Model 8: Sustainable Bio-based Products from Plant-based Biomass
This cluster formed on the basis of five enterprises using cultivated plant based and wood biomass for variety of other bioproducts, incl. food products (vegan, gluten free food, starch, baking products, ingredients for organic food products), animal feed, animal beddings, paper and cardboard, and bioenergy and fertiliser side streams. Thus, the products of this type are more varied than in the previous one that specialised on plastic replacement.
Value proposition
The value offered to customers is a mix novel, sustainable, natural and organic products or ingredients for food and packaging based of plant and woody biomass. Different high value-added products from side streams include biogas and fertilisers.
Infrastructure
The key partnerships are forest owners and wood industry, other suppliers for biomass raw material. Universities and other research institutions provide opportunities for concept development for materials, processes, products, verification and prototyping and design. The role of business and industrial associations was especially emphasized for network, export and product development. Cooperation with regulatory authorities is required for meeting the environmental and other requirements for ingredients for food and feed industry were important for some companies. Some of companies were selling bioenergy to municipal byers.
Key activities include procurement of biomass, production (food ingredients, pellets, organic mulch, magazine paper, and bioenergy production), distribution and marketing and sales network development, incl. sales channels. In some cases, the enterprise collected their own biomass. Other enterprises bought the biomass from various industries and also outsourced the processing. Other important activities included constant product development (e.g., new products based on ash from bioenergy production). Some of the enterprises offered various additional agriculture related services as side activities.
The tangible key resources are raw material (straw, hay, high starch crops, manure, and wood), machines and equipment, vehicles for transportation and water, energy, processing and packaging infrastructure, technology for new product development based on residuals. Intangible key resources include human resources, the technical, market and innovation know-how, networking with research organisations for the development of products and technologies, also global trademarks.
Keyword ratings for enterprises in Sustainable Bio-based Products from Plant-based Biomass Business Model type
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Customer interface
The enterprises established their customer relationships through direct personal sales, long-term relationships and distribution networks. The main focus was on B2B sales (incl. private labels in B2B chains, B2B with other producers that use products as ingredients for their products). Customer segments included gardeners, livestock farmers, consumers of pellet and wood heating, producers of organic food products using potato starch or brown peas starch (bakeries, confectioners), dry blends, as well as vegan products, gluten free products, companies using paper and hardboard and packaging; municipal buyers for heating.
The channels depended on the product. Mostly enterprise’s own sales force selling directly (B2B and B2C) and enterprise owned online channels (online shops, website, and social media) and partner owned retail networks were used. Intermediaries were also used, especially for export and distribution. Marketing channels included direct marketing and trade fairs.
Business Model Canvas for Sustainable Bio-based Products from Plant-based Biomass Business Model type
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Key partners Forest owners Wood industry Other biomass suppliers R&D organisations Business and sectorial organisations Municipal authorities Regulatory authorities |
Key activities Collection of biomass Procurement of biomass Outsourcing of processing Production R&D Distribution Marketing and sales of bio-based products Additional agricultural services Sales of bioenergy |
Value propositions Plant and wood biomass based novel and natural products and ingredients for food and packaging Bioenergy and fertiliser production from waste and residues |
Customer relationships Personal direct sales Automated online sales |
Customer segments B2B B2C Bio-based products Farmers Gardeners Food industry Packaging industry Supermarkets Heat Municipal byers for heating |
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Key resources Raw material Equipment and technology Processing plant Staff Technical know-how Market knowledge Networks Global trademarks |
Channels Sales force Online selling Intermediaries Retail network Trade fairs |
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Cost structure Raw material costs R&D costs Investment in the processing plant Equipment and technology costs Production costs Distribution costs Marketing costs Labour costs Certification costs |
Revenue streams Sales of bio-based products Sales of bioenergy Sales of agricultural services |
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Financial viability
The cost structure is that of manufacturing company with main costs being costs for raw material, production (energy costs), personnel costs (also for manual work in some cases where the product was manually prepared), R&D costs for new products and marketing, operating and service costs of equipment and fuel. Marketing costs were separately emphasised as the products were novel, costs such as for specialised export managers and specific marketing channels occurred, and in some cases separate certifications were required.
The revenue streams mainly come from the sale of products (selling the different products to the various market segments), bioenergy and to some enterprises also from provision of services.
Socio-economic aspects and novelty
The activities of the companies support the economic development of rural areas by creating employment opportunities, utilization of local resources for variety of products, and strengthening the diversity of economy. Some of the companies demonstrated integrating social goals to their economic and environmental activities by engaging in a local community support programme. Consumer and health trends (ingredients for vegan, gluten free food) were important driver for R&D. The companies presented a mix of specialised and diversified enterprises.
The novelty of the companies in the cluster varies from company to company. Some enterprises represent the use of agricultural residues or wood for circular production and low value-added sustainable products (e.g., straw pellets). Some enterprises are working on high value-added product and processing innovations, e.g., offering in the market organic plant-based products for industrial application, development of new protein products for customers.
The Business Cases of this cluster include a Latvian company Aloja Starkelsen (Case 8.1: Aloja Starkelsen – organic starch and plant-based products for home and industrial application – Latvia), a company producing a mix of plant-based products for food and industrial application. Another Business Case involves company Lilli Agro (Case 8.2: Lilli Agro – organic straw pellets for animal bedding – Estonia) that uses agricultural residues to produce straw pellets in Estonia.
Other related Business Models
Archetype of novel uses of bio-based materials for non-energy purposes includes Business Models developing innovative biomass based non-energy products and processing technologies for food, pharmaceutical, cosmetics, construction and other industries. The Business Model innovation in this archetype includes finding new ways to capture value from novel biomass, new uses of existing biomass or designing new processing systems, and related changes in other elements of the Business Model. The Business Models in this archetype rely heavily on knowledge resources and their combination with networks, and thus are not so easily transferable.
Model 10: High-value Products from Knowledge-based Processing