It's party time for the omega-3 industry right now.
Food and beverage product launches are coming thick and fast. Supplements sales are increasing despite (perhaps because of) all the activity in the food aisles. Lab work means ingredient potential is improving exponentially.
It doesn't take an industry pundit to predict omega-3s will be the next big thing with a swathe of scientifically backed health benefits that range from cardiovascular health to brain function to reducing the risk of Alzheimer's to skin health and more. It's plain to see. Omega-3s have already become THE THING. Many think omega-3s have the potential to broach the mainstream in a manner only a few ingredients such as calcium and vitamin C have managed to do.
As John Kurstjens, global marketing manager at Lipid Nutrition notes: "More and more food companies are incorporating omega-3s in their products. Foods are bigger for us than supplements now. One large food customer will buy a lot of omega-3s, more volume than a supplements maker would. Our biggest markets are the US and Europe but Asia is also important."
Jerry Luff, business development and regional director for Europe at Australian-based Nu-Mega, puts it this way: "Omega-3s are moving into a very sustainable mainstream position. But they are a little more complex than other mainstream ingredients so it might take longer to occur. There is also the issue that omega-3s deliver medium-to-long-term benefits and consumers still tend to like quick fixes."
Just the beginning
If the global market is exploding now, it is a minor eruption compared to what is about to come, according to the founder and CEO of the world's leading omega-3s supplier, Ocean Nutrition Canada. You would expect a man in his position to say as much, but Robert Orr has been in the fish-oils game a long time and he has always looked to the long term. He says it will be 2009 and beyond before omega-3s products truly broach the mainstream and deliver mainstream sales and profits.
"Things are definitely good now. It's an exciting time for omega-3s. There are lots of foods being launched in many different categories, but none has really achieved huge sales yet," he says. "But that's coming, especially as bigger food companies like PepsiCo get involved. And the fact ingredient technology continues to develop and unit costs will come down long term will facilitate this process."
Technologies, many of them patented — from the likes of DSM, EPAX, Nordic Naturals, BASF, Martek, Lipid Nutrition, Croda, Cognis, Denomega, Ocean Nutrition Canada (ONC), Bizen, Nu-Mega, Kievet, and others — are being marketed to food and beverage makers on the basis of their ability to deliver taste and odour neutrality in addition to other properties such as heat stability, shelf-life longevity, and all at relatively high dosages. Ingredients giant Cargill has also announced it will be moving into omega-3s supply, and a spokesperson told FF&N it will employ a micro-encapsulation technology, and target the breads and yoghurt sectors with doses up to 150mg with a 1:1 EPA/DHA ratio.
A recent US-focused omega-3s report by Packaged Facts noted the market for foods and beverages fortified with ALA (alpha linoleic acid), EPA (eicosapentaenoic acid), and DHA (docosahexaenoic acid) had grown from $100 million to $2 billion between 2002 and 2006. It forecast sales of $7 billion by 2011 — a growth rate of 60 per cent per year for 10 years. It predicts DHA/EPA will take 71.4 per cent of the market, compared to only 28.6 per cent for ALA.
"Omega-3s-fortified foods are highly recognisable to today's health-conscious consumer, and the once 'fishy-flavoured foods' are now behind us, thanks to exceptional advances in omega-3 food ingredients," says Don Montuori, the publisher of Packaged Facts. "By all indications, the addition of omega-3s is not only the current hottest fortified-foods trend, it will remain so for years to come." Omega-3s' transition from the niche health channel into the mainstream is evidenced by the fact 50 per cent of US omega-3s food sales now occurs in supermarkets.
According to Productscan Online there were 1241 omega-3s-fortified foods, beverages, pet foods and cosmeceuticals launched in 2006 worldwide, up from 1065 in 2005. "Dairy product manufacturers and marketers of baked goods seem to be the most inclined to jump on the omega-3s bandwagon," says Productscan director Tom Vierhile.
While some products have already gone by the wayside, success stories are beginning to trickle in. An omega-3s bread by Australian baker, Tip Top, has captured 15 per cent of the market there. Major dairies like Danone/Dannon, Muller and Campina have found healthy sales with omega-3-fortified yoghurts and other dairy products. General Mills has added DHA to its Yoplait Kids range in the US.
An omega-3s milk by Puleva in Spain has sold well for a number of years. Pepsi-owned Tropicana recently debuted an omega-3s orange juice in the US. Coca Cola has brought an omega-3s orange-juice, mango and passion-fruit blend to market in Canada under its Minute Maid 'Fruit Solutions' brand. Dean Foods-owned White Wave has developed a Silk Plus Omega-3 DHA offering.
White Wave's Colorado-based director of nutrition and wellness, Branin Lane, tells New Nutrition Business magazine: "We're doing this to add specific value to our products. While it's not our goal to try and mainstream DHA, as the science continues to evolve this allows us to further mainstream our products. It's a natural extension of that positive science."
But at what level will sales of these products settle? "There are major products like Tropicana and Minute Maid offering omega-3s juices," says Baldur Hjaltason, sales manager at Iceland-based omega-3s supplier, EPAX. "Now the question is: will consumers buy it? So it is a very interesting period for the next 12 months. Will consumers warm to it or will it fade from view like low-carb products? But the time is ripe for innovation, based on the interest of the media, the science that is there, the interest of the ingredient players. I hope we will have an international success story."
What dosages are working
Efficacy issues have not raised their ugly heads because with omega-3s foods the acknowledged wisdom has been to market products as sources of omega-3s, and not claim supplement-level, high-dosage effects. Indeed a UK dairy that referenced a high-profile Durham omega-3s supplement study that demonstrated improved brain function among children was censored by the advertising regulator there. The dairy altered the marketing for its omega-3s milk accordingly.
