North American suppliers invade Europe

For Vitafoods first-timer Ocean Nutrition Canada​ (ONC), the inroads into Europe are signposted by growing demand for omega-3, according to VP marketing and new product development Ian Lucas.

Requests from European customers who had been let down by their usual suppliers coincided with a major expansion in capacity by ONC, which began with a $10 million expansion of omega-3 fish oil concentrate production in Mulgrave, Nova Scotia last year and continued with the purchase of a new production facility in Arcadia, Wisconsin in February.

The Arcadia facility will be dedicated to servicing the US omega-3 market, freeing up the Novia Scotia plant to fulfil orders from Canada, Europe and Asia.

A report on nutritional oils from market research firm Frost & Sullivan revealed that Europe's omega-3 market was worth $195 million in 2004, with marine oils accounting for 77 per cent of this total.

"We are now making enough product to ship to Europe and to address lead times,"​ said Lucas.

In September the standard fish oils and omega-3 fish oil concentrates produced by ONC become the first dietary supplement ingredients to be certified under the United States Pharmacopeia's (USP) new ingredient verification program.

Lucas maintains that this certification acts as a rubber stamp to the quality of ONC's products and is speeding its entry into Europe, as the USP standards are recognized throughout the world.

But for ONC compatriot Pharmanutrients Botanical Corporation​, the tightening of regulations on the American side of the Atlantic has prompted diversification overseas.

Under the new Natural Health Products Directorate all supplements products marketed in Canada that make a health claim must display a natural health product (NHP) number for each of their ingredients.

But the burden for providing the science that proves efficacy falls to the manufacturers not raw materials suppliers, a scenario that wrestles control of sales potential out of the company's hands, president Wayne Hachie told NutraIngredients-USA.com.

"Finished product problems in Canada will impact on raw materials, so we need to diversify,"​ said Hachie.

The situation is generating anxiety since at present around 63 percent of Pharmanutrients Botanical's sales come from Canada, compared with 32 percent from the United States.

This year was Pharmanutrients Botanical's second as a Vitafoods exhibitor. In value terms, European sales are currently only five percent of Hachie's overall business, but exhibiting at Vitafoods is key to his plan to increase this presence five-fold.

"I would love Europe to be at least 25 percent of my business,"​ he said.

To bring this about, Hachie is currently looking for a joint venture partner in Europe and would like to have an agreement in place by June or July.

One company that has capitalized on its presence at Vitafoods over the past seven years is New Jersey-based Stryka Botanicals​, which now makes 20 percent of its sales in Europe.

President Brian McNally told NutraIngredients-USA that he would like to see this proportion grow to 50 percent in the next three years.

Success in Europe is a lot less fickle than in the US, he said. Customers subject products to rigorous testing procedures before accepting them and, once they are satisfied, they are less likely to chop and change between suppliers whenever they are offered a cut-price deal.

McNally added that having an active presence in Europe also adds credibility in the United States. More stringent regulations in Europe mean that products sold there are perceived to be higher quality than those that just meet domestic standards.

His viewpoint brings the argument full circle from Lucas'. The companies' opposing experience would suggest that it works both ways: a respected presence in Europe can help build reputation in the United States and vice versa.

Although the US and Europe are governed by different regulatory and quality demands, there are interdependencies at play which could prove the key to success on a global scale.