Case Study of Vitamin C Business Development by Royal DSM NV
Vitamin C, or L-ascorbic acid, was discovered as the nutritional factor lacking in the diets of sailors suffering from scurvy. It naturally occurs in fresh fruit and vegetables. The first industrial preparation of L-ascorbic acid was developed by Tadeus Reichstein for F. Hoffmann-La Roche in 1934. DSM acquired this business from Roche in 2003. Figure 11.4 shows the overall context, LCA-based insights, supported decisions and value creation opportunities of Vitamin C product.
4.2.1 Context and Drivers of Vitamin C
The world's population is still rapidly growing and expected to peak at nine billion people around 2050. Presently large groups of people in poor countries already suffer from malnutrition. Even if they have sufficient energy in their diets, these are deficient in micronutrients, just like sailors' diets did. Even in wealthy countries there are deficiencies of micronutrients, and people concerned about their health take precautionary supplements of micronutrients. Hence there is a large and growing demand for micronutrients, including Vitamin C. All over the world, even in developing countries, concerns about food quality and food safety are increasing, so food additives and supplements have to comply with high standards of quality and safety. Finally there are concerns about the environmental impact, including land use, of the activities required to feed the growing population. These concerns also lead to questions about the contribution of additives and supplements to food (environmental) footprint. There is strong competition and price pressure from China in the vitamins market. DSM has the only non-Chinese production site for Vitamin C in Dalry, Scotland.
The DSM Quality for Life™ program symbolizes quality, reliability and traceability. Quality for Life™ also means sustainability.
As part of the program DSM licenses the Quali-C® trademark to customers for positioning their consumer products. Quality for Life™ and the Quali-C® brand are integral parts of DSMs value propositions.
4.2.2 Results of the Vitamin C LCA Study
DSM carried out an LCA to determine the carbon footprint as a pilot in the UK carbon trust program. One of the key results was that energy contributes more than 50 % to the footprint of the product, even with the very low energy footprint, produced in a combined heat and power plant fired with natural gas. This high energy consumption was related to the production of the intermediate 2-ketogulonic acid (KGA) in an oxidation reaction. The oxidation can only be executed selectively if groups that should not be oxidized are protected by addition of acetone, which has
Fig. 11.4 LCA-based value creation approach for Vitamin C products (relation between context/drivers and LCA of Vitamin C and its support in business decision-making, key stakeholder responses to improved environmental performance and resulting value creation opportunities)
to be removed and recovered after the oxidation. In addition to the large energy requirement, this complicated procedure requires chemicals and produces waste.
DSM did not carry out a social LCA. The potential benefits to people taking vitamins as supplements or additives are very well known to customers and consumers, so there is no need to emphasize these. Production, starting from agriculture and fuel generation is completely European based, so there is little risk of social issues in the value chain.
4.2.3 Business Decisions Supported by LCA
Because of the cost and the high footprint of the KGA production DSM switched to the fermentative production of KGA. A complete fermentative route to further reduce cost and footprint is also considered. DSM has recently forwardly integrated into premix companies, who supply premixes of additives to the food and feed industry. This allows to actively influence the footprint of vitamin additives used. For strategic reasons DSM is acquiring a Chinese production site. The LCA was extended with an assessment of other environmental impacts and used to check the footprint of the Chinese product, and will be used to identify and assess initiatives to reduce the footprint.
4.2.4 Stakeholders' Responses and Sustainable Value Creation
Customers respond positively to Quality for Life™. They prefer products from a reputable and reliable source, with an undisputable track record in food safety, environmental performance and sustainability image. All these contribute to reducing their operational risks. This is valid in the western world, but certainly also in Asia. Particularly in food fortification programs within the area of malnutrition, social LCA makes the benefits more tangible, and DSM is piloting this use. In addition, stakeholders in these programs are interested in environmental impacts, including those of small packaging sizes and distribution.
Implementation Procedure for Business Value Creation Based on Life Cycle Assessment in Companies
UNEP/SETAC has proposed the application of life cycle management (LCM) capability maturity model for developing the capacity of small and medium sized companies to achieve their sustainability goals (UNEP/SETAC 2009). The authors propose an implementation procedure for business value creation based on the insights gained from LCA studies and its integration in business functions (see also UNEP/TU Delft 2007; UNEP/SETAC 2009). This is an iterative procedure of various steps as shown in Fig. 11.5.
Fig. 11.5 Iterative procedure for translating insights from the LCA and S-LCA into value creation adapted from Manda et al. (2014)
The steps of the iterative procedure are:
1. Understand the context of the product by collecting information on various drivers and stakeholder views/concerns
2. Involve the relevant business functions within the company
3. Define the goal, scope and type of LCA and/or S-LCA
4. Engage the value chain companies and customers
5. Discuss the results of conducting LCA and/or S-LCA internally
6. Share the outcomes of the process with value chain companies and customers to capture value
Limitations of the Suggested Approach and Life Cycle Management
While implementing the suggested approach, practitioners would face some barriers and challenges.
We acknowledge the limitations of the LCA approach in terms of the development of methods for impacts such as biodiversity and toxicity, lack of inventory, uncertainties in data and methods, limited guidance on allocation for different product categories, etc. (Finnveden et al. 2009). Resource requirements are also acting as limitation for implementing LCA. Companies can also create value with customer experience, products with superior aesthetics, feel, etc. These aspects might not be captured by LCA, if its unit of analysis, i.e. the functional unit, cannot take these aspects into account. LCA is not easily able to capture the perception and preferences of people, taste, and emotional value attached to products, hence it cannot help companies to create value in terms of these aspects.