At any rate, formulation and cost have kept a lid on excessive dosing. As Hjaltason observes: "It is difficult to get high concentration omega-3s powders into foods, given the available technology."
While a 50g EPA/DHA per-serving cost can seem quite economical, doubling or tripling this dosage can quickly price the ingredient out of many food manufacturers' budgets. In addition there is little evidence the public wants higher-dose omega-3s foods anyway. Public demand for higher doses is calmed by the fact there is no official government-backed Recommended Daily Intake, with levels published by various scientific groups ranging from 150g to 2000g per day. Most of the major fish-oil suppliers have banded together to form GOED, a group that promotes the benefits of EPA/DHA, and which is working hard to get an RDI approved in the US and Europe. They admit, though, it might be three or more years before this becomes a reality.
Only the UK and the US have approved omega-3s health claims and those both relate only to cardiovascular health. Still as a DSM spokesperson notes: "Food companies are using the various types of claims to show their support for the use of EPA and DHA in their products, which is helping to boost consumer confidence in omega-3s addition to food products in the marketplace."
Supplements manufacturers have reported increased sales in most markets, with many reporting as much as 30 per cent annual growth, in part due to the increased attention omega-3s foods have brought to the category. Informed about omega-3s, those consumers who want higher doses have made their way to the supplements aisle where dosages upwards of 1000mg per pill are available. IRI figures in the US show supplements sales have soared past $1 billion (in all outlets except Wal-Mart) with double-digit growth showing no signs of abating.
Adjusting to success
Most of the major suppliers have learned that with an ingredient as complex as omega-3s, supply of the raw materials is only one part of the equation. "We adjust our service level to our clients need," says Ron Wheelwright, vice president of sales and marketing at Denomega. "If the client wishes 'full partner services,' with complete product and R&D services, we will step up to the plate.
"Our technical application departments truly enjoy it when they are invited to perform at that level, and the end result is typically achieved sooner with better results than if they were left alone. In other cases, customers just want conceptual assistance and a product that works."
Stability is greater in certain food matrices than others, and suppliers are offering increasingly sophisticated oil and powder solutions for different end products.
There have been many acquisitions and partnerships to converge corporate qualities. Swiss-based Lonza acquired German multinational Nutrinova's algae-derived DHA business at the end of 2005. Around the same time Degussa formed an alliance with Neptune Technologies and Bioresources to extract omega-3s oils from the Canadian start-up's krill ingredients.
Spanish supplier Puleva Biotech has signed a deal to supply its Eupoly fish oils to Louisiana-based The Wright Group, which is applying its micro-encapsulation technology to produce high-quality, stable fish oils suitable for food applications. The companies are sharing sales and marketing rights.
"We provide strong technical support, based on long experience in formulation and application techniques and an innovative approach to new product development," says Petra M?ller, global product-line manager for Cognis Nutrition & Health's Omevital omega-3 fatty acids division. "Scientific and regulatory expertise is also provided, alongside marketing know-how and co-promotional opportunities to stimulate consumer demand."
An example of the kind of diversity of the offerings is Nordic Naturals 250mg and 500mg chewable tablets aimed at the children's market.
The fact omega-3s for human nutrition accounts for less than 10 per cent of fish stock (the rest is predominantly used as fish meal), means supply is relatively secure (and clean), despite concerns to the contrary that have occasionally captured headlines. But raw-materials suppliers are bumping up the price of fish oils in response to booming demand, although they are still much cheaper than other omega-3s sources such as the DHA source, algae. Prices can vary from as little as $3 per kg to $100 or more for high-concentrate, value-added ingredients.
With this in mind, players like ONC, Cognis and EPAX trump the benefits of the total vertical integration they possess as a means of controlling quality and cost. ONC, the market leader with sales in excess of $100 million, has committed to reducing the price of its offerings by 30 per cent in three years.
Beyond fish oil
The contaminants issue — lead, mercury, PCBs — which has drawn criticism in the past has largely been resolved. US-based supplements tester Consumerlab.com found no supplements with contaminants among those tested. Still, it is an issue that has helped the vegetable-sourced omega-3 suppliers, as food makers have opted for flax or algae over fish oils for fear of public recrimination.
Flax is one of the cheapest sources of omega-3s (in ALA form) and remains very popular despite the fact it does not have the glamorous array of scientifically-backed health benefits associated with fish oil-derived EPA and DHA. ALA converts to EPA and DHA in the body but not very efficiently.
"People say ALA has no benefit other than the bit that converts into DHA and EPA," says Linda Pizzey of Pizzey's Milling. "That's where the story gets a little lost. Flax and ALA have a lot of synergies that have nothing to do with the DHA/EPA conversion or the fibre content of flax." The fact that ALA utilises enzymes that would otherwise process over-abundant omega-6 levels and that can lead to inflammation, is one unheralded benefit, Pizzey says.
Suppliers like Bioriginal and Pizzey's Milling now offer flax-/fish-oil combinations to garner the best of both worlds in terms of formulation ease and health benefits.
This kind of innovation will help the flax omega-3s industry survive in a climate increasingly biased toward fish oils. (Sixty nine per cent of FF&N online survey respondents say fish oil is a superior omega-3s source. Only 6.9 per cent say flax is superior while 24.1 per cent mention with other sources such as krill and chia.)
As Manny Sabares, director of marketing at Bioriginal notes: "Both fish and flax have independent health benefits that are required for optimum health. People just focus on its conversion to EPA/DHA when there is more to it than that."
How far the omega-3s boom can go is unknown but as Nu-Mega's Luff says: "Like any food-ingredient proposition there will be debate about the positives and negatives, and I think at the end of the day omega-3s will take a position such as vitamin C enjoys today. But we are probably looking at closer to the end of the decade. But I don't see any reason to believe omega-3s are not a sustainable trend."