The end of the krill wars is the begining of a new chapter in the history of the omega 3s market, said Tim De Haas, of krill supplier Aker Biomarine. It’s good news not just for the krill oil suppliers themselves, but for the category as a whole.
The burying of the legal hatchet means that money that was going to law firms can now be devoted to more productive uses, De Haas said. De Haas, Aker’s vice president of business development, sat down with NutraIngredients-USA at the recent Vitafoods trade show in Geneva, Switzerland. He said that the freed-up capital can now be used for additional promotion, eduction and research and development into new ingredients, all of which can bring additional consumers into a cateory that, after years of strong growth, has experienced significant headwinds in recent quarters.
“It’s good news for the entire industry,” De Haas said.
The history of the krill oil patent disputes is a long and tangled one. Neptune Technologies and Bioressources, the Canadian firm that pioneered krill oil as a human nutrition ingredient, did some of the early scientific work in the field and also filed the first patents in markets around the globe. Without rehashing the entire patent dispute (which would take many chapters), suffice it to say that Neptune’s subsequent competitors—Aker of Norway and Enzymotec of Israel—viewed those original patents as overbroad and challenged them in various courts. Late last year Aker agreed to a licensing deal with Neptune and just in the last few weeks Enzymotec did the same (later Norwegian entrant Rimfrost had already done so). It should be noted that the ultimate validity of Neptune’s underlying patents on which the licensing deals hinge is still at issue.
Neptune, after its initial foray, went dark on the science front and recently had no money to spare to even consider new studies after the destruction of its lone production facility in an explosion and fire in November, 2012. Aker picked up the science ball and did a number of subsequent studies on krill oil and has a number in the works. And it’s on the science front that De Haas said the loosening of the sector is first starting to make itself felt.
“For the first time we see a study published by someone else, in this case, Enzymotec,” De Haas said. "We see the value of investing in science, and we believe the industry recognizes that."
In addition to the investment in science, Aker has invested heavily in the production end of the sector. Aker is the world’s largest harvester of krill and, with a second vessel now online, has increased its production security in the challenging Antarctic environment where the krill is harvested. And the company, motivated in part by Neptune’s experience, has moved to install backup for its production, too. In a joint venture with Naturex, Aker is retrofitting an exisiting facility in the Houston, Texas area that is schedule to come fully online sometime in the summer or early fall. Aker currently extracts all of its krill oil in a joint venture facility with Naturex in Valencia, Spain.
Aker was fortunate to land a significant partner in the United States market fairly early on in the form of Schiff Nutrition, now part of UK CPG giant Reckitt Benckiser. Schiff brought a certain marketing genius to bear on the subject of krill’s main advatange, that being that its phospholipid form is more digestible for many consumers and is said to be more ‘bio-efficient’ in its delivery of EPA and DHA, meaning smaller and fewer capsules will do the trick. Schiff correctly intuited (with the help of market research done by Aker) that there was clear dissatisfaction among some fish oil consumers, both because of digestibility problems and because of the large size of the softgels and the multiple numbers of them that consumers had to swallow, especially for the early, low-concentration products. Schiff’s MegaRed brand roared to the top of the charts, and is currently the best-selling individual omega-3 sku in the US.
But De Haas said that Aker did not rest on those Schiff laurels. Aker and others have the elbow room to tackle those delivery form challenges head on, De Haas said. In addition, krill oil’s relatively high price means the R&D costs can be more easily borne than would be the case for more of a commodity ingredient. Indeed, Aker recently doubled its R&D team with the addition of eight scientists from a defunct Norwegian pharmaceutical company.
“We lead mainly because of innovation. We are always working on new delivery forms,” De Haas said. At Vitafoods, Aker was demonstrating a new gummi bear delivery form, of which De Haas said, “we now have a product that, taste-wise, is the best in the market.”
“What was really missing in the market was the dedication to overcome challenges. With krill oil we offer a product that addresses a clear market need. We see a clear demand for new delivery forms, so we are going to sit down and make it happen,” De Haas said.
Powder, liquid forms
One of the new forms that Aker is close to market with is a powder form. Aker has always sought industry partners, De Haas said, and worked in this case with a firm in Oregon that offers a unique infrared drying system. The company has done initial successful trials in putting the powder into capsules, he said.
The company is also offering now a liquid form for direct intake, De Haas said. The product, offered in a 30-day supply bottle, features a 3-month stability profile after opening.
“We are looking at these new forms to give our customers the possibility to have a unique product so that they can have the space to market it. We don’t do a copy-and-paste approach,” De Haas said.
But what about a functional food applications, Holy Grail of the omega-3s sector? Marine ingredients always suffer from oxidation and odor issues, and krill oil seems especially burdened in this regard. The company has made progress with drying technology and solving some of the stability issues as shown in the liquid product, but full entry into that sector remains elusive.
“As for functional food, you could say that the gummi is the first step. But with gummis it is relatively easy to mask taste. Other food applications are still a ways off,” he said.