Biotechnology transforms regional retailer into potential global player in multi-billion dollar omega market
(Financial Press- Dec 17, 2013) - From his office in Vancouver, BC, Craig Goodwin looks south to the world's largest market for omega-3 health food supplements, it's an alluring prospect.
The phenomenon is certainly worldwide. In 2012 the global market for omega-3 products was valued at US$33 billion and was the third fastest-growing supplement globally between 2007 and 2012 with a 12% annual growth rate. In Canada alone, there has been a 1,766 per cent growth in consumption of omega-3 natural health products since 2005, according to Ipsos-Reid.
Booming interest in omega-3 supplements stems mainly from heart, brain and vision benefits and the industry shows no sign of slowing down as consumers are constantly becoming more astute and aware of the food they eat.
Goodwin and his long-time friend and business partner Bryan Carson were among the first to spot "this massive opportunity" more than six years ago. They formed a publically traded company, Naturally Splendid Enterprises (TSX-V: NSP), to market a line of plant based omega-3 rich superfoods now called NATERA™. (http://www.naturallysplendid.com/) (http://www.nateralife.com/)
Currently, the most common source of omega-3 is derived from fish and it's now common knowledge that the World's oceans and rivers are becoming increasingly contaminated with toxic pollutants which can build up in fatty fish tissue. The pollutants can cancel out the beneficial effects of the omega-3s they contain and can be harmful to children, adults and unborn babies. Farmed fish unfortunately do not offer an answer; they contain less omega-3s than their wild counterparts and even more toxins.
The good news is you don't have to eat fish or the neurotoxins and carcinogens they contain to get your omega-3s; there are perfectly pure plant sources, enter Naturally Splendid.
Recent studies show that omega-3s from plants can offer all of the benefits of fish based omega-3 without exposing you to harmful toxins. Plant-based omega-3s provide better protection from heart disease and many other degenerative conditions. A 2013 report published by Amadee & Company Inc. states, "Plant based omega 3 production value is expected to grow twice as fast as marine during the next five years. As a result, by 2018, plant based omega-3s will account for 52% of production value compared to 48% for marine. Plant based omega-3s will benefit from consumers' desire to get away from animal based products."
This benefits the environment as well; plant-based sources of omega-3s are sustainable, fish are not. The environmental argument for switching to plant-based omega-3s cannot be ignored. Commercial fishing is devastating the world's oceans and fish stocks are plummeting. Flax, Hemp, Chia and other plant-based sources of omega-3s are sustainable sources of this important fatty acid as well as being the healthier option. The many arguments supporting the move towards plant-based omega-3s away from fish oils are indisputable.
Naturally Splendid's current transition from regional retailer to a potential global player in the health supplement industry has been made possible through an exclusive agreement with a company called Boreal Technologies Inc; a private company engaged in scientific research of plant based omega fatty acids, whose laboratories are on the Vancouver campus of the University of British Columbia (NYSEARCA:UBC).
Goodwin explains, "Boreal has developed the science that allows plant-based omegas to be mixed into most dry goods or liquids. The omega enriched product possibilities are almost limitless; with applications in most anything you bake or drink."
Naturally Splendid was introduced to Boreal early in 2012. Goodwin states "within five minutes of our meeting we realized that what Boreal was developing was a breakthrough application for plant-based omega oils. We have since learned that the science Boreal is developing far surpasses our first impression, and the science is transferable to a wide range of plant-based omega products."
Boreal, a company at the forefront of research into industrial hemp has developed a range of revolutionary plant-based omega products, in powdered and aqueous forms, using micro-encapsulation and liposomal technology. In plain terms, the technology enables plant-based omegas to be used in a huge range of food products, with an extended shelf life. The "delivery system" developed by Boreal also allows for the optimum absorption by the human body of the essential fatty acids (EFAs) in omega products.
Boreal was looking for someone to market its patent-pending products, and Naturally Splendid was a natural fit. A relationship built up over eighteen months resulted, at first, in an agreement giving Naturally Splendid marketing rights in Canada. Then, in November 2013, the company won exclusive rights to market and distribute the full range of Boreal's plant-based omega products right across North America.
The initial products developed by Boreal; HempOmega™ and H2Omega™ are based on hemp oil. Boreal has taken the technology developed for hemp products and adapted it to also produce FlaxOmega™, CanolaOmega™ and ChiaOmega™ - created respectively from flax, canola and chia incorporating the same micro-encapsulation and liposomal technologies.
Boreal's agreement with Naturally Splendid has already borne fruit. The company's shares jumped after Naturally Splendid signed a non-disclosure agreement with North American food ingredient supplier Caldic in early November. Ontario-based Caldic has been a global player in the ingredient supply business since 1985. Under the deal, Caldic is testing the suitability of Naturally Splendid's line of omega products as potential offerings to its global clients as a premix for a wide variety of consumer foods. In September, Naturally Splendid had signed a similar agreement with another independent ingredient supplier, Calico Food Ingredients, of Kingston Ont. "This is the first step to commercialization of these proprietary products, with the potential to generate large volume sales," " says Goodwin.
Even as Naturally Splendid looks to capitalize on the global potential of these omega products, the company is aggressively growing domestic sales of its existing NATERA™ retail line. The company's hemp-based products are currently available in stores Canada-wide and are taking new orders on almost a weekly basis.
Newly rebranded under the name NATERA™, the products includes shelled hemp seeds and four flavors of hemp protein powder. NATERA™ is also the first brand to market single serve flavored shelled hemp seeds. "We've spent four years doing market research, developing and refining our products and becoming experts in the superfoods industry," says Goodwin.
The attention to detail has paid off. "The interest shown by national distributors of natural products in Canada has been impressive," says the CEO. "We are in negotiations with several national distributors who want to take our product and market it coast to coast."
The NATERA™ line is expected to produce a positive cash flow by the first quarter of 2014 and has the potential for gross sales of $5 million for the 2014 fiscal year. Goodwin admits: "The retail line may not sound as exciting as the omega technology side of our business, but it will allow us to run the company efficiently, without having to go repeatedly to the market to raise operating capital."
Goodwin says that after a lifetime in sales and marketing, he expected initial skepticism when presenting the plant based omega superfood line. But "we knew we had something special on our hands when literally 100-per-cent of the people we contacted with these plant-based omega products, wanted samples for testing."
Naturally Splendid has a balanced strategy that drives revenue from a growing retail product line and incorporates the exciting upside potential of a technology-driven company in a booming market. Goodwin summarizes, "We are offering the best of both worlds - a successful retail line in an explosive market category, and a technology-driven company utilizing ground-breaking science with the potential for global reach. Naturally Splendid delivers on both counts."
Naturally Splendid currently trades on the TSX Venture under the symbol "NSP."
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