There was a time when a chemical distributor could be considered simply a trader. A demand was identified, a supplier was found, material was purchased and sold. Life was simple. The reality now is that the world has become a smaller – but so much more complicated – place. A chemical manufacturer now needs distributors to offer more then a middleman service.

Customers not only want the right price but quality of supply. By this I mean consistent supply with no disruptions, just-in-time deliveries, security, legality and, of course, quality of product. To survive, the distributor has had to evolve. This article reflects some of the key changes that we have seen affecting our business in the industrial, cosmetic, food, nutritional and pharmaceutical sectors.

Quality challenges

The distributor/manufacturer relationship is vital to the quality of supply. Working together to provide the best service possible for the customer is essential. The distributor must act as a quality buffer for the customer, understand the supply chain and manufacture of the product and assess potential issues. He must be sure that he can form a good working relationship with the manufacturer and that the manufacturer will be flexible enough to meet the needs of the end customer.

As manufacturers outside Europe will often work to different standards and legislation, a European distributor needs to be careful to work only with companies that can meet the high standards that EU customers expect, communicating customers’ needs clearly to the manufacturer. Cornelius selects suppliers who have these qualities and look to develop long-term business and goals together. We have implemented a robust audit system to highlight business risk and prioritise auditing of suppliers, putting in controls to protect its customers.

Our Cornelius China office has developed a network of reliable high quality Chinese suppliers. For example, we have QC tested several batches of food grade material from our Chinese suppliers to the appropriate specification in independent labs to ensure the conformity of the ingredient to the standard declared. We strongly believe that low prices without convincing quality management systems or safe production facilities can in no way justify the corporate risk.

Legislative challenges

Two major pieces of EU legislation have hit the chemicals industry in recent years: the Registration, Evaluation, Authorisation and restriction of Chemicals (REACH, 1907/2006) regulation and the Classification Labelling & Packaging (CLP, 1272/2008) regulation.

REACH has been described as the most important piece of EU legislation for 20 years. In the past, new substances had all too often been developed and put on the market in large quantities with insufficient information on the effect they posed to human health and the environment. REACH has put the onus on the industry to create dossiers on chemicals, with data sufficient for full awareness of the hazards materials may pose. This shake-up has forced EU distributors to take control of their supply chains.

In the first wave of registrations under REACH, the European Chemicals Agency (ECHA) has confirmed, 3,400 substances were registered by 1 December 2010. However, over 100,000 EINECS-listed substances still need to be registered in the years to 2018. EU distributors need to be sure that materials being imported are REACH pre-registered and to be aware of the tonnage limit which will form the deadline for full registration – 2010, 2013 or 2018.

Cornelius can confirm that all of the materials it sells that fall under the REACH legislation have been confirmed to be preregistered, with the manufacturers’ full intent to register. Our bespoke CRM systems have allowed us to contact all customers requesting Use Descriptors and pass these back up to the manufacturers to ensure these are included in the REACH registration dossier.

There will be a change to product safety data sheets (SDSs), as they need to be in the REACH Annex II format, with a deadline of 1 December 2010 for substances and 30 November 2012 for mixtures. Distributors need to be prepared for this. We have also been monitoring materials containing Substances of Very High Concern, which risk becoming unavailable in Europe, and we can confirm that none of our products are expected to be withdrawn from the market.

CLP came into effect 1st December 2010 and has caused a shake-up in the classification of goods hazardous for supply. This legislation seems to have passed some companies by. Even some of our customers are unaware of the changes, because all of their attention has been focused on REACH.

Many goods will now be classed as hazardous which formerly were not. The calculations for classifying mixtures have changed and there has been a change in the flashpoint for deciding if a material is flammable, coming into line with the ADR transport regulations.

The EU chemical hazard classification system now looks dramatically different. Pictograms have changed to squares on a point, ‘R’ phrases are now Hazard Statements, Safety Phrases are now Precautionary Statements. Hazardous substance labelling now needs to be in the CLP format, though there is a period of grace for product already produced and labelled in warehouses in the EU. SDSs need to be rewritten to include the new classifications though the CLP deadlines do not appear to have been set with consideration for the REACH Annex II requirements!

