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Cyanotech consumer focus boosts Q2 results

By Jess Halliday , 09-Nov-2007

Cyanotech has reported in increase in sales in Q2 over last year and a reduction in loss, as its new product mix and human-nutrition marketing program is yielding results.

Hawaiian microalgae specialist has struggled to maintain sales momentum in recent times, partly due to external factors such as weather at home and in the locale of its aquaculture customers. In the past it aimed to counter fluctuations in demand caused by factors like these by making its production set-up more flexible. The latest set of results released show that the tide may well be turning. For the quarter ended September 30 it has reported sales of $2.6m, compared to $2.4m for the prior year period. Net loss was down from $572,000 (or -$0.11 per diluted share) to $344,000 (-$0.07 per diluted share). Early last year Cyantech launched a new consumer marketing campaign across print and broadcast media, with which it aimed to make consumers directly aware of its BioAstin brand of antioxidant ingredient astaxanthin. Such campaigns are said to be costly, and president and CEO Gerald Cysewski said at the time that the strategy ate up most of the company's promotions budget. Yet it looks to have been an interesting change of pace for a company that, although having originally launched its Nutrex Hawaii consumer products division a decade ago, remained primarily a business-to-business ingredient supplier. The consensus from nutraceutical companies who have also sought to whip up recognition for their branded ingredients amongst the end user is that, handled properly, they can pay dividends. This year this new marketing strategy was followed with an extension of Cyanotech's consumer product offering to include astaxanthin-containing joint- and heart- health-oriented products. In addition to bringing in revenues in their own right, when a company launches its own consumer products they can act as a showcase for product concepts that could help convince potential customers to use the branded ingredient in their own wares. Notably, sales of branded BioAstin products increased 57 per cent, while natural astaxanthin sales rose 18 per cent overall and spirulina sales were down slightly. Although full break-out figures were not available, the boost to BioAstin is likely down to the launch of the two new condition-specific formulations called JointAstin and CardioAstin in its consumer products division. Both of these contain BioAstin, while the former also contains glucosamine from a vegetarian source, and the latter CoQ10, lutein, acetyl L-carnitine, DHA (docosahexaenoic acid) and other omega-3 fatty acids. Gerald Cysewski, Cyanotech's chairman, president and CEO, said the launches "will add breadth to [the company's] Nutrex Hawaii consumer products division and increase focus in [its] human nutrition initiative". Originally the Nutrex Hawaii consumer division was a vehicle to take spirulina, then quite a new ingredient on the scene, to consumers. Until quite recently the line has only incorporated spirulina products. It now incorporates a consumer product that uses the BioAstin name, alongside JointAstin and CardioAstin.

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