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As distribution is a vital link in the supply chain, NIE offers case studies highlighting strategic partnerships that have brought innovative products to market.

Entering the Omega Market Together

In 2011, TSI (USA), Inc., a Montanabased distributor with nutraceutical products sold in more than 30 countries that credits itself as never having been a typical distributor, was looking for a unique product that enabled it to enter the omega-3 market with a point of differentiation. Meanwhile, Hofseth Biocare in Norway merged with Cromi AS and completed its Midsund plant, and the first commercial production of its value added biomarine ingredients for human applications commenced that October.

According to Lucas Altepost, vice president of sales and marketing with Hofseth Biocare, “As far back as the 1990s, many companies tried to make better quality protein from fish using hydrolization, but none succeeded in achieving the high quality needed. The right technology was not available, and the raw material control was insufficient.” 

But through acquisition and improvement, Hofseth succeeded in solving the puzzle.

“Through innovative production technology and logistics, we preserve the quality of protein, calcium and oil extracted from fish,” explained Altepost. “Hofseth Biocare stands apart in the biomarine sector as we maintain the highest quality food-grade standard using the freshest material available. Our production is dedicated to human consumption from the sourcing of the freshest possible raw material to its new enzymatic production technology, which solves many of the issues that the traditional crude fish oil industry is facing, such as fish taste, lack of freshness of the raw material and lack of quality control of the value chain.” 

Hofseth Biocare began looking for a distributor with the best knowledge and competence to be able to explain the product and to have a long-term commitment to it. “Key for us was to choose a growing company that would focus on our product,” said Altepost, noting that chemistry with an excellent professional team was the last, but not the least, part of the equation.

The company was in discussion with three other potential distributors for the U.S. market, but TSI (USA) far and away fit Hofseth’s corporate culture the best, according to Altepost. The company signed with TSI (USA) for the distribution of its salmon oil, which is based on its new enzymatic production technology and has shown significant benefit in human trials on a new cardiovascular health marker, oxidized LDL-GP, under the brand omeGO™ in North America and other key markets in Southeast Asia. 

“Many factors brought us to choose TSI (USA). The most important being that it has incredible knowledge of this industry’s global market, and its sales team can cover key markets for Hofseth Biocare,” said Altepost, also noting the point of differentiation on which TSI (USA) prides itself. “TSI (USA) is also more than a distributor; they are a partner. The company brings essential synergies in the areas of R&D, formulation and high quality contract manufacturing capacity that we can offer our end customers.” 

And according to Larry Kolb, president of TSI (USA), the fit and timing couldn’t have been better for his company.

“We partnered with Hofseth for two main reasons,” he said. “In addition to the omeGO ingredient indeed offering the true point of difference we were looking for—this ingredient has a distinctive, fresh and quality supply chain with a proprietary manufacturing process yielding an active oil that is clinically substantiated—TSI USA) produces soft gels, and this ingredient is a good fit for our soft gel operation and several of our existing soft gel accounts.” 
Although in its early stages, omegGO has been well received to both companies’ delight. It was launched with MRM, a leading sport nutrition company in the U.S., into the health food segment at Expo West in March, and it’s doing very well, according to Kolb.

“TSI (USA) entered the space with this oil and our efforts are paying off with several brands in the U.S. and international markets,” he added.

“We’ve benefited as a result of the recognition this branded ingredient has brought to several of our key customers. OmeGO is a unique, differentiated approach to the omega-3 category.

TSI (USA) and its customers believe this space we now occupy has a tremendous up-side for many years.” “TSI (USA) focuses on value services and innovative products to drive growth and meet their customers’ expectations, and this is why the partnership is already so strong and has such tremendous potential,” said Altepost.

Single-Sourced Entry

Tennessee-based Renewable Algal Energy, LLC (RAE) draws on the expertise of a team that has decades of experience developing and commercializing breakthrough technologies for the production of a range of ingredients, including tocotrienols, cranberry extracts, algal carotenoids and natural vitamin E. In late 2011, the company was primed to launch its first two products to the dietary supplement industry: Algal Protein Isolate and Full Spectrum Algal Oil.

Both products are renewable and vegetable- sourced, based on the development and implementation of patentpending technology that allows natural strains of algae to be used in a highly efficient system for algal growth and the recovery of high-quality nutritional ingredients, according to Jeffrey S. Kanel, PhD, RAE president and CEO. “Carbon dioxide is captured directly from the atmosphere and utilized by the algae to make the algal oil and protein,” he explained, adding that both products offer noteworthy advantages. “The Full Spectrum Algal Oil is an omega 3-6-9 oil that also provides naturally occurring ingredients such as GLA and a balanced ratio of carotenoids along with natural vitamin E and tocotrienols for additional antioxidant protection. Our Algal Protein Isolate does not have the drawbacks associated with soy-, whey- and eggderived proteins, as RAE’s algal protein requires significantly less land to produce a kilogram of protein than is required from all other protein sources currently available.”