Figure 1 provides a timeline outlining the deadlines for REACH & CLP. As European distributors, we need to play a key role in the communication of these changes, particularly to the non-EU suppliers. Article 1(b) and (c) of the CLP regulation imposes certain obligations on companies in the supply chain.

Importers are required to ensure that goods have been classified for CLP, with appropriate SDSs, labelling and packaging. Manufacturers and importers of substances are obliged to notify ECHA of such classifications and label elements if these have not been submitted to ECHA as part of a registration under REACH. Only an EU importer can notify to ECHA, so distributors for non-EU manufacturers are likely to be involved in providing notifications and should not assume that this is being done by the Only Representative.

Although the CLP Regulation covers chemicals that fall within the scope of REACH, we must also not forget that some hazardous chemicals that do not fall under REACH, for example flammable food materials, must still comply with the CLP regulations.

Cornelius has tackled these challenges in order to give our customers confidence in continued supply and help our suppliers. We have invested in staff training and software, allowing us the flexibility to create our own compliant documents. We are actively making our own notifications to ECHA and our experts now often guide our suppliers in classification of products and paperwork requirements.

Added value services

Offering added value in the supply chain is essential. We are seeing an increasing number of end product manufacturers looking to reduce their supplier base. For a manufacturer with worldwide manufacturing sites, European legislation may appear confusing and present a problem. Sourcing materials worldwide using a European-based distributor experienced in all the facets of European legislation may be a welcome alternative.

The Cornelius Technical Centre’s regulatory expertise and REACH/CLP support has allowed us to remove the burden of being an importer from customers who may have previously imported goods direct. In addition, its labs can prepare demonstration samples and offer formulation support, innovations and suitability testing, which offers added value to manufacturers and customers alike.

We are always looking for new, inventive ways to promote our products. In 2009, for instance, Cornelius was the first distributor in the UK cosmetics industry to have delivered the ‘virtual exhibition’, at a time when customers were reluctant to travel to large exhibitions due to cost and time implications.

Also back in 2009 Cornelius invested in the project aimed at implementing a business development and marketing capability across the business, developing both the existing and new international markets sales and marketing strategies. As a result of the project, a clear marketing strategy was devised, allowing the company to grow and diversify despite the recent recession. We believe that our enhanced marketing capability has enabled us to develop even stronger relationships with our global principals.

Ethical supply

Industry in general has become more aware of the impact we make on the environment, employees and society. This can be seen at supermarkets, where there has been an explosion in availability of ethically sourced & Fair Trade products. There is a growing trend towards consideration of Corporate Social Responsibility (CSR). Cornelius’s own strategy for CSR encompasses five strands: employees, the local community, the supply chain, the environment and external stakeholders.

The company uses this strategic framework to ensure that it provides a rich environment for its employees, where they can flourish in a safe environment, supports the local community, where it can, through the actions of our organisation and its employees, manages its supply chains to the highest standards of safety and quality, minimises its impact on the environment where possible and operates to the highest business standards and ethics with all our stakeholders.

We not only believe that this is the right culture to have within our organisation, but also that it brings with it a level of sustainability to the company, which benefits all. This aspect of our culture continues to develop and shape our organisation.

While searching cosmetic shelves, many consumers opt for ‘natural’ formulae. In the DIY store, they would rather avoid picking up the tin with a scary dead fish or a ‘harmful’ label. This commercial pressure, coupled with legislation change such as VOC level restrictions, has acted as a positive driver for change in the chemicals industry.

We have grown our portfolio of naturally derived materials and lower toxicity alternatives. As many customers want naturally sourced materials to fulfil the requirements of Ecocert and the Soil Association, we have to tackle issues like our impact on deforestation. Palm oil products particularly pose many questions, with many customers seeking Roundtable on Sustainable Palm Oil certification.

In the food sector, labelling laws differ greatly across the world. When dealing with food grade materials manufactured outside the EU, great care is needed to monitor materials which may potentially be of genetically modified origin (GMOs). Our industry needs to have systems in place to warn customers of the potential presence of GMOs.

We also need to be aware of any changes in the manufacture and feedstock materials in food products as a change that may not be significant in, say, the USA may have huge labelling repercussions in the EU. All this leads to the need for distributors to have strong relationships with their suppliers to allow for full and open transfer of information.

In conclusion, distributors face a lot of challenges and responsibilities, both legal and ethical, for the products they supply. This makes us an essential part of the supply chain, adding value to both the manufacturer and customer.

