Recession-proof BioGaia doubles 2008 profits

By Shane Starling

- Last updated on GMT

Related tags: Probiotic

Swedish probiotics specialist, BioGaia, has turned in an impressive set of financial results for 2008, maintaining the 30 per cent-plus growth it has achieved annually for the best part of this decade.

The company almost doubled 2008 after-tax profits to 36.1m Swedish Krone (€3.35m) from SEK19.7m in 2007, which included a deferred tax rebate. Before tax profit was SEK24m (€2.23m) and it forecast a 25 per cent profit margin within 3-5 years.

In 2008 it increased sales 36 per cent to SEK145.2m (€13.48m) from 106.6m (€9.9m) in 2007.

2009 and beyond

BioGaia executive vice president, Jan Annwall, said the company, which has a proprietary probiotic strain called Lactobacillus reuteri ​ was as yet unaffected by the global economic recession.

“There has been some slow-down in functional foods but our core business is in food supplements so we have had almost no effect from the economic situation,”​ he told NutraIngredients.com.

The company has for some time focused on new markets in regions such as the Middle East, Asia and Eastern Europe – all of which continue to demonstrate growth, mainly in the probiotic tablets and drops usually sold under licensing agreement with local distributors.

However, since 2005 BioGaia has sold products under its own brand and these products now account for 20 per cent of finished consumer products sales.

This strategy meant, greater emphasis on the BioGaia brand, increased sales to both existing and new customers and a controlled cost level” ​the company said in its financial statement.

There had been a rapid uptake of supplements in Eastern Europe as well as new Q4 licensing agreements with distributors in Lebanon and the US.

“Eastern Europe has surprised us because we did not think that there was the spending power there to buy the volume we have been selling there,” ​Annwall said. “But it continues to flourish.”

Probiotic caps and straws

While its focus will remain on supplements, the company has been developing alternative delivery solutions in the form of probiotic straws and caps.

The straw – which preserves the probiotic cultures in a dormant state until the point of consumption when they are released into the beverage – is available in select markets.

Via its probiotic cap technology subsidiary, CapAble, a deal with American firm Mass Probiotics means a beverage with a probiotic cap that works on the same principle as the straw will be available “by the end of March”.

BioGaia signed that deal in December and Mass Probiotics is publicising the product called Phd on its website and has established a Phd Facebook page.

The beverages come in citrus and berry flavours, contain six probiotic strains as well as 4g of prebiotic fibre with the berry version being linked with digestive health; citrus with immunity. Each bottle contains 20bn colony forming units.

CapAble has inked a similar deal with the Mexican bottled water company, Aqua Scandik.

Major international beverage makers were in discussions with the company, Anwall said.

Japan

He said a strategy that had focused on marketing a drink with a probiotic straw via grocery stores had been abandoned in Japan in favour of pharmacy-sold supplements.

“The product was too complicated and so we have gone back to the strategy we employ in most other markets,”​ he said. “So far it looks very promising.”

“We are seeing sustained strong demand for our products and expect to launch our products in many new countries during 2009,”​said President Peter Rothschild, in a statement.

Euromonitor put the global market for probiotic dairy drinks alone at $10.2bn (€7.93m) in 2007.

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