Cyanotech astaxanthin helps boost Q3 sales

By Lorraine Heller

- Last updated on GMT

Related tags: Marketing, Cyanotech

Cyanotech has reported an increase in sales for its third quarter,
but the firm continues its focus on cost-reduction initiatives as
it focuses on increasing resources.

The 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 firm's latest results reveal revenues for the third quarter of fiscal 2008 of $2.7m, a 14 percent increase compared to last year. Loss for the quarter, ended December 31 2007, was $594,000 - a significant reduction compared to the prior year loss of $1.2m. Spirulina ​ A major challenge for Cyanotech during the quarter was spirulina production, which was stunted by torrential rains and flooding in December. This, said CEO Gerald Cysewski, made it impossible to fully meet demand for the firm's Spirulina Pacifica ingredient, which is used in foods to improve energy and immune response. The ingredient, which holds Generally Recognized as Safe (GRAS) status for use in foods and drinks in the US, saw a 26 percent reduction in sales during the third quarter. Cysewski said that issues related to constraints in spirulina production were resolved by the end of the quarter, and full production at typical historic levels was resumed in January 2008. Astaxanthin ​Cyanotech's overall sales for the quarter were boosted by strong sales of its natural astaxanthin product, which were up 72 percent compared to last year. The company's flagship BioAstin brand of the antioxidant ingredient is marketed for its anti-inflammatory benefits, and for its ability to enhance skin, muscle and joint health. Cyanotech claims BioAstin is the world's best selling brand of astaxanthin for humans, and grows the microalgae from which it derives the ingredient in shallow ponds at its 90-acre facility along Hawaii's coastline. This year, the company announced it has been given approval for a total of 17 different structure/function claims in the US for its BioAstin. Structure/function claims are not as coveted by supplement manufacturers as qualified health claims, but still can contribute to the scientific and marketing clout of an ingredient. Cyanotech also filed a formal petition in the European Union (EU) for six claims, which focus on joint health, skin health, protection from UV damage, eye heath and immunity. Human nutrition marketing ​ Early in 2006, 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. 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. Last 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. However, the company today said it has slowed down on its consumer marketing efforts, as it attempts to increase resources. "Our renewed marketing emphasis on retail products and condition-specific formulations announced earlier in the fiscal year has been moderated while we increase cash resources, which should be assisted going forward by the approximate 20 percent reduction in our workforce announced in December. We continue to focus on human nutrition products for both spirulina and natural astaxanthin,"​ said Cysewski.

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