Getting Serious about IP in Cereals Case studies - Learning from local companies CerealTech The next time you sink your teeth into a slice of bread, piece of cake or bowl of noodles, relish the taste – you could be enjoying the hard work of CerealTech, a local food ingredients company. Established in 1995, CerealTech provides solutions that improve the quality and shelf-life of cereal-based products. These solutions include applied product R&D, process optimisation, integrated technical support and manpower training.
“We have embarked on an exercise to evaluate our IP and quantify how IP acts as an asset towards generating revenue streams for the company. This will help us to better recognise that what we are doing is worth doing and change our portfolio of IP assets into benefits and profits. It will also act as a motivating factor for our development team, as they can understand the actual value of their work and how it contributes towards developing the company’s know-how, proprietary information, new products and processes,” said Mr Foo Ko Kin, Managing Director and Founder of CerealTech.
Developing CerealTech’s “Know-How”CerealTech’s development team has created more than 300 products or what they call ‘micro-ingredients’, which have specific functions for different solutions. These include enzymes, improvers, concentrates and mixes to optimise the performance of the final cereal-based product. For example, CerealTech has worked with a well-known local bakery to improve the softness of its breads.
“There are thousands of enzymes available, each with a different function. CerealTech conducts research on selected enzymes in combination with other enzymes and observes their effect in relation to the environment, manufacturing process and material used. The end result is a cocktail of micro-ingredients and more importantly, the know-how of the process or system used to create this cocktail,” explained Mr Foo.Protecting the Company’s IP, Staying Relevant
The formulations of these unique cocktails and the technology processes that created them are CerealTech’s IP. Mr Foo decided that the most effective way to protect his IP was through keeping this knowledge as trade secrets. “Protecting our formulations through patents would be a lengthy and expensive process and in this industry, keeping our products as trade secrets is a better alternative. This is because there is constant change – conditions for each market are different, raw materials such as wheat flour differ in quality and nothing stays constant. As such, we need to adjust our formulations regularly to adapt to this change and a patent for one formulation would not be relevant for long.”
Mr Foo further explained, “It is critical to continuously conduct R&D and stay one step ahead of the competition. It is not what you know, but how you use this knowledge to reap the benefits.”
Trade Marks and Copyright
In addition to trade secrets, CerealTech’s IP includes a host of trade marks, which have been registered for the company’s name as well as some of its products. Food manufacturers have become familiar with CerealTech’s enzyme improvers, such as Softzyme®, which promotes softness and extends the shelf-life of breads and buns. They also use its flour correctors, such as Farenaise®, to improve the baking performance of flour.
“We began registering trade marks for our products back in 1996, and chose to register in key operating markets. When we chose not to register in certain markets, we soon found other companies imitating our products. This was a lesson for us – ‘penny wise, pound foolish’,” said Mr Foo. “But more than simply registering a trade mark, it is important to ensure that the products perform. This is what will keep customers coming back to you, despite the other imitations out there.”Another service that CerealTech provides is manpower training and the company holds a wealth of IP in the form of copyright in its training manuals. CerealTech owns a number of certified programmes as well as customised training, in areas including bread making technology, cake and pastry making technology, food safety and hygiene and baking appreciation.
“We are currently studying how to best convert our knowledge from training into IP assets that will result in another revenue stream for the company. Being an SME, we have limited resources and we need to put these resources in places that generate revenue,” said Mr Foo.
Establishing IP Knowledge Throughout the Company
CerealTech’s employees of food technologists, trainers, engineers and consultants understand fully the importance of the company’s IP. Employees are educated on keeping trade secrets secure and all formulations are protected in an in-houseManagement Information System, protected with passwords and controlled access. Non-disclosure Agreements and Noncompetitive Clauses are built into the company’s HR policies. Furthermore a culture of innovation is encouraged, especially as CerealTech needs to constantly improve its products to stay ahead of competition.
By differentiating itself through unique formulations, know-how, technology and branding, CerealTech aims to maintain a strong growth of between 7-12% per year. In this manner, CerealTech will continue to be a food ingredients company that provides a full range of micro-ingredient products and services to meet the needs of its customers.