As Aker BioMarine looks forward to 2019, CEO Matts Johansen said the demand for krill oil grew strongly in the past year, a trend he said shows no signs of faltering.
“2018 has been a very important and good year for us. Sales of krill oil supplements grew 30% in the past year in the US, which has been a very mature market,” Johansen told NutraIngredients-USA.
“This drives investment in the category going forward. We have the wind at our back, as we say in Norway,” Johansen said.
Long term strategy
From its start in the krill oil business more than a decade ago, Aker has pursued what might be colloquially termed a go-big or-go-home strategy. Harvesting krill in Antarctic waters is expensive and fraught with difficulties. First you need a sophisticated harvesting vessel capable of keeping to the sea in all weathers. You also need a supply ship that can also offload harvested and processed krill so that your harvesting vessel doesn’t have to waste time and fuel returning to port. Then you need a second vessel to cover for the first during scheduled and unscheduled maintenance.
Throw in a third fishing vessel so that the business can achieve what Johansen has frequently termed sufficient ‘scale’ for it to be sustainable and profitable. In order for krill oil ingredients to be the best they can be, take your processing in house (over the past several years Aker has retrofitted a processing facility in Houston) so that you can implement new extraction and purification technology on your own timescale without having to negotiate with a processing partner.
Now, hundreds of millions of dollars later, in January Aker will commission a fifth vessel in its krill navy. With the addition. the company will be close to bringing in more than three quarters of the world’s total krill harvest.
The new vessel will incorporate all of what the company has learned in harvesting techniques over the years. The company pioneered a harvest technology that uses an air bubble-driven water pump, sort of a giant size version of the bubble filters common in home aquariums, to pump the krill from the water without squeezing and crushing them by hauling a net and dumping its contents on deck.
Krill are delicate and their bodies are loaded with enzymes, and once damaged, they begin breaking down rapidly. So avoiding that initial spoilage that can contribute to the ingredient’s old bait bucket odor is part of Aker’s value proposition. The company has also invested heavily in on board processing, so that the krill can be prepared for shipping to Houston in a state in which no additional spoilage can occur.
The krill business is not for the faint of heart, Johansen said. Nor for those who have insufficient capital.
“You need patience and have endurance and have success. Our new vessel is a $130 million investment. It will have lower CO2 emissions; it will have all of those sustainability elements to it,” he said.
New efficacy study
In addition to the processing and harvesting side of the coin, Johansen said Aker has invested heavily in efficacy studies as well. The latest is a trial which is ongoing with 400 US Army Rangers, to measure various parameters that go into what Johansen termed ‘warfighter performance.’ That will include looking at how krill oil supplementation can improve measures of sleep, stress and anxiety.
“The data from that trial will be coming in early in 2019 and then it will take some time to get it published. I think that will be huge for the omega-3s category, and it will be a value proposition for a younger target group of consumers,” Johansen said.
“If you have a group of individuals who are already the strongest, the smartest and the toughest and they are taking krill oil to be more than they are, then that is a good place to start,” he said.
Aker has also invested in proving its commitment to the sustainable harvest of krill, which forms the bast of the Antarctic food web. The company has installed updated suites of scientific instruments to equip on its board labs. In the past, the company has devoted a week’s worth of ship time annually so that researchers can monitor the health of the krill populations.
Last year, the company entered into a milestone agreement with Greenpeace. In it, Aker will voluntarily avoid harvesting krill near penguin colonies to avoid stressing the animals.
And in the coming year, Johansen said Aker will donate a significantly greater amount of ship time so that the first comprehensive population survey of Antarctic krill can be carried out. While the harvesting limits set by the international body CCAMLR (Convention for the Conservation of Antarctic Marine Living Resources) are highly conservative, they are based on baseline data that is more that is more than a decade old.
“The last time a survey like this was done was in 2000. In 2019 our ship time for science will be much more than a week. It will be more like a couple of months,” he said.
“We have also developed a sail drone that is powered by the wind and by solar panels. It will operate autonomously, and will scan ocean temperatures and collect biomass data and continuously feed that back. We have tested that in the waters off of Norway and in 2019 it will deployed in the Antarctic,” Johansen said.
Johansen said Aker’s background in oilfield services (the company has a division involved in offshore oil development in the North Sea) has stood it in good stead in the processing of lipid ingredients for human consumption.
“We are expanding our facility in Houston to increase capacity, but we also have started a big project around data analytics. We are trying to build up a model for machine learning to optimize our processes using AI,” he said.
“It will recognize patterns of when things are about to go wrong. They have used similar things in the oil and gas industry to try to prevent things going wrong on the rigs,” Johansen said.
In addition, the company is investing in product development in using krill oil as a carrier and absorption enhancer for other ingredients, including CoQ10, Johansen said.
“Now that we have achieved sufficient scale, we can start to innovate sideways. And as we get bigger, we are going to invest more,” he said.