Martek deal pits General Mills against Kellogg in omega-3 race

By Jess Halliday

- Last updated on GMT

Related tags Docosahexaenoic acid

The race is on to see which of two leading cereal makers will be
the first to place an omega-3 fortified product on shelves,
following a new license and supply agreement between Martek and
General Mills that is substantially similar to that which the
biotech struck with Kellogg 18 months ago.

The new deal gives GM the right to develop certain, unspecified food products containing Martek DHA, and sets out that it must purchase substantially all of its DHA requirements for the US and other designated territories from Martek for the next 15 years.

In February 2005, the company signed a notably similar non-exclusive deal with Kellogg. Both food companies have agreed to carry the Martek logo on packaging.

Although there has been little news on Kellogg's progress towards omega-3 product development, a spokesperson for Martek told that the deal is still current, and that the first product launch is expected to take place in 2007. It was originally foreseen for 2006.

The spokesperson said that the specific details of both deals are confidential, but confirmed that they "serve the same purpose".

Although both companies are active in the breakfast cereals sector, the nature of the product each one is developing - or indeed whether Martek has split the product category rights between the two competitors - is not known.

However one clause of both deals takes the pressure off the food companies somewhat: there are no minimum purchase requirements in either case, not other financial commitments to Martek.

This gives them the a measure of flexibility to test the water with initial products; although given the rising popularity of omega-3 amongst consumers, it not likely that they will meet with a wholly chilly reception, so long as they have done due diligence to overcoming sensory hurdles associated with the notorious instability of omega-3, and pay heed to market research.

Martek's marketing of its DHA (docosahexaenoic acid) omega-3 hinges strongly on its microalgae, rather than fish, origin.

DHA and EPA (eicosapentaenoic acid) have been linked in numerous recent studies to health benefits including heart health, cognitive function and joint health.

Market is also extremely active in the infant formula market; it claims that its DHA and ARA are contained in 80 per cent of fortified formulas in the United States, with licensees including Mead Johnson, Wyeth, Abbott Laboratories and Nestle.

In the past two years it has indicated that it is looking to grow up with consumers of infant formulas, to see its DHA used in food products for children and adults.

Last November Martek announced that it had developed a new, lower-cost product, which CFO Pete Buzy told would open the door for more food applications.

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