Omega-3 demand brings profits for Clover

Growing demand for omega-3 fatty acids significantly boosted
profits at Australian health ingredients firm Clover Corporation
last year but lower-than-expected sales in Europe and restricted
supply of ARA oil for its fortified infant formula stopped it short
of meeting targets.

The company, which refines and sells the omega-3 fatty acid DHA in both oil form and microencapsulated powder, increased supply of the ingredient to customers by 70 per cent over the previous year, generating A$15.6 million (€9m) in revenue.

New contracts with companies such as Scotland's Natural Fruit and Beverage Company, producing a DHA-enriched juice for children, as well as interest from a number of bakeries in omega-3 fortified breads following the success of George Weston Foods' Tip Top Up range, are driving the growth in sales.

However the rapidly growing omega-3 market has also raised the number of competing products on the market and Clover says it is looking for alternative, less costly, sources of omega-3 in an attempt to reduce the the price pressure.

It has also been under pressure to supply the infant formula market, a strong source of growth in sales to Asia, because of problems in supply of the fatty acid ARA (arachiadonic acid), manufactured by DSM for US-based Martek.

ARA is a key ingredient to Omega-3 DHA enriched infant formula but production problems at DSM last year impacted global supply of this ingredient. Oil supply is not expected to return to normal untilafter September.

Clover has however made moves in the US market, appointing a US-based development manager during 2003 to capitalize on growing consumer awareness of the health benefits of omega-3 DHA.

At least six multinationals are trialling its DHA products, said the company, with results from several of these looking promising.

Other new products under development include a new soy flour, developed through a joint venture with Austgrains, and expected to be commercialized during December 2004. R&D staff are currently working in a pilot plant on applications for the ingredient in the bakery, cereal and beverage areas and a number of customers are expected to start buying the product early in 2005, according to Clover.

The company reported profits of $1.2 million for the year, up 168 per cent over last year, with sales to the end of June reaching $17 million, up 54 per cent on the prior year. Clover also made a fraction of its revenue (9 per cent) from pharmaceutical raw material distribution.

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