ONC eyes China as 'the new frontier'

By Jess Halliday

- Last updated on GMT

Related tags: Asia, China

Ocean Nutrition Canada is aiming to extend the reach of its Meg-3
fish oil ingredient to embrace the whole of Asia - a strategy that
may prove shrewd given estimates of a 200 percent increase in
market value in the next six years.

The Canadian company has previously had a presence in Australia and New Zealand, but it is now broadening out into new markets. Ian Lucas, executive VP of global sales and marketing, told NutraIngredients.com at last week's HIE show in Frankfurt, Germany, last week that "China is our new frontier".​ In particular, the company has identified opportunities in the Chinese dairy and infant formula sectors. It made its first foray into China this summer, with the introduction of a drinkable yoghurt with Meg-3 by Canton American Flower Lounge Livestock Company (CAFL), a subsidiary of Lark International Dairy Holdings. The product was named '2006 Recommended Product' by the Guadong Dairy Association.

Dr Carl Zhu, who has been appointed as sales manager for China and brings experience in the dairy sector, said that the rationale behind dairy as the first target is that it already has healthy connotations.

Moreover, many infant formula makers are now fortifying products with DHA (which occurs naturally in human breast milk) in light of evidence of the vital role it plays in cognitive development.

In a recent briefing Frost and Sullivan said that the Asia Pacific omega-3 market earned revenues of US$279.6m in 2005. It is expected to increase to $596.6 by 2012. However Australia, New Zealand and Japan are the only Asian markets where legislation and recommended dietary intake of omega-3 already exists. "Unclear or inadequate legislation relating to omega-3 most major Asian markets as well as the lack of consumer understanding of the nature and action of good fats is restraining market growth," said Frost and Sullivan.It urged omega-3 manufacturers need to push for more favourable regulatory regimes that will support market expansion, and to educate consumers and opinion leaders on the health benefits.The latter should give ONC little headache, since it has established strong branding behind Meg-3, which appears on consumer packaging in some markets and has been used in advertising campaigns.While more and more people are acknowledging the benefits of omega-3 in China and southeast Asia, the most challenging areas of Asia have been identified as India, the Philippines and Thailand, where awareness levels remain low. Further advice to omega-3 manufacturers in the region from research analyst Vignesh Raja is to "identify other avenues for growth such as focusing on niche segments, making acquisitions or entering into strategic tie-ups and alliances."ONC's Asia Pacific expansion will be overseen by Kevin Krail, who becomes general manager for the region. Krail's remit was previously limited to Australia and New Zealand. Although Krail will remain based in Sydney, Australia, the company is planning to open a sales and marketing office in Shanghai in 2007.

Taiwan-based Jingkai Shen will be responsible for developing new business in the North Asian market, and will provide local leadership in Taiwan and Korea.

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