Diversification by end-market is a strategy designed to guarantee an instrument and lab product company a wider user base and greater sales opportunities. However, a company focused on a particular industry, whether due to the company’s origins, the application fit for its technology, or a deliberate effort to serve a growing market, can succeed by offering consistent sales growth, competitive advantages and long-term customer relationships. Such companies are not as common as they once were, but are an important part of the analytical instrument industry. In this article, IBO talks to two companies that are widely known for their association with a particular end-market.

Danish company FOSS provides molecular spectrometers, X-ray spectrometers, software and other technologies for both lab, production and quality control testing. The family-owned company primarily serves the food sector, having focused on the food market since its founding in 1956. Other markets for FOSS products include pharmaceuticals and environmental testing. FOSS revenues grew 6.5% last year to DKK 214 million ($297.8 million = DKK 5.36 = $1). According to the company, it is responsible for the analytical testing of 85% of worldwide milk production, 80% of traded grain and 75% of global beer production.

According to Johan Weimann, Industry Segment manager at FOSS, the company’s focus on products for food, beverage and agricultural testing, both raw materials and finished products, allows it to build relationships with companies, and thus improve its technology for the industry’s needs. ”Having worked closely with the major food/feed producers and grain handlers for the last 56 years, FOSS has built up in-depth understanding of our customers business, and has furthermore built an extensive portfolio of applications based on the experience from many thousands of installations.”

The in-depth knowledge of the food industry’s operations and requirements contributes to the development of products and applications. As an example, Mr. Weimann described the company’s solution for the analysis of ground meat. “This is notoriously difficult due to the inhomogeneous nature of samples,” he told IBO. “FOSS uses technologies such as X-rays to measure entire batches of meat or a special form of NIR analysis called NIR transmission that penetrates the sample to get a representative picture.” FOSS’s MeatMaster System utilizes dual-energy X-ray absorptiometry for in-line quality control of meat trimmings’ fat content. Based on NIR transmission spectroscopy, the MeatScan is designed for at-line or lab analysis of fat in raw meat or meat products for process and final product control.

Key to molecular spectroscopy measurements is calibration. Mr. Weimann gave an example of how FOSS history of working with the food industry has benefited its development of calibration methods. “Because ground meat is not very homogeneous, a very reliable calibration is required that can account for the natural variations in samples,” he explained. “FOSS has, therefore, spent many years working with the meat industry to develop ready-to-use calibrations based on literally thousands of samples from different types of meat samples and from around the world.”

As the food industry has evolved so has FOSS. The company’s initial product was a moisture meter for grain analysis. “This initial success was followed by a venture into milk analysis and from there on the business developed naturally into other areas of food and agriculture, including meat, wine, feed and forages,” explained Mr. Weimann. To keep up with industry developments, FOSS seeks a wide range of input. “We are in close contact with large and small producers, industry organizations and regulatory bodies. The information gained is filtered into a research and development program, starting with an assessment of technology possibilities and business potential,” he said. FOSS generally introduces four to five new products each year, as well as new features for existing solutions.

New solutions are some times in response to industry trends. “One example that matches a trend in the milk testing area is a new milk analyzer application that allows testing for sub-clinical ketosis in dairy cattle,” said Mr. Weimann. “Typically, a cow with ketosis costs around 500 kilos of lost milk per year.” A metabolic disorder in cows, ketosis leads to declining milk production. “In dialogue with dairy industry experts, FOSS has developed a simple and cheap test that helps farmers to spot signs of Ketosis early, so empowering them to head-off the worst effects with appropriate feeding strategies.” The test is provided by FOSS’s MilkoScan FT+ system, which measures acetone and BHB residues, indicators of ketosis, for routine screening.

Another trend in the food industry that FOSS has responded to is growing business in the BRIC nations (Brazil, Russia, India and China). “FOSS is developing to meet business trends in BRIC lands with new offices, facilities and staff to serve growing business requirements,” he said. In 2011, the company reported sales grew 23% in Brazil and China each, and Indian sales rose 33%.

Another company that has focused its product line on a particular end-user market is PAC, a Roper Industries business. PAC offers a range of analytical instrumentation for both lab and process analyses in the hydrocarbon-processing market, including systems for the analysis of petroleum, petrochemicals, natural gas and biofuels. Products offered through the company’s eight brands include chromatography detectors, elemental analyzers and systems for physical properties testing, including distillation, flash point, cold behavior, viscosity and vapor pressure.

PAC’s product line consists of more than 100 instruments. “The synergy and dynamics of these brands work together under PAC to provide best-in-class analytical instrumentation for refinery and petrochemical laboratories, as well as on-line process applications for refineries, fuel-blending facilities and similar production facilities,” said Daniel Benitez, vice president of Process Analytics at PAC. “All of these brands combined under a single company shaped the focus of PAC to concentrate on solving the key instrumentation challenges faced in the hydrocarbon-processing market.”

Asked about the competitive advantage of PAC’s focus, Mr. Benitez told IBO, “The long-standing history of each product line and the industry knowledge and experience of our employees are PAC’s competitive strengths. Decades of combined industry experience translate into a very comprehensive body of process, materials and industry knowledge that helps PAC assess customer and industry challenges and develop solutions to meet them.” He also stated that this industry knowledge and PAC’s broad portfolio differentiate the company.

A focused approach also benefits from PAC’s offering of both lab and process solutions and vice versa. “By having the same reliable and innovative technology in the lab and in the process, plants are able to optimize their plant operations, which improves overall productivity, reliability and profitability,” said Mr. Benitez. “Since PAC offers both lab and process applications, companies are able to deal with one vendor as opposed to working with many.”

About the industry, Mr. Benitez said, “The hydrocarbon-processing industry changes constantly; price and availability for materials constantly fluctuates. It is difficult to operate a manufacturing concern in the face of constant volatility.” Other challenges include the processing of heavier crude oils and the need to meet low sulfur specifications in fuels. Such challenges provide PAC with growth opportunities, according to him. ”The availability of real-time information is thus critical for decision-makers. This in turn has sparked more rapid growth and development in the on-line process analytics area of PAC’s portfolio.”

One solution for real-time process analysis described by Mr. Benitez is the MicroDist distillation analyzer for the measurement of vapor, liquid temperatures and the percentage distilled over the boiling point curve. It delivers analysis information every eight minutes. “One refinery has reported a profit increase of nearly $1.5 million per year by increasing the heavy diesel cut point by 1°C after implementation of the MicroDist in its process control,” he noted.

R&D also helps PAC evolve with the industry. “PAC is actively involved in the industry to stay aware of the challenges our customers face on a daily basis,” said Mr. Benitez. Involvement in standards organization is also critical. “Hydrocarbon-processing industry test methods are constantly being updated due to advances in technology; thus, it is important to keep test methods up to date with new technologies and changing specs,” he explained.

As with any industry, but particularly one affected by the price of oil, the hydrocarbon-processing industry has its downturns. PAC maintains growth during such periods by improving existing systems. “During lean economic times or periods when industry growth is slow, PAC helps customers maintain profitability by optimizing their processes and therefore maintaining profits. Process optimization means less waste and more consistent quality,” explained Mr. Benitez. “PAC leverages its efficient analytical instrument technology and dedication to attentive technology service and support to help our customers operate ‘lean’ and with maximum yields. This helps PAC maintain customer loyalty and build stronger growth during more economically robust times.”