KEY INTERVIEW: Expansion to Meet the Growing Market for Astaxanthin

15 Dec 2014 --- Algatechnologies, a biotechnology company specialising in the commercial cultivation of microalgae, is confident its profits will be boosted further by its AstaPure product, so much so that it recently announced plans to increase its production capacity by 100%. Here, FoodIngredientsFirst talks to marketing and sales director, Efrat Kat, to find out where demand is coming from and what else the company has in the pipeline.

Back in 2013 a UK investment firm invested a huge sum of money in Algatechnologies in exchange for a 56% share in the business. This explains the company’s marketing & sales director Efrat Kat, triggered the start of a major turning point for the business.

“This led to major changes, the first of which was the decision to expand the production capacity for our natural astaxanthin,” she says.

The astaxanthin produced by Algatech, which is packaged and sold as AstaPure , is of a particularly premium nature, and it therefore has strong appeal as a high quality variant of what is generally considered to be one of the world’s most powerful antioxidants.

“The whole reason for the decision to expand our production facility was because of an increase in demand for our product in the global market and we projected that demand will keep going up and that there was room for additional supply,” explains Kat.

The investment allowed the company to not only extend the reach of AstaPure but it also meant a separate extension could be built for new product development. The company has plans to innovate through technology for the cultivation of microalgae and by looking at new active ingredients.

“I am happy to say we have recently finished the first part of this expansion,” confirms Kat. “Until this point, supply was very tight and demand was much higher than our ability to supply. It’s a good position to be in in some ways, but we found that we were unable to promote the product or develop new business streams because we didn’t have enough of our product to be able to expand.

“Strategically we decided we would support our existing customers and we would try to meet any increases in demand that they requested, but this means avoiding new business, which is not ideal for any company!”

Now that the company is gradually able to produce more, it offers a lot more possibilities for expansion, which, says Kat, has made many people involved in the company very excited about the future.

”We now have the capacity and a quality product to be able to develop new customer relationships and seek out companies that are interested in working with us. Some of our existing customers meanwhile have been putting their own NPD on hold as it was difficult to get the supply from us, but now they can get it, so it’s a great time for them to look at developing their own new products.”

AstaPure: what is driving demand?
There is a growing market for astaxanthin, particularly at the premium end, and Kat puts this down to a continued increase in awareness of its health benefits.

“There have been many publications of clinical trials for astaxanthin, showing how it can protect the body and offer us other health benefits,” she explains.

“In addition to this, our customers have helped promote the use of it as well. It is a very powerful antioxidant and so studies by many different groups have shown how beneficial it can be for humans as it can help with several health disorders, not just one.”

The main application for this product is in sports nutrition, confirms Kat, but other applications are emerging.

“Producers can promote qualities such as added muscle endurance, for example. It is also used in the beauty industry and it is very popular in Japan for cosmetics applications for the promotion of increased beauty on the inside and outside. And also, it has a growing interest for the treatment of disorders related to the central nervous system.”

Innovation:
The latest version of AstaPure is very concentrated at 20%, which is the highest currently in the market, according to Kat.

“It makes the product ideal for the use in multivitamins, particularly when you need very small amounts to reduce the capsule size for example,” she says. “This kind of development is something we will be investing more in, as well as creating soluble applications for areas such as beverages and sachets to add to liquids – these are the kinds of delivery systems we will be investing in going forwards.”

At present the product is mostly found in cosmetics and supplements but one of the growing areas for the use of astaxanthin is in food and beverages, which is where the company is finding its product used more and more.

“It is definitely a growth area but it is still limited in Europe, although this looks set to change. In the US and Japan we have approval for use in beverages, and this is likely to be the case across the world eventually.”

Kat explains that AstaPure was very popular in supplements in Japan and there was a lot of interest also in the US, which helped lead to the ability to move into the areas of food and drink.
For the last six to eight months there has been more interest in the European market, and so, says Kat, “hopefully it is going the same way. I think it is just a matter of time”.

She also hopes that if the company continues to work on joining forces with other companies that are interested in this area then it will help to accelerate acceptance within the food and drink arena.

Demand:
“We do get a lot of interest from different companies, including beverage and dairy companies (there are some of these now sourcing our product in Japan for example), as well as liquid supplements and cosmetic,” she says. “Believe it or not we are also working with chocolate manufacturers for chocolate coins and there has been lots of interest in these – they are promoted for consumption by elderly people that would like to consume astaxanthin, but are tired of swallowing tablets. It’s a much nicer way of consuming it.”

The interest in its use in chocolate is high, she explains, particularly in its homeland of Israel. “In Israel chocolate is often given as a gift before you start university. It means that the added astaxanthin is popular because it can be promoted as aiding brain function.”

She admits there are so many areas the company can explore.

Energy drinks and drinks for specific athletes is another growth area to note, she points out. “We have done our own tests related to physiology during marathons and other activities that undertake extreme exertion.”

Challenges:
Kat is very positive about the future for AstaPure, but the potential for growth is not without challenges.

Firstly, she notes, on the production side it is not so easy to grow microalgae.

“In a laboratory it is easy but commercially it becomes quite challenging. We know how to produce quality products but because of the increase in demand there are new players in the market and because it is very difficult to grow microalgae they have been looking for other sources.”

This dilutes the quality message Algatech is trying to project, she explains.

“We are seeing other players using artificial astaxanthin from petrochemical sources. Our main challenge therefore is to educate the market as this kind of activity will confuse people.”

She notes that the artificial newcomers have not been approved and the different compositions may not be as effective – this is the message they are working to get across.

“It is very important to explain these differences,” she says.

Going forwards Algatech is keen to ensure this message gets through so that its customers fully understand the quality of its ingredients.

“We are very open to collaboration using astaxanthin and other active ingredients that can be developed from microalgae,” she concludes.

by Sonya Hook