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A Site Selection Web Exclusive, September 2011
WEB Exclusive story

To Life!

A Kentucky animal nutrition company’s
growth is anything but niche, and
that’s just how they like it.

Alltech's Center for Applied Animal Nutrition and Nutrigenomics, Nicholasville, Ky.
All photos courtesy of Alltech
Dan Haney, Alltech’s director of global manufacturing
Dan Haney, Alltech’s director of global manufacturing

ome life sciences companies, like strands of DNA, are narrowly focused on their sphere of influence. Others resemble full-body life systems, with emphasis on the "life."

The latter could apply to Alltech, the animal nutrition product company based in Nicholasville, Ky., whose varied corporate and philanthropic interests include pigs, yeast, catfish, beer, poultry, three-day equestrian events, coffee, algae, sustainable development in Haiti, whiskey and a golf course adjacent to headquarters.

In other words, life … in many of its refined, messy, distilled, elegant and fermented forms.

Lately those interests have fomented significant facility development at home and abroad for the 31-year-old company, whose operations now extend in various forms to 128 countries:

  • On Sept. 9, the company broke ground on a $4.5-million distillery in Lexington, just down the road from headquarters. Located adjacent to the company's brewery, the 20,000-sq.-ft. (1,858-sq.-m.) facility will house production and storage for Alltech's Pearse Lyons Reserve whiskey (named for the company's founder and president), Bluegrass Sundown after-dinner Bourbon coffee beverage, and soon-to-be-released Bourbon. The project is expected to be completed by September 2012. Alltech's Beverage Division, LLC, which has been brewing craft beers since 2000 in downtown Lexington, currently employs 34 people, 14 of whom were hired within the last year. The division's continued expansion is expected to create a dozen additional jobs within the next year outside of construction. Recently getting into the age-old Kentucky business of spirits, Alltech in 2010 distilled the first malt whiskey in Kentucky since 1919.
  • In February, Dr. Lyons was on hand to cut the ribbon for the $200-million Alltech Algae plant in Winchester, Ky., just outside Lexington. The fermentation facility was acquired in 2010 from Martek Bioscience Corp. for approximately $14 million and was renovated with the aim of becoming one of the largest algae production sites in the world.

    "For Alltech, algae fermentation presents the latest technological frontier from which we expect incredible opportunities in the areas of food, feed and fuel to arise," said Lyons. "We have already been working in this area for several years and see it playing a major role in both human and animal health and nutrition. I am confident that this will be one of the key pieces that will help our company pass the $1 billion revenue threshold in 2015."

    The algae will be used for value-added feed products, algae-derived bio-fuel and the production of ethanol. The Alltech project is one of several algae projects in Central Kentucky's Bluegrass country, with others in research stages taking place at Eastern Kentucky University in nearby Richmond, the University of Kentucky in Lexington and Kentucky State University in the state capital of Frankfort. Algae create 70 percent of the atmosphere's oxygen, more than all forests and fields combined. Algae also capture CO2 and release it as pure oxygen, so combined carbon and flue gas capture and biomass energy projects are a prime motivation behind some of the research, especially in coal country.

  • In early September it was reported that Alltech managers at the company's office in Fresno, Calif., are looking around Tulare County for a place to establish a hub to serve the dairy industry, complete with lab, office and warehouse space.
  • In July, the company started construction in Clovis, N.M., on its 32nd production facility globally and ninth in North America. The site will be the fifth of its kind to produce one of Alltech's emerging technologies, Optigen, a non-protein nitrogen source. "By creating space in the diet, the inclusion of Optigen allows producers to use on-farm feeds and have more flexibility during formulating," explains the company. "With corn prices doubling since last summer and natural disasters and drought impacting this year's planting, the southwest has seen an increasing demand for the protein alternative." Alltech has operated in New Mexico since 2008, and currently makes Yea-Sacc®1026 Farm Pak 2X, a live yeast culture feed additive, at the Clovis facility. The new facility will create just a handful of new jobs, but the Clovis office also plans to expand its sales team serving the dairy and beef sectors.
  • In April, the company opened its 16th North American office, among a family of offices in more than 80 countries, in Ames, Iowa. The new facility will support sales in Iowa, offer a local customer support site and help the company to develop a closer partnership with Iowa State University. "As a global animal health and nutrition company, we seek out places that are centers for agricultural productivity," said Lyons. "Alltech will now be able to offer improved service to America's Heartland in a distribution and sales capacity."

More than Helping Hands in Haiti

The Alltech Sustainable Haiti Project in Ouaniminthe in northern Haiti began the week following that nation's devastating earthquake in January 2010. Since that time the company, along with other Kentucky organizations such as UK, has helped launch a coffee co-op production and marketing operation under the brand name Café Citadelle; procured a poultry unit with the goal of creating both jobs and food; worked to rebuild and improve the village's main school; and sponsored a children's choir that toured the U.S.

In July, Alltech flew more than 20 community volunteers to Haiti, including medical professionals, educators and students. Projects they're working on range from medical clinic ramp-ups to plant nurseries. Alltech spokesperson Susanna Elliott says the July trip was one of several the company plans to back, involving a mix of employees (who use their vacation time) and volunteers from the Central Kentucky region.

