Emerging probiotic markets drive BioGaia sales boom

By Shane Starling

- Last updated on GMT

Related tags: Probiotic

Swedish probiotics player, BioGaia, has notched a 55 per cent increase in sales for the first half of 2009, with emerging markets in central and eastern Europe driving the recession-bucking result.

The company’s focus on gaining medical profession support for its self-branded and licensed probiotic supplements bolstered a 55 per cent net sales surge of €3.91m to €11m over the period.

“Some currency changes have worked in our favour but it is the strength of our model that focuses on clinically-backed probiotic food supplements that has enabled this result,”​ managing director, Peter Rothschild, told NutraIngredients.com this morning.

“We work very hard with our distributors to ensure that potential clients such as doctors receive the education they need about these products and we are happy with how that is going especially in the emerging markets such as the Middle East, Asia and Eastern Europe.”

That model means the supplements are typically available only in pharmacies.

BioGaia’s experience in Eastern Europe is backed up by Euromonitor statistics that show the probiotics market there grew 22 per cent to €517m in 2008, compared with nine per cent in western Europe (€4.25bn).

Rothschild said the supplements side of the company’s business accounted for 80 per cent of its turnover, but expected activity to pick up in the infant nutrition area after recently inking a deal with Nestle.

Because of accumulated tax losses the company did not pay tax on €2.11m it earned.

Notable events during the second quarter included a distribution agreement with InfectoPharm for BioGaia's Probiotic drops in Germany and a deal with Semper to distribute probiotic oral rehydration solution in Sweden and Norway.

Other new deals have been struck in the US and Lebanon.

Rothschild added that the bottom-line figures have been assisted by costs remaining stable along with the strength of clinical backing for its various probiotic strains in a market where that was not always the case.

“One of the biggest threats is generic products that make unsubstantiated claims,”​ he said. “It takes a few years before clinical packages are put in place.”

BioGaia has since 2005, 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

Delivery mechanisms

BioGaia has been developing probiotic straws and caps – methods that preserve probiotic cultures in a dormant state until the point of consumption when they are released into the beverage in question.

Via its probiotic cap technology subsidiary, CapAble, a deal with American firm Mass Probiotics means a beverage with a probiotic cap is set for release there soon.

Euromonitor estimates the global probiotics market is worth more than €14bn.

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