The Science of Alltech
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The innovative Nicholasville-based company, a global biotech leader in producing natural animal health and nutrition products, also has goals to improve human health.
Alltech’s 2015 conference is a spectacular affair. Rupp Arena swirls with lights, pulses with loud, dramatic music. Nearly 3,000 people from 68 countries are there. It’s called REBELation—“Revelation” with a “b” scrawled over the “v”—and synonyms for “rebel” fall into place on the screens mounted behind the stage.
In the buzzy air of innovation, presenters talk about plants that change color (to show their nitrogen level, attract pollinators more effectively, or to optimize photosynthesis); growing vaccines in tobacco plants; keeping “smart” beehives that won’t let bees leave when there are toxins or pollutants nearby; using drones to monitor crop growth; and half a dozen other seemingly science fiction futures.
To be clear, not all of these ideas are from Alltech’s own research. But they are all ideas Alltech elected to present at its annual symposium.
If this air of innovation is the shoe, though, what foot does it fit on? REBELation offers sessions about brewing and distilling, aquaculture, the future of beef, mergers and acquisitions…
What on earth is this company?
The simple answer is that Alltech is a privately held, Kentucky-based company that brings in more than $1.5 billion in sales annually, nearly all of it from making nutritional supplements that go into animal feeds, although the company also has interests in brewing and distilling, crop science, and other areas.
The company trades in 128 countries, has production facilities in 23 of them, and has more than 4,200 employees worldwide, 700 of them in Kentucky. But because its products are largely used in someone else’s factory, even farmers don’t necessarily know the company’s name. Almost the only consumer products Alltech makes are beers—Kentucky Ale is the flagship product—and several lines of whiskey. In 2010, it took its biggest step at promoting itself, when it served as the name sponsor for the World Equestrian Games in Lexington.
Yeasty beginnings
Another way to answer “What on earth is this company?” is to say that it all comes down to yeast.
Dr. T. Pearse Lyons, the company’s president and founder, is an Irish native who came to Kentucky in the late 1970s as a biochemist for Irish Distillers, the company best known for Jameson Irish Whiskey. He was here to learn about the bourbon industry (and, secondarily, about making fuel alcohol).
Lyons and his family had planned on being back in the British Isles within three years of their arrival in Lexington. But he had always had an entrepreneurial spirit, and he says he grew tired “of building companies for other people.”
So with $10,000, he started Alltech. Lyons took a problem-solver’s approach, asking farmers what difficulties they had. One answer: colic in their animals. Colic is created by gas, which in turn is caused by excess sugar in the gut—and sugar is exactly what yeast breaks down. And yeast is what Lyons had been studying his entire academic and professional career.
That’s why it all comes down to yeast. The product Lyons devised, Yea-Sacc, was the company’s first success.
Alltech “probably did more to develop the concept of using live yeast as a feed supplement than any company or institution has ever done,” says Dr. Karl Dawson. A professor at the University of Kentucky’s College of Agriculture, Food and Environment, Dawson studied the role of microorganisms in cattle digestion before becoming Alltech’s director of worldwide research in 1999. He’s now vice president and chief scientific officer.
He says that Alltech’s insight was that you didn’t need to change the nutrients an animal took in to get better results. Instead, you could use yeast to make it digest the existing nutrients more efficiently, and you could research the precise strain of yeast best suited for the job. (When he was at UK and consulting with Alltech, Dawson remembers looking at 2,500 different strains.)
And the hits just kept on coming. Mycosorb uses one part of yeast’s cell wall to rid animals of mycotoxins, the harmful metabolites of spoilage fungi that cause $3 billion a year in lost agricultural production, according to Ronan Power, Alltech’s vice president for life sciences. Bio-Mos, first marketed in 1993, is a yeast-derived product that contributes to gut health. Power says it can be part of an antibiotic-free feeding strategy.
Nancy Cox, dean of UK’s College of Agriculture, Food and Environment, says that as the widespread agricultural use of antibiotics comes under more criticism, Alltech’s early investment in an alternative seems like foresight—and good luck.
Nimble founder, nimble company
Another way to explain Alltech is to quote Ralph Waldo Emerson: “An institution is the lengthened shadow of one man.”
At age 71, Lyons is a dynamo of energy and ideas, someone who still gets up every morning to run 3 miles. Power says, “25-year-olds go traveling with him and come back exhausted, while he’s bouncing around the place.”
Lyons’ friend, UK men’s basketball coach John Calipari, once told him, “You know, Pearse, I love you, but I can’t talk to you for very long, because I get a headache from all the ideas you throw at me.”
Because the company is privately owned by Lyons, his wife, Deirdre, and their two children—which means that the stock isn’t publicly traded—Lyons’ ideas can turn into reality very quickly, and the company can change direction with surprising speed. UK’s Cox uses the term “nimble.”
“I’ve been on the plane with him, and we’re heading one way, and he gets an idea and talks to the pilot,” Deirdre says, and they set off for a different destination.
Lyons says flexibility is one advantage Alltech has over a larger, publicly traded company. “It’s a great burden to have” to need to answer to thousands of stockholders, he says.
Erik Dunnigan, deputy secretary of the Kentucky Cabinet for Economic Development, says a privately held company like Alltech can be not only more flexible but, paradoxically, more stable.
“When a recession comes, their first mission is not to cut losses and build profit again,” he says. “Their first thought is, ‘How do I protect this business and make sure I sustain this business for the long haul?’”
The other advantage to being privately held is, as Lyons puts it, stupidity. Or, to put it another way, the freedom to be stupid. He says, “When we do stupid things and we make mistakes, we answer only to ourselves, and we change.”
To read more about how the company is extending its impact, click here.
James Nold Jr. from September 2015 Issue
