In this exclusive excerpt from the Nutrition Business Journal/Engredea Monograph: Ingredient Market Forecast, we look at whether supply-source diversification will happen quickly enough to stave off overharvesting concerns. For more on the report, go to www.newhope360.com/monograph.
These ingredients have unrivaled backing in the form of scientific studies vouchsafing their benefits in cardiovascular health, in fighting inflammation and in infant nutrition. In addition, consumer awareness of omega-3s now has reached a level where it feeds upon itself word-of-mouth style. Even consumers who are only vaguely aware of the specific scientific data know that omega-3s are good for them and should be part of their supplementation plan.
Even as this awareness of omega-3s reaches something approaching critical mass, the overall market appears to reaching maturity. While sales remain robust, growth has backed off to the strong single-digit arena. Countering this trend is very strong growth in individual supply sectors, like krill. And adding more fuel to the fire are new omega-3s supply sources set to come on the market in the near future in the form of new photosynthetic algae technologies and a soy-based ingredient from Monsanto that has huge potential in the functional foods arena.
“The market globally is $1.67 billion to $1.86 billion in 2011,” said Christopher Shanahan, omega-3s analyst with Frost and Sullivan. “2012 is the year when the global market is going to pass $2 billion, so it’s a big achievement for the industry.”
Supported by strong science and by an effective and visible trade organization, these ingredients have now achieved an enviable position; awareness of omega-3s has advanced to the point that consumers are now choosing the ingredients based on a general good-for-you association without having to make health claims or associations on labels, in much the same way vitamin content can be mentioned.
And they are more studied than any other nutrient—or pharmaceutical. More than 20,000 scientific papers have been published on the benefits of docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA) omega-3s—including more than 2,000 randomized, controlled trials in humans—making them beloved among consumers and health-care professionals alike.
These facts are nothing but good news for omega-3 ingredient and end-product manufacturers, particularly in light of the yawning gap between the average person’s intake levels, and what those levels probably should be.
“For heart disease, the intake I recommend for the general population without known disease is about 500 mg of EPA and DHA a day combined in roughly equal proportions. If there is 40 percent EPA and 60 percent DHA or the reverse—as far as we know it doesn’t make any difference,” said omega-3s expert William S. Harris, PhD, of the Sanford School of Medicine at the University of South Dakota. Harris is also the inventor of the baseline measure called the Omega-3 Index, a test for which he offers through his firm OmegaQuant Analytics. “The Japanese eat about a gram a day. The typical American intake is like 150 mg a day. So going from 150 up to 500 is a big step. Going up to 1,000 is huge step, so I’m trying to be a little bit realistic. And there is good data that 500 mg a day reduces risk of cardiac events.”
EPA and DHA exist in the first place because they are synthesized by algae, which are eaten in the ocean by fish, krill, squid and other animals and concentrated in their tissues. The start of the story of omega-3s in human nutrition started in fish, and this is still the primary source of the oil that ends up in supplements. More than three-quarters of the world’s supply of omega-3s comes from the anchovy and sardine fishery off of Peru. This supply is abundant but not unlimited and is nearing maximum output.
Other sources are coming to the fore; most notably omega-3s from krill and algae. The market for omega-3s sourced from Antarctic krill has been growing significantly faster than the rest of the sector. Krill suppliers, most notably Aker BioMarine AS, have been investing in krill oil science. Schiff Nutrition markets the leading omega-3s supplement SKU, MegaRed, which features Aker’s Superba Krill Oil. The company’s effective marketing highlighting the smaller pills because of krill oil’s better bio-efficiency has resonated with consumers and raised awareness of the ingredient across the board. And Aker has led the charge toward sustainable fishing practices, becoming the sole krill harvester to earn Marine Stewardship Council certification.
On a longer time scale, omega-3s will start coming from agricultural crops. Monsanto is close to full-scale production of its Soymega soybean variety that yields a 25 percent concentration of SDA, a precursor to EPA and DHA that converts at a much high ratio than the ALA found in chia and flax. And Dow Chemical Co. is working on a canola variety expected by the end of the decade that would express EPA and DHA.
Martek, now part of DSM, was long the leader in sourcing omega-3s (DHA only to start) from algal fermentation. The company now offers a DHA and EPA algal ingredient. Several algae suppliers, chief among them Aurora Algae and Algae Biosciences, are close to bringing to market omega-3s from photosynthetic algae species.
Jockeying for the pharma play
Two big deals in 2012 point to ongoing consolidation in the space as suppliers move to lock up supply for the coming generic drug bonanza (the first of the patents on the blood triglyceride-lowering fish-oil pharmaceutical Lovaza are set to expire in 2013). In the biggest deal, DSM acquired Ocean Nutrition Canada, the biggest fish oil supplier for supplements. In another deal, BASF acquired Scottish fish oil refiner Equateq. These come on the heels of another big deal, this one in 2011 in which another fish oil leader—EPAX—was acquired by Trygg Pharma, a partnership between Aker BioMarine and a private equity firm. Krill suppliers and the algae firms are investigating pharmaceutical applications, too.
Omega-3s SWOT Analysis
- High degree of science backing
- High consumer awareness
- High positive profile in trade press and mainstream media
- Highly effective ingredient-specific trade organization (GOED)
- Sustainability issues for fish and krill: Recent report called for cutting harvest of forage fish (main source of omega-3s); Whole Foods banned krill because of sustainability concerns, a position on which it recently backtracked a little
- Digestibility—many consumers complain of the “fishy burps”
- Some consumers have concerns about purity of fish sources
- High-quality supplements are expensive
- Krill continues to benefit from smaller-pill/better digestibility message vis-à-vis fish oil
- Algal oils will become more available and cost-competitive
- New science could back omega-3s benefits in mood support and other new health conditions
- Major source—anchovies off Peru—nearing supply maximum
- Costs will continue to rise as generic pharma demand siphons off fish oil supplies
- Global climate change, which is showing up most noticeably in polar regions, could affect krill populations
- Whole foods movement could push consumers toward eating fish and away from taking supplements