180 S. Bolwig et al.
moderate demand for the innovative solutions (interview with AFI). Thus it
remains to be seen whether Nutrilac
®
will become a dominant technology in
acid whey valorisation and if other processing solutions are developed and
commercialised alongside this one.
As noted in Chapter 3, lock- in mechanisms not only create barriers to
innovation in the bioeconomy, but can under certain conditions promote and
reinforce innovation and sustainable business development. In this regard, as a
result of a series of mergers and acquisitions, foreign direct investments and
technological specialisation over the past decades, Arla Foods has realised
positive lock- in mechanisms in whey- based activities. These are economies of
scale (in whey sourcing, processing and marketing), economies of scope
(regarding production and marketing of different whey products) and longterm learning effects (regarding whey sourcing, processing technology and
markets). A key factor has been the establishment of the subsidiary AFI with
an R&D department dedicated to whey product development. Important
economic and political contexts have been the fast- growing global ingredients
market, good access to regional (Northern Europe) whey resources and a
basis in an export- oriented agricultural sector (see Table 9.3). All this represents a strong ‘directionality through industrial practices’ (Chapter 3) in whey
valorisation, which was originally motivated by a growing waste problem.
Currently, TINE has had no explicit strategy for adding value to its side
streams and is still establishing a strategy for acid whey in cooperation with a
Norwegian research institute (interview with TINE). Most of TINE’s R&D
focuses on end products, health, packaging and animal health. The main focus
within TINE has been on how to manufacture end products most efficiently,
while the handling of by- products has received less attention. The department called ‘Ingredients’ does not have a special focus on surplus resources,
but rather on the needs of the food industry. This means that they do not
search for alternative uses of surplus resources from the dairies, but respond to
demand from a specific market. There is an emphasis on keeping production
and products stable, and on not interacting with existing production infrastructure in the utilisation of side streams.
For side streams TINE has emphasised reducing the costs of management
rather than increasing the value added. For acid whey, this choice is related to
the rather small volume of acid whey generated (even with the increase in
Greek yoghurt and cottage cheese production), which makes valorisation less
attractive in a cost- benefit analysis. It is also related to TINE’s current lack of
an international market channel for acid whey- based products (interview with
TINE). In the case of sweet whey, which is much more abundant, TINE’s
partnership with AFI has enabled the co- production of two bulk commodities – whey protein concentrate and whey permeate. But TINE depends on
AFI for the marketing of these products and does not engage in more refined
processing or product development, and it also depends on AFI for building
or upgrading its processing facilities. From a value chain governance perspective (Gereffi, Humphrey & Sturgeon, 2005), this places TINE in an
moderate demand for the innovative solutions (interview with AFI). Thus it
remains to be seen whether Nutrilac
®
will become a dominant technology in
acid whey valorisation and if other processing solutions are developed and
commercialised alongside this one.
As noted in Chapter 3, lock- in mechanisms not only create barriers to
innovation in the bioeconomy, but can under certain conditions promote and
reinforce innovation and sustainable business development. In this regard, as a
result of a series of mergers and acquisitions, foreign direct investments and
technological specialisation over the past decades, Arla Foods has realised
positive lock- in mechanisms in whey- based activities. These are economies of
scale (in whey sourcing, processing and marketing), economies of scope
(regarding production and marketing of different whey products) and longterm learning effects (regarding whey sourcing, processing technology and
markets). A key factor has been the establishment of the subsidiary AFI with
an R&D department dedicated to whey product development. Important
economic and political contexts have been the fast- growing global ingredients
market, good access to regional (Northern Europe) whey resources and a
basis in an export- oriented agricultural sector (see Table 9.3). All this represents a strong ‘directionality through industrial practices’ (Chapter 3) in whey
valorisation, which was originally motivated by a growing waste problem.
Currently, TINE has had no explicit strategy for adding value to its side
streams and is still establishing a strategy for acid whey in cooperation with a
Norwegian research institute (interview with TINE). Most of TINE’s R&D
focuses on end products, health, packaging and animal health. The main focus
within TINE has been on how to manufacture end products most efficiently,
while the handling of by- products has received less attention. The department called ‘Ingredients’ does not have a special focus on surplus resources,
but rather on the needs of the food industry. This means that they do not
search for alternative uses of surplus resources from the dairies, but respond to
demand from a specific market. There is an emphasis on keeping production
and products stable, and on not interacting with existing production infrastructure in the utilisation of side streams.
For side streams TINE has emphasised reducing the costs of management
rather than increasing the value added. For acid whey, this choice is related to
the rather small volume of acid whey generated (even with the increase in
Greek yoghurt and cottage cheese production), which makes valorisation less
attractive in a cost- benefit analysis. It is also related to TINE’s current lack of
an international market channel for acid whey- based products (interview with
TINE). In the case of sweet whey, which is much more abundant, TINE’s
partnership with AFI has enabled the co- production of two bulk commodities – whey protein concentrate and whey permeate. But TINE depends on
AFI for the marketing of these products and does not engage in more refined
processing or product development, and it also depends on AFI for building
or upgrading its processing facilities. From a value chain governance perspective (Gereffi, Humphrey & Sturgeon, 2005), this places TINE in an