Q&A with Cornelius

Who are your principals in the UK?

Cornelius is the sole distributor in the UK for some of the world’s largest chemicals companies. Our principals in the UK are, in alphabetical order: BASF, Guangzhou Tinci, JEEN International, JM Huber Engineered Materials, Lonza Biologics, Phoenix Chemicals, Precolor, Radiant Color, RITA, Silab, Shangdong Longlive, Strahl & Pitsch, and Teluca.

Our product portfolio covers all of the personal care market applications, including unique technical materials and competitive commodity-type products. We are proud of the strong working relationships with our global principals. This allows us to offer ingredients for all business needs, as well as to ensure continuity and security of supply- something which we recognise as one of the key requirements in the today’s market.

How has business been this year, in personal care and any other fields you are active in?

Last year in general was exceptional for us – and SCS Formulate in Coventry last November was a great platform for us to showcase our latest innovative solutions under the Cornelius Complete Solutions concept. New multifunctional actives from Silab providing proven efficacy combined with value for money have been one of the most popular ranges, while the new range of UV-filters from BASF, such as Tinosorb S Aqua, offers a number of benefits to formulators.

The new BASF Sunscreen Simulator, an online tool for formulators, is an example of our value-added offer, helping the formulator planning the composition of active ingredient in a sunscreen formulation. In addition, our complete natural and organic range of ingredients have been a real hit with the customers, as we offer an extensive range of Ecocert, Natrue and the Soil Association products for any personal care applications, such as pearlescent pigments, dental silicas, actives, emulsifiers, surfactants, oils, waxes, preservatives and many more.

Alongside the cosmetics and personal care business unit, we area also active in our industrial, pharmaceuticals, health and food markets, in the UK, Ireland, Poland and France. For example, after establishing our Polish personal care branch Cornelius Polska, we have now diversified into the vibrant food and pharmaceutical markets, which we think will grow significantly in the next year.

Products for our pharmaceutical and our health and food portfolios are selected via a very focused approach that is based on innovation, quality, safety and functional benefits. We constantly scan the market for new product development (NPD) opportunities, and identify the ways we can help both our customers and principals develop their business.

For example, the latest launches from our principals address the current market trends, such as: weight management (such as Slendesta, Kemin’s patented potato-derived satiety ingredient, sports and energy (AlzChem’s well known Creapure brand of creatine) and Hayashibara’s Treha Trehalose an innovative carbohydrate with unique properties that helps aid in new development, cost reduction and problem solving in both food and pharma products.

A lot of products are tested by the Cornelius staff. For example, the principal development manager for our industrial team cited his success in completing the London Marathon in 2010 as largely due to taking Creapure during his training! Further new developments include Acatris, which can help convert products such as gelatin desserts to gelatine-free, and Cafosa gum granules that can be used on conventional tablet making equipment to manufacture chewing gum.

Do you regard yourselves essentially as distributors or do you offer value-added services in terms of technology to your principals? Can you give some examples of projects you have been involved in?

I am confident our principals will agree that we are much more than just a distributor. We work on the basis of open communication on market and cross-industry developments and opportunities.

For example, we have coordinated the pioneering project between Lonza and the Soil Association in the UK exploring and developing the scheme for an approved list of materials which would be accessible to formulators and developers. This scheme makes it possible to speed up and simplify the selection of materials for products to be certified to the Soil Association standards. The newly approved range includes preservatives, polyglycerol esters and natural multifunctional ingredients.

As a principal’s representative in the UK and other operational markets, it is our job to ensure the active promotion of their latest launches to the industry players. Our IT, marketing and sales teams constantly develop innovative concepts for the promotional campaigns. Furthermore, the Cornelius Technical Centre possesses regulatory expertise which is an undoubted value-added to our principals, especially non-EU based.

Our active role with the CBA, FECC and various industry trade associations ensure both the representation of principals’ views and regular updates on the latest developments in the markets. The raft of legislation that has hit the industry in recent years, has created a huge volume of work and cost for the industry. However, CBA has been excellent in providing very strong support for its member organisations, to ensure that the sector meets all the legislative requirements and can face a strong and sustainable future.

We are constantly hearing of big companies like Azelis and Univar acquiring small distributors and rebranding them. Is it becoming harder for smaller companies to compete in this market?

