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Probi 2012 sales up 6%, but ProViva royalties set for dive

By Shane Starling , 25-Jan-2013
Last updated on 25-Jan-2013 at 18:01 GMT

Probi 2012 sales up 6%, but ProViva royalties set for dive

The European probiotic sector is bracing itself for tough times ahead in the wake of December’s  EU health claim ban for the sector, but the effects are yet to be felt at Swedish supplier Probi which notched 6% sales growth in 2012.

However royalty payments stagnated for the deal it has to supply probiotic strains to Swedish dairy Skånemejerier’s ProViva probiotic juice, a brand Danone took a half share in in 2010.

Probi earned 100m Swedish kroners (€11.57m) for the year turning an operating profit of SEK17.2m (€1.98m).

In relation to the ProViva deal, it forecast lower royalties in 2013 as new terms kicked in post Danone’s entry.

“As announced earlier, royalty calculations for ProViva sales in Sweden will change from 2013 in accordance with the agreements signed with Danone in 2010,” the company said.

“This means that Probi’s royalty revenue from ProViva in  Sweden in 2013 will be approximately 8% lower, calculated on net sales for 2012. Should net sales of ProViva  in Sweden in 2013 be higher than in 2012, the negative effect of the changed method of calculating royalties  will be correspondingly reduced.”

2012 saw Probi sign six new agreements.

“I would like to underscore the importance of the two agreements that were signed in December, the new venture in oral health with Symrise and the cooperation with Viva 5, which boosts our ability to grow in the important North American market,” said CEO Michael Oredsson.

“Our two major clinical studies in immune and gastrointestinal health that were completed in 2012 did not yield the anticipated results. However, our products – Probi Digestisand Probi Defendum  – are based on strong data from a large number of previous clinical studies.”

“Accordingly, they are still competitive on the international market and are purchased by consumers since their health is tangibly improved.”

Claims, research, fruit…

Oredsson said the company had not given up on EU health claims either with its Lp299v strain – used in ProViva since 1994 – and others.

“We are now focusing on evaluating the studies and will launch new studies in 2013, which will form the basis for EFSA [European Food Safety Authority] applications.”

Danone’s buy-in to the brand can be viewed in the light of the health claims situation, with its own marketing severely curtailed around its marquee probiotic brands Activia and Actimel.

Expanding the brand beyond Sweden is a stated aim of the new partnership although progress has been slow in that direction for the €40m brand.

 At the time, industry analyst Julian Mellentin, of New Nutrition Business, said the move signaled how much value it gave to probiotic juices concept.  “Danone sees massive potential in probiotic fruit and vegetable juices,” he said noting a joint venture with global fruit player, Chiquita.

“This development also makes sense because fruit is the future of food and health. To the average person, fruit equals ‘healthy’, and it is this consumer perspective that has driven sales of fruits such as blueberries and pomegranate, as well as fruit smoothies, in recent years.”

Danone at the time said it was interested in the probiotic fruit technology and the Swedish market.

The dairy giant was moving into fruit because, "fruit was a good vector for health products".

"It makes sense given our health mission.”

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