Known for branded ingredients including Bioenergy Ribose and RiaGev, BLS is also vertically integrating sourcing, logistics and third-party testing to increase transparency, accelerate procurement and protect brand profitability.
The company has appointed Michael Crabtree as general manager to lead the expansion.
“What we noticed in applying our customers with just our branded ingredient, our branded materials, is that there were all of these opportunities to supply them with raw materials that they would be utilizing in other products,” Crabtree said.
BLS began by offering ribose but expanded to high demand, high volume goods and products such as vitamins, quercetin, various kinds of polymethyl flavones and plant products like apigenin.
“We can help them bring down the cost on these quality materials, and we can also help [customers] verify quality assurance practices here in the United States,” Crabtree added. “This gives them advantages when they are going to launch on Amazon or when customers are dealing with their own FDA audits and good manufacturing practices, establishing a quality assurance matrix.”
BLS China connection
Prior to becoming a subsidiary of Chinese company, Chengzhi Life Science, in 2010, BLS was an U.S. company with intellectual property around ribose, but the product was difficult and expensive to make. Soon after, it incorporated Japanese and Chinese technology to improve the fermentation process used to genetically engineer bacteria. BLS found that its Chinese partners had significantly improved fermentation efficiency, which in turn lowered product cost.
“This gave us the ability to sell a branded ingredient at a much better price,” Crabtree said. “It made the product, in the volume sense, take off. That was really kind of the starting point. But what that historical picture gave us was an enormous basis of understanding of how business operates in China, how the ingredient world works in China, and how supply chain between China, the United States, Europe and Latin America functions.”
Four years ago, BLS established a direct supply chain from China to the United States for the purposes of supplying select customers with higher value ingredients that they were already using in their products. The company is also establishing a supply chain for customers to export finished products back to China.
Crabtree said several American companies do not have people on the ground or intel in China, whereas BLS has the advantage of being a culturally blended company.
“You have to go through this chain link fence or a layered trading system where the manufacturers in China hire distribution companies that can very often hire distribution companies in America,” he said. “You have two or three layers between the end user to manufacture the finished products and the Chinese manufacturer. What we learned through our experience is that we can cut that middleman out and effectively deliver these ingredients to companies at a lower price.”
Companies may see an average 10% markup on products when they work through traders, but gross margins can rise to even 20% to 40%.
Tariffs
The recent pressure of U.S.-China tariffs is not anything new for BLS, which has navigated tariff issues for the last 15 years with the help of its resources in China.
“We talk to our Chinese partners on a regular basis,” Crabtree said. “They tell us what they think is going to happen and then we have to make an assessment of the market and of the political situation as we think it might play out. If you’re dealing with companies or you are a small-to-medium-sized business dealing in high-value ingredients but don’t have this intel coming in from China, you’ve got a big blind spot and are vulnerable to alterations in Chinese manufacturing, Chinese energy costs[…]—it’s almost a geopolitical watch apparatus that BLS has because we are so well embedded. We had to develop this way.”
He added that if there are changes in the manufacturing costs in China, BLS can inform the customer of that, helping them prepare to save them money, time and undue stress.
“[Customers] are really riding a razor’s edge here with the import systems,” Crabtree said. “Every dime that you can save counts.”
