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Neptune improves capital to fund expansion

By Dominique Patton , 26-Jan-2006

Canada's Neptune Technologies has gained a government loan to support its drive into the European market.

The firm that exploits krill for its nutritional benefits gained C$100,000 free of interest under a programme designed to help Quebec-based SMEs working in innovative areas to develop export markets. The loan has to be reimbursed within seven years.

The company has also reorganized its capital structure, increasing its credit line from $200,000 to $1 million to give it greater power to buy more raw materials to support increasing demand.

"The obstacle with krill is that krill comes up in the water twice a year. So you need to know six months ahead how much inventory you need, and be able to factor in new clients. Money from sales will only come in nine months down the line," explained Serge Comeau, director of investor relations.

"Before our inventory was just in time but now we have leverage so it's there if we need it," he added.

Since being introduced to the US market in 2003, sales of Neptune's omega-3-rich krill oil have seen strong growth, last year reaching $5.1 million. They are expected to top $7 million this year, Comeau told NutraIngredients-USA.com.

To date the oil has been used only in soft gels, but since it has undergone safety testing for approval as a new dietary ingredient (NDI) it is also assumed to be generally recognised as safe (GRAS) for use in conventional food products.

Neptune is expecting its first food customers in Europe however, where omega-3 fortification is more developed, and the recent approval of the firm's logo and trademark by the European Registration Office has cleared the way for its market launch.

It recently announced an agreement with Germany's Degussa to develop krill oil for food formulations.

The company is currently running its plant at around 40 per cent capacity but plans to reach full capacity within the next 12-18 months, said Comeau.