Lonza buys Nutrinova DHA business
revealed today, enhancing its nutrition portfolio with an omega-3
ingredient.
Lonza currently offers niacin, or vitamin B3, and the vitamin-like substance L-carnitine to food and supplement makers.
It has not previously stated any ambition to grow its nutrition business, but its vitamins are seeing significant pressure from Chinese competition, eroding margins at the organic fine and performance chemicals unit.
"With this acquisition a first important strategy milestone has been completed," said Lonza in a statement.
Nutrinova's DHA (docosahexaenoic acid), introduced to the food industry two years ago, has some key advantages over other omega-3 ingredients, which are already seeing strong demand for heart health and brain function formulations.
The DHA is both vegetarian, derived from microalgae, and is also said to have superior sensory properties compared to the dominant omega-3 source, fish oils. Nutrinova also claims to offer a higher concentration of this important fatty acid, widely studied for its health benefits, than fish oil suppliers.
But the ingredient is significantly more expensive than the better known fish oils and algae-derived DHA has also required lengthy and costly safety approvals as it does not have traditional use in foods.
As a result, the Nutrinova product still only has a small share of the overall omega-3 ingredients market. More than three quarters of last year's $194 million omega-3 sales in Europe were generated by marine oils, according to Frost & Sullivan, while the algae-derived products made by Germany-based Nutrinova and its main rival, US firm Martek, made up 19 per cent of the market, or about $37 million.
A spokesman from Nutrinova parent firm Celanese confirmed to NutraIngredients.com that "it is still an early stage" for the ingredient, with sales in the low single-digit millions.
"For us it was a very small business and not linked to the major activities of Nutrinova," he added.
However Lonza said the acquisition "expands its portfolio of nutrition businesses...with a health ingredient already well recognized by educated consumer groups".
It added that the DHA business is 'synergistic' with the current L-carnitine and niacin lines and will further strengthen the existing distribution channels worldwide.
The deal includes all of Nutrinova's know-how, patents and registrations in major markets including the US, Europe, Australia and New Zealand.
The omega-3 market is forecast by Frost & Sullivan to grow at rates of 8 per cent on average to 2010.
