Dan Murray, vice president of business development for Xsto Solutions, spends about six nights of each month on the road. It's the norm for him and the three other full-time employees of Xsto who each cover a different section of the country with two goals: provide novel, science-supported functional ingredients for dietary supplements, foods and beverages, and offer sales/marketing support for the smaller companies that own these ingredients.
"I'm a person who likes to be on the road," said Murray. "We feel like we're much more in tune with the customer."
Xsto's current portfolio of about 10 to 12 products includes vitamins, omega-3s and specialty ingredients from companies such as Kappa Bioscience (Vitamin K2 MK7), Biothera (Wellmune WGP), Bioenergy Life Science (Bioenergy RIBOSE) and Hamari Chemicals (PepZin GI).
But Xsto isn't a distributor of these ingredients. Instead, like a manufacturer's representative, employees know their clients' ingredients inside and out, and work to help launch them in North America. That includes working on compliance and regulations, gathering appropriate documentation and suggesting safety trials, to name a few roles.
"We work best when we can get involved before the product launch and help develop the strategy, approach and documentation," Murray said. After the product grows to several million dollars in sales, Murray said companies can usually support the hiring of additional staff and may take the sales and marketing back in house – something that's hard to justify before the product is sold. "There is a mutual goal of building sales so that in the future, a dedicated staff can be supported by existing revenues," he explained.
Francis Foley, president, founded the Morristown, N.J.-based company in 2004. Prior to that time, Foley and Murray worked at competing companies: Foley with BASF and Murray with Roche Vitamins, though they didn't know each other at the time. Foley found a niche for helping up-and-coming ingredients – usually turned down by large companies – find their wings independent of hiring large sales forces or distributors with already extensive product portfolios.
It's no coincidence that the company's name reflects the products it represents. "If you put an ‘e' in front of ‘xsto' it means ‘to rise above' in Latin," said Murray, who jokes that many people have trouble knowing how to pronounce it (think: X-toe).
One product they're excited about this year is Spain-based Brudy Technology's Algatrium brand DHA. The chemical structure of DHA has a triglyceride backbone with three positions: 1, 2 and 3. In fish, DHA is concentrated on the 1 and 3 positions, with very little on the 2. In human breast milk, DHA has been found to be most concentrated in the 2 position, said Murray. Brudy's has found a way to use enzymes that naturally concentrate the fish oil's DHA in the number 2 position, making it more bioavailable to humans, he said. The ingredient, which can be delivered in traditional supplement forms, is currently sold in pharmacies in Europe and through Xsto is making its way to the U.S.
One of the facets of the business includes a retainer charge, because Xsto isn't likely to get an order for a new product for about six to nine months, Murray said. They phase into working on commission over time, but require the retainer to be compensated for the time and resources spent while pursuing orders. However, "the retainers are significantly less than what it would cost for a company to hire a full-time person and have them travel around the country," Murray explained.
Whether Xsto seeks out products or companies ask it for help, Murray said the challenge remains the same. "People come to us with a preconceived notion of what they have to do for the success of their product," he said. "Their ideas are usually wildly optimistic. I think our biggest challenge and probably our greatest success is helping people establish realistic expectations."
Xsto Solutions's core competencies
- Extensive experience in nutritional ingredients
- Strong industry contacts in marketing and R&D
- Unique access to food, beverage and supplement marketers
- Access to worldwide research network
- Professional and advanced product knowledge