Distributing these innovative ingredients to the market might have been an issue for the fledgling company, but thanks to a long-time relationship with Bill Van Dyke, CEO and chairman of California-based B&D Nutritional Ingredients, a national leader in sales and marketing of premier raw materials, the company had its answer.

“We went directly to B&D Nutritional to be its distributor because of the very positive professional experiences several members of our team had with Bill Van Dyke and B&D,” said Kanel. “Specifically, Bill made several visits to the solar salt ponds on the Great Salt Lake to view early versions of the technology. He always provided wise counsel, assistance and encouragement to an entrepreneur starting an ingredient supply business.” 

Since its 1993 inception, B&D has connected innovative ingredients to manufacturers nationwide, bringing quality, benefits and technologies that Shape the supplement industry. Today, the company represents 12 principals worldwide to deliver a comprehensive portfolio of products to supplement developers across the U.S. And timing, as they say, is everything.

According to Van Dyke, RAE was ready to enter the market as B&D was in search of a protein and omega oil provider. So when RAE approached B&D for representation, the company jumped at the chance.

“RAE’s expertise and patent-pending technology hooked us in right away,” said Van Dyke. “Its unique single source for multiple ingredients provides a breakthrough opportunity for finished product producers to limit their sourcing requirements while at the same time providing their customers with a rich and balanced combination of high value ingredients. This nutritional platform derived from a renewable source provides an opportunity that comes along only once every two or three decades.” 

And being there at the ground floor has had its advantages. “B&D’s relationship with RAE’s founders goes back many years. We’ve enjoyed watching their vision develop and grow,” said Van Dyke. “Since RAE is a new business with a new facility, we have the advantage of helping them prepare and structured right from the beginning. In the end, this will save us all time.”

B&D’s promotion of RAE has generated leads as customers anticipate the final protein product composition to mirror that of traditional products— “with much higher protein than novel products and RAE’s DHA with EPA will give customers more than other current oils,” said Van Dyke.

“As a new ingredient supplier, B&D has assisted RAE in understanding regulatory issues, product demand, and has connected us with companies that offer toll conversion services and strategic partnerships,” said Kanel. “Initial market reaction to both products has been encouraging, and we’re eager to get them to the point of actual delivery to customers.”

A Vision for Global Reach

Scientific evidence indicates that zeaxanthin is important in reducing the risk of cataract formation and agerelated macular degeneration (AMD), the two most prevalent chronic eye diseases. But what makes ZeaGold® zeaxanthin from Michigan-based Kalsec, Inc. unique isn’t just that it’s extracted from a whole-food source—paprika—but that it’s a non- GMO paprika cultivated on the company’s farms in the United States.

“We control and maintain the highest quality from seed to the finished product. Kalsec uses its own seed stocks, grown on acreage here in the U.S.; we harvest, process, extract and package in Kalsec facilities in Texas and Michigan ensuring a high-quality, pesticide-compliant, concentrated zeaxanthin that is safe,” said Aaron G. Wheadon, the company’s business development manager, noting that the ingredient is GRAS and exempt from certification under the Code of Federal Regulations (CFR) color additive regulations.

Kalsec had been developing breakthrough natural flavor extracts for more than 50 years, but it only began servicing the nutraceutical industry in 2006 with its ZeaGold ingredient. The company had been utilizing a team of domestic and international sales people along with select channel partners across the globe to bring its products to market, but recognizing its limitations, it sought a distribution partner that could help it grow.

“Our knowledge base was primarily based in the food ingredients arena, and a change needed to be made. We needed a partner that understood global regulatory aspects and how best to address the many different types of laws in different countries,” said Wheadon. “We were also looking for somebody who understands the nutrition market as well as the unique proposition that ZeaGold zeaxanthin brings as an ingredient. Finally, we needed a partner who was servicing the major global markets and could bring continuity to the sales effort with an educated and trained sales force.” 

Enter New Jersey-based OmniActive Health Technologies, Inc., a company that had its finger on the pulse of the vision health market with its Lutemax™ Free Lutein and Lutein Esters, and Lutemax™ 2020 Lutein with Zeaxanthin Isomers.

“As OmniActive is actively involved in the development, manufacture and scientific research behind the products we offer, we are tuned in to market trends and customer needs, and are able to provide innovative and responsive solutions,” said COO Abhijit Bhattacharya.

According to Bhattacharya, there had been a long association and healthy respect between the promoters and management of both companies spanning several decades. “As a result, when Kalsec was looking for a partner in developing stabilized beadlet forms from their natural zeaxanthin, it felt comfortable exploring OmniActive as an option,” he said, noting that Kalsec’s U. S. paprika cultivation particularly resonated with OmniActive and its own farming methods of marigold in India. “At the same time, OmniActive found that Kalsec’s values and approach in developing a traceable value chain from the ground up with a robust foundation of science and technology was an excellent complement to our GRAS Lutemax range of lutein products based on a similar foundation.” 