Might Alltech, which already operates in the nearby Dominican Republic, one day locate its own production facility in Haiti?

"We absolutely will," says Dan Haney, Alltech's director of global manufacturing. "We will be blending and producing products for that region. The Dominican Republic is already a huge market for us. And then there is the coffee, which is very exciting. The idea is to become more and more involved from a production standpoint, and to grow our presence. We certainly intend to play a big role in Haiti."

Opportunistic and Entrepreneurial

Alltech maintains 31 production facilities around the world: 11 in North America; 10 in Latin America; five in Europe; four in the Asia Pacific; and one serving Africa and the Middle East. In addition, the company has three bioscience centers of excellence in Nicholasville; Dunboyne, Ireland; and Tianjin, China. The Tianjin center of excellence was moved from Bangkok for strategic reasons within the last year.

Haney is one of the central people involved in any sort of property purchase, but he says any location decision at Alltech involves a broad cross-section of people. And any greenfield site certainly involves Deirdre Lyons, Dr. Lyons' wife and company co-founder, who serves as Alltech's director of corporate image and design, assuring that the firm's design aesthetic and high-quality appearance and functionality suffuse any facility project the company might choose to pursue, "down to the horse plank fencing we ship around the world," says Haney.

The company pursues its wide variety of projects without the benefit of a corporate real estate director.

"If I look at our tier-one facilities, each one of those came about differently," says Haney. "We're not following a template. Some locations are based on where the animals or market are, and some are opportunistic. Take Winchester. A fermentation facility came available. That is a core competency and matches what we do as a company very well. It's 40 minutes from our corporate headquarters. It's a perfect fit.

"Then we have facilities like our solid state enzyme facility in Mexico," he says. The location in Serdan, Puebla, was originally chosen because it's the primary growing area for the plant known as yucca schidigera, a key raw material for the company's De-Odorase product.

In Serbia, he says, a yeast facility came available. "You wouldn't know that facility today from [how it looked] when we purchased it," says Haney. "We go in, put our flare and image into the facility, and today it's state-of-the-art, one of the more impressive facilities in Europe."

Asked how the company executes such projects without the benefit of real estate specialists, he says, "We're a very global company, certainly within our spectrum. If you're looking at fermentation or drying facilities, we know most of the facilities around the globe. I worked at the Winchester facility when it was a Coors facility 20 years ago."

Indeed, that facility embodies a cross-sector richness similar to the company's, having served Martek as a plant for making Omega-3 fatty acids, and before that, producing riboflavin for Coors before the brewer sold that technology to ADM.

Those projects and others illustrate the flexible thinking of an entrepreneurial company culture in action. The golf course next to headquarters, for instance, was originally purchased for potential future growth. But until that time comes, the company has chosen to refurbish and professionally manage it as a golf operation (upgraded from the "country golf" experience of this writer in the 1990s).

That kind of culture also brings with it swift decision-making.

"I remember when we purchased our facility in Alexandria, Ontario, about an hour west of Montréal," says Haney of an ex-Nestlé plant visited by him, Dr. Lyons and a company engineer. "We flew up, and literally made the decision and had the facility purchased before we landed back in Lexington."

Whether by method or happenstance, such experiences have done their part to influence how the company thinks strategically.

"Several years ago we were looking at having large global manufacturing centers for our core products," says Haney. "Today we're thinking globally and producing locally — that's kind of our motto." It's a motto to live by amid constantly changing regulatory and import/export issues. "To grow our business we need to be producing in every region and every country around the globe," he says. "Today most of our products are produced within the region."

Such an approach meshes well with the do-it-yourself principle behind the company's facility location and growth patterns. One might go so far as to call Alltech's people the DNA of its strategic planning.

"We have so many people on the ground," says Haney of the company's 2,600 employees. "We really are all over, and cover an incredible amount of area. We are very much involved in terms of our industry — in Asia I'm constantly aware and staying in touch with these companies. Some colleagues were looking just last week at a facility in China. We very much have our finger on the pulse."

Alltech’s Café Citadelle coffee brand, produced from a coalition of eight coffee co-ops in Haiti whose business the company committed to help grow after the January 2010 earthquake in that country, is named after Citadelle Laferriere, built by 20,000 former slaves under the orders of King Henri Christophe and completed in 1820 to defend against the return of the ousted French. (Inset): Schoolchildren in Ouanaminthe, Haiti, are seeing the benefits of Alltech’s sustainable development efforts in that country, part of what might be deemed a holistic definition of “life sciences.”

Story in Pictures

Alltech Algae in Winchester, Ky., is one of the largest algae production facilities in the world. It houses a variety of sizes and types of fermentors for growing heterotrophic algae. Alltech is pursuing research there related to animal nutrition, biomass and biofuels.
Click for a larger view.
Click for a larger view.
Click for a larger view.

The Site Selection Life Sciences Report features exclusive and in-depth reporting and analysis on the most important life science projects and issues. Topics covered include pharmaceutical R&D and manufacturing, biotechnology, medical device manufacturing, health-care services facility trends, clinical research and other key life science sectors.


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