Functional Technologies Announces New Wine Yeast Strains, Features to Complement Portfolio

The Company's wine yeasts have gained substantial interest and demand in the U.S., Europe and South America since their commercial introduction two years ago, including a 240% increase in the number of commercial wineries purchasing these yeasts for trials.

4 May 2012 --- Functional Technologies Corp. has announced recent developments and initiatives to support growing customer enthusiasm and demand for the Company's proprietary hydrogen sulphide (H2S)-preventing wine yeasts. This includes the availability of new proprietary wine yeast strains that offer low levels of both H2S and sulphur dioxide (SO2), as well as technical and marketing programs with several leading non-profit institutions and/or alliances associated with the wine industry to further expand the Company's product offerings as well as enhance the support and adoption of its wine yeasts.

The Company's wine yeasts have gained substantial interest and demand in the U.S., Europe and South America since their commercial introduction two years ago, including a 240% increase in the number of commercial wineries purchasing these yeasts for trials. The Company's wine yeasts are marketed by its wholly owned subsidiaries Phyterra Yeast Inc. and Phyterra Europe GmbH (collectively "Phyterra"), with distribution in the U.S. facilitated by an exclusive partnership with the Beverage Supply Group ("BSG"). In Europe, Phyterra's wine yeasts are offered through various country-specific distributors, reflecting the segmented wine industry there.

Complementing the offerings of Phyterra's most popular strains, based on customer interest and requests, the Company has expanded its product portfolio with new innovations, primarily classically bred wine yeast strains that not only feature the low H2S attribute, but also low levels of total SO2. Under certain conditions, excessive levels of SO2, which can form also as a byproduct of wine fermentation, can cause sensory faults. These next generation wine yeasts are expected to be available for the 2012 fall wine production season.

"We are pleased to be able to build on the positive customer feedback that we and our distributors have received on our proprietary H2S-preventing wine yeasts, by offering an expanded portfolio of wine yeast products enabling winemakers to select their preference of low H2S or both low H2S and low SO2 wine yeasts that are best suited to their winemaking practices," said Howard Louie, Chief Business Development Officer of Functional Technologies. "These and other industry-supported strategies are expected to not only enhance customer benefits and satisfaction, and drive adoption of our innovative next generation wine yeasts, but also elevate the value of our yeast platforms."

Supporting the initiatives to expand the Company's platform and product portfolio of innovative wine yeasts, technical and marketing programs have been launched, or are in discussions to begin, with several leading academic institutions and/or industry groups associated with the wine sector in the U.S. and Europe. This includes the University of California at Davis ("UC Davis"), a leading viticulture and enology institution that is also home to the Robert Mondavi Institute ("RMI") for Wine and Food Science. A collaboration agreement with UC Davis has commenced to complement the Company's internal strain development and breeding programs, and is expected to enable more efficient and rapid expansion of Phyterra's portfolio of wine yeasts, resulting in a broad selection of wine yeast strains. In addition, the collaboration includes technical initiatives to optimize the quality and customer support of the Company's expanded portfolio, and as well, provide valuable access to UC Davis' renowned expertise.

"I am pleased at the widespread interest in these strains and in the low H2S technology that we have developed. One goal of our strategy was to be able to breed this capability into varying genetic backgrounds to provide an array of options for the wine industry," commented Dr. Linda Bisson, Professor at UC Davis' Viticulture and Enology Department.

From marketing perspectives, additional strategies including branding initiatives supported by industry validation of the benefits offered by Phyterra's wine yeasts, as well as both volume and premium pricing structures, are in various stages of implementation, with the support of BSG and its vast industry network and alliances.

"The innovative and beneficial qualities associated with Functional Technologies' H2S-preventing wine yeasts make a great fit for Beverage Supply Group's mandate to offer novel and technically superior products that improve our customer's processes, as evidenced by the interest, positive customer feedback and sales generated by these yeasts in the U.S. in the first two introductory commercial seasons," said Dr. Ian Ward, President of BSG. "We look forward to continuing our work with Functional Technologies in offering greater product selection, support and value to our existing and new customers with the Company's expanded portfolio of yeast strains."

H2S is a gaseous byproduct naturally emitted during wine fermentation, and is associated with a distinct rotten-egg odour. A well-recognized and widespread industry problem, H2S is also implicated in the formation of other undesirable sulphur-containing compounds that can cause sensory faults and reduce the quality of the wine product. Even very low levels of H2S are indicated to mask desirable sensory attributes sought by winemakers. The Company's H2S-preventing wine yeasts feature a proprietary attribute of preventing the formation of H2S in the fermentation phase, and represent a robust preventative solution requiring minimal or no changes to existing production processes.

Although SO2 is commonly used as an additive in winemaking practices as both an antimicrobial and protective, antioxidant agent, it can also form as a natural byproduct of yeast during fermentation. Under certain conditions and instances, excessive levels of SO2 can impede normal fermentation processes or lead to sensory faults. The new classically bred wine yeasts offering the dual features of low H2S and low SO2 have been cultivated by Phyterra's scientists and technical team to provide winemakers with added options and benefits, based on customer demand.