The exclusive distribution agreement, announced in October 2011, stipulated that OmniActive would educate both the supplement industry and consumers, helping to increase awareness of the health benefits of zeaxanthin while developing innovative delivery forms and distributing them into the market- Place. While the new partnership was not void of challenges—according to Bhattacharya, a key obstacle was that both companies’ technical teams are located in different parts of the world— Kalsec and OmniActive found workable solutions and are excited for the future.

“One of the most exciting aspects of our agreement is the potential for growth in both companies. Our synergy together will enable both Kalsec and OmniActive to expand our presence in the global market,” said Wheadon. “The partnership is a continuing work in progress. Since we have only been doing business together for less than five months, it will continue to change and progress, and ultimately become a model for how two multinational companies can engage and do business together.” 

“Our valued customers benefit the most from this collaboration as it will produce a high-quality zeaxanthin in a variety of delivery systems for custom solutions,” said Bhattacharya. “Our customers have been pleased with our ability to bring another innovative ingredient to the global market, allowing them to enhance their eye health formulations.”

Remarkable Retail Reach

And What happens when you have a top-notch, clinically proven product, but a limited reach to get it onto retail shelves? That’s where Frank Tufaro, PhD, CEO of Allera Health Products in Florida, found himself.

Six years ago Allera launched its Immune Extra® with Proligna® pinecone extract for immune support after completing clinical trials that confirmed the product’s safety, according to Tufaro. “Two clinical trials have demonstrated outstanding safety; a placebocontrolled, blinded study of 48 individuals and a pilot study of six individuals showed that Immune Extra pinecone extract reduces the amount of the antibody IgE circulating in the blood. IgE is a trigger for allergies in humans, which suggests that Immune Extra may be useful for helping reduce symptoms,” he explained.

Immune Extra is a water-soluble, organic, kosher extract of pinecones made by a patented process. “The pinecones used to make the extract are from forests in Wisconsin and Minnesota. They simply fall from the tree, so no trees are destroyed to make our product,” said Tufaro.

While Allera established an effective regional broker network to introduce Immune Extra to retailers, Tufaro admitted that the scope was limited, so he sought a distribution partner that shared his philosophy while also bringing a wider reach to the table. He found what he was looking for in Missouribased Membrell, pioneers in offering natural eggshell membrane (NEM®) for joint health.

According to Chris Haynes, director of sales with Membrell, the relationship began several years ago via a series of product presentations. “Our executives got to know Frank Tufaro. Everyone kept in touch and Membrell reached out to Allera to discuss possibilities of distributing Allera’s unique Immune Extra formula.”

The product’s clinical backing certainly piqued Membrell’s interest, but it was the dosage—only one 15 mg capsule per day is required, making it potent and easy to take—that the company found particularly intriguing and convinced it Immune Extra was a match.

“Allera’s Immune Extra product was a perfect fit for Membrell in practical and philosophical terms,” said Haynes. “Our best-selling product, JOINThealth, is only one capsule per day with peerreviewed published clinicals proving its effectiveness. It’s the same for Allera’s Immune Extra with Proligna. Proligna is a pine cone extract that is patented, developed and manufactured in the U. S., it is only one capsule per day and has shown to enhance immune cell ninefold in only nine days.” 

Membrell, with five products of its own it’s distributing to market, added Allera Health’s products to its stable and the two haven’t looked back. Just six months into the partnership and both sides are Extremely pleased with the results.

“We considered several options for distribution, but none seriously after we spoke with Membrell. Membrell has a similar philosophy to our company; the people are highly ethical and honest,” said Tufaro. “By partnering with Membrell for distribution, we get the benefit of an excellent sales and marketing network throughout the whole country.

“Moreover, the sales team has both the Membrell and Allera products to offer retailers,” added Tufaro. “Membrell and Allera are both committed to making high-quality supplements based on science and clinical research. We think we found a perfect partner.”

“Allera and Membrell’s focus is very straightforward. It’s a pure distribution arrangement with Membrell’s outstanding broker network providing sales and support to the retailers,” said Haynes. “It’s truly about educating the retailers and, in turn, the consumers.”

FORMOREINFORMATION:

Allera Health Products, (888) 466-8638

B&D Nutritional Ingredients, (800) 546-6113

Hofseth BioCare, +47 667 655 62

Kalsec, Inc., (800) 323-9320

Membrell, (800) 749-1291

OmniActive Health Technologies, (866)LUTEMAX

Renewable Algal Energy, LLC, (423) 979-8008

TSI (USA), Inc., (877) 549-9123

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