Cognis says consumer education improving health business

Related tags Natural vitamin Nutrition Cognis

Cognis, the speciality chemicals company, suffered a tough year in
the nutritional ingredients market, with a long-awaited surge in
the growth of its natural vitamin E sales undermined by adverse
currency movements.

The company reported a fall in sales of 4.6 per cent in its nutrition and health business in 2003, to €263 million, with nutrition accounting for some 9 per cent of the group's total sales.

Cognis​ specialises in natural vitamin E but has strived to distinguish the product in the consumer's mind from synthetic vitamin E. Cognis claims that the natural version is twice as effective as the more common synthetic version, thanks to a molecule that the human body is more able to absorb.

A rush of market entrants into the natural vitamin E market five years ago held back Cognis' own market growth to little over 1 per cent a year, as slow consumer take-up of the more expensive natural alternative combined with over-supply. However, 2003 had marked a turning point, the company said.

Cognis saw a surge in the volume of its natural vitamin E sales of some 9 per cent last year, accompanied by a stabilising of prices from mid-year. This was driven by a rising awareness of the products' benefits that the company was now actively supporting, with expanded consumer education programmes in the USA and Europe, and as co-sponsor of 'Vitamin E and Health', a New York Academy of Sciences conference to be held in Boston on 22-24 May.

The group's carotenoid business, also initially held back by lack of consumer awareness, similarly made sharp strides forward last year on the back of condition-specific marketing. These included products promoted as aids to skin and eye health, which contributed to a 50 per cent surge in sales of carotenoids. This rise was also boosted by a flipback from concerns about the health effects of pre-formed vitamin A, which had been widely promoted as an aid to eye health, and by a surge in the multivitamin market.

The company said the licensing agreement on Tonalin, its CLA brand marketed to help reduce body fat, had contributed to sales volumes within the group's nutrition business, but the speed of its take-off would likewise depend on building a broader public perception of the importance of body-fat reduction over weight loss.

The move away from ephedra products in the US, amid associated health fears, is also likely to spur interest in Tonalin as a scientifically backed alternative.

Several of the German group's other units were also affected by lower prices, with the weak US dollar playing a role in the 5.6 per cent drop in sales across the company. Some 60 per cent of group sales are made in the US. Chief financial officer Joachim Sohngen said that cost reduction measures have been put in place and that steady organic growth would continue over the next 12 months.

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