As a smaller but established, trusted and fast-growing company, we are in a position to quickly react both to the general market trends and – somewhat more importantly – to our customers’ needs. Quick decision making, flexibility, and approachable and personable teams are all part of our culture and something that many of our customers have positively commented on. Our strength is our ability to quickly communicate customer feedback to our suppliers, ensuring full supply chain continuity and working on unique technical projects using our principals’ expertise and the resources of the Cornelius Technical Centre.

Our aim is to facilitate the knowledge transfer between raw materials suppliers and our customers, the end product manufacturers. We regularly organise technical presentations and workshops where we invite the industry experts to deliver presentations and practical advice on any formulation challenges. We also hold regular technical seminars, giving our customers the chance to network with international industry colleagues, catch the latest news, research and views on sourcing, identifying and using natural materials.

Our principals recognise the importance of such networking and educational events and always support us with these initiatives, which ensures high brand awareness for Cornelius in our operational markets. It is a great opportunity to network directly with the end product global manufacturers and to discuss ideas for NPD using our expertise and that of our suppliers.

As a result of the teamwork between ourselves and our principals, innovative products and solutions are constantly being developed to help the companies with formulatory, legislative and other challenges. For example, our industrial additives partner, Elementis Specialities, has optimised a selected combination of Rheolate rheology modifiers, Nuosperse wetting and dispersing agents and Dapro defoamers specifically to give improved performance in high gloss, water-based alkyd paints.

The Solaplex range of bright yellow and orange pigments from Rockwood Pigments has been developed specifically to replace old-technology pigments that contain lead and chrome, to answer the challenges of our customers who work to standards being imposed by new and forthcoming legislation. Tronox, a top five global producer of titanium dioxide, continues to develop and optimise processing, gloss and opacity properties of their products for use in coatings systems and plastics applications. Their brilliant white pigments have contributed to the success of many internationally known brands.

How do you see the personal care distribution market evolving in the next couple of years and what are you doing to address that?

We are seeing increasing number of end product manufacturers looking to reduce the number of their suppliers. We have been successfully working with a number of multinational corporations as a pan-European supplier, which allows then to achieve significant cost and time saving. As a ‘full basket’ distributor, with a global sourcing office with speciality and commodity capabilities and excellent logistical support systems, our ultimate goal is assisting to shorten product development cycle.

The full supply chain continuity and assurance of quality is an important issue in the market today: our stringent systems (for example, comprehensive and unbiased auditing of all of our suppliers, full batch traceability) and our commitment to CSR gives our customers peace of mind. We are delighted that our principals across all business sectors work closely with us on developing environmentally responsible solutions, as the growing focus on sustainability is giving rise to innovation at all stages in the supply chain.

I am really struggling with what to pick as just one example of the vast portfolio of innovations developed by our principals that we were able to bring to the market but one is Jeesperse CPW (standing for Cold Process Wax), a patent-pending cosmetics wax/gallant-optimised powder which allows ‘green’ formulations. This series offers sustainable carbon footprint reduction by allowing single kettle production by a cold process.

Cornelius has expanded into Poland. Why did you target this particular market and how are you addressing it?

It has in fact now been over three years since the beginning of our operations in Poland and it is going very well. A number of our customers have put their manufacturing into Eastern Europe, and our environmental scanning unveiled huge opportunities in this market. We started by identifying the market potential, formulated strong product portfolio to address market needs, employed an experienced team with extensive local market knowledge and organised logistics and customer service, adopting a flexible approach to every problem.

In January 2011, Cornelius Polska was officially established as a Cornelius Group subsidiary in Poland. This will allow us to leverage our operational capabilities further across the business groups, to continue delivering excellent sales and to support service and achieve synergy across our supply chain. We owe our success to the exceptional teamwork of our teams in the UK and Poland and our sourcing offices in China and India, plus the continuous support of our principals.

Cornelius Polska remains the platform for future operations in Central and Eastern Europe, supporting planned growth in the region. Our market entry plans outside the UK ensure that Cornelius remains a vibrant and exciting company to work for and to work with it. We are consistently looking for new opportunities and are broadening our horizons with regards to new geographical markets and have recently entered the French cosmetics and food markets, with an industrial business unit also being developed.

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