Fish oil omega-3: Industry tackles supply chain uncertainty and cost pressures

Just under three years ago, the global fish oil industry faced a sudden shortage after the Peruvian anchovy fishery—the largest source of fish oil for the global omega-3 market—cancelled the year’s first fishing season.

Largely attributed to El Niño, which raised ocean surface temperatures and caused adult anchovy biomass to move away from traditional fishing areas, the cancellation led to a spike in omega-3 prices.

The industry has since worked to improve its resilience to unforeseen circumstances, but such uncertainty is likely to intensify as geopolitical tensions and regional conflicts continue to unfold.

Belgium-based fish oil supplement company WHC Labs says it is trying to buffer against this uncertainty by increasing its inventory by a maximum of 35%.

Swisse, owned by Hong Kong-based Health and Happiness (H&H Group), has even gone so far as to forecast the volume of fish oil omega-3 required for at least the next 12 months—an approach it is taking for other raw materials, including popular botanicals including cranberry extract and milk thistle.

Climatic events on the horizon

Facing a potential El Niño this year, Peru’s Ministry of Production assigned a quota of 1.91 million metric tons for the first anchovy fishing season of 2026, representing a 36% decline from a year prior.

“On the topic of the upcoming Peruvian anchovy season, there is the possibility of a mild-to-moderate El Niño, but the specifics are not yet available,” said Chris Gearheart, director of sustainability & analytics at the Global Organization for EPA and DHA Omega-3s (GOED), noting that the Peruvian anchovy fishery has been challenged by El Niño climate events every seven to 10 years.

To help connect companies across the fish oil supply chain—from the crude oil producers to refiners and brand manufacturers, GOED announced at its biannual exchange that it is launching an online database to help industry players connect to companies operating across the supply chain.

“In an effort to help identify the scope of omega-3 crude oil sources available to the market, GOED is launching a Supply Chain Navigator tool to allow brands to identify and build relationships with a larger variety of quality suppliers,” Gearheart said. “GOED has also begun researching a traceability program to ensure member companies are producing quality oils from sustainable fisheries.”

Aside from the Peruvian anchovy fishery, the Black Sea is a significant source of fish oil omega-3.

Stocking up: A balancing act

Increasing inventory is often the most immediate response when preparing for unforeseen disruptions but must weigh various factors including cash flow constrains, the pace of sales growth and the shelf life of raw materials.

“At this stage, we are trying to get as much inventory as possible,” said Patrick Zhao, chief operating officer at WHC Labs Asia, which distributes WHC Labs products in China. One of its hero SKUs is WHC UnoCardio 1000 Fish Oil. “It is a heavy burden on cash flow, that’s for sure, but we will try to maintain an inventory level well above the necessary as long as possible.”

The company increased its inventory by almost 35% last year, but unpredictable demand, especially from its livestreaming business in China, made it challenging to derive an accurate sales forecast.

“We increased almost 35% on stocking up goods, but on the other hand, our expansion last year was also up 30%,” said Bart van Zwol, CEO and co-owner of WHC Labs. “Forecasting is always a very difficult scientific approach, which mostly doesn’t work, especially if you’re a growing brand.”

While collaborating with leading KOLs (key opinion leaders) can drive thousands in daily sales volume, securing these collaborations is far from guaranteed, as negotiation over commissions and other terms can be challenging. As a result, businesses often need to prepare additional inventory in advance to meet potential demand.

The ideal situation, van Zwol said, would be to create a buffer of at least 50% in ingredient inventory.

Sales forecasting has emerged as a key learning for Swisse, shaped by recent disruptions including the 2023 fish oil shortage, supply chain challenges linked to drought conditions affecting the Panama Canal between 2022 and 2024 and the blockage of Black Sea shipping routes in the wake of the Russia-Ukraine war.

“We’ve learned that everything is related to sales forecasting and so we have developed a regional and long-term horizon forecast as well as to centralize our internal planning,” said Poh Ling Cheang, managing director for Asia at H&H Group, the parent company of Australian supplement brand Swisse Wellness.

In fact, the company has extended its sales forecasting horizon to more than year, which Cheang said will help secure longer and more stable contracts and supplies.

Brands are also increasingly prioritizing stockpiling of raw ingredients over finished product inventory to help extend overall product shelf life.

“Consumers demand long shelf lives—so long expiration dates, not short expiration dates; it is a very difficult balance to strike when it comes to how much to produce, and at which time,” van Zwol noted.

As a brand owner, he maintains a close relationship with raw material suppliers to be able to secure supplies in the face of unexpected circumstances.

“We still have the same set of suppliers from when we first started,” he said. “We don’t shop around to see who has cheaper ingredients, and the fact that we stay loyal to our suppliers gives us a lot of support and some kind of prioritization. It’s the long-term relationship that matters,”

The company sources its fish oil from KD Pharma and soft gels from Sirio Pharma.

Considering fish oil alternatives

In the face of disruption, companies are also looking to alternatives, such as krill oil and microalgae-based omega-3, to reduce reliance on fish oil.

“Supply remains a key concern to all supplement brands, and GOED’s message for the last several years has been that brands need to consider alternative sources beyond Peruvian anchovy to ensure the long-term stability of the category,” Gearheart said. “This includes algae and krill, but also other fish sources from regions not as familiar to brands.”

Noting that decisions to explore fish oil alternatives must align with brand identity and positioning, Swisse considers overall brand strategy focused on areas with the strongest growth potential.

“New product development is always linked to how the market has transformed and is based on market demand as well,” Cheang said.

The company also offers its Swisse Ultiboost High Strength Krill Oil, which was granted listed assessed status by Australia’s Therapeutic Goods Administration (TGA) for a “relieve knee pain in mild to moderate osteoarthritis” benefit claim in 2024.

WHC Labs, which recognizes the importance of clear brand messaging, said that the company is not yet considering alternatives to fish oil, at least in the near term. Currently, 14 out of the 18 supplements it sells in China are fish oil-based products, including its UnoCardio line of medical-grade 97% purity EPA fish oil capsules, 95% purity deep-sea fish oil and chewable fish oil for children.

“WHC is known for being the high-concentration fish oil specialist,” van Zwol said. “That is our unique selling point and what our brand stands for. We want to have clear consumer communication, and having a big portfolio can get very confusing for our consumers.”

Malaysia’s Holista Colltech, which carries the Pristin brand, stated that while fish oil remains the leading and most conventional choice for most consumers, largely due to greater familiarity and understanding, it is exploring alternatives.

“We are planning to launch an algae oil supplement probably in Q2 next year, but consumers would want fish because it’s part of our culture, it’s part of our tradition, and it is very natural to take fish,” said Dr. Rajen Manicka, founder of Holista Colltech.

To help companies compare the environmental impact of different omega-3 sources, GOED recently published life cycle assessment (LCA) guidance which considers emissions, energy use, eutrophication and other outcomes.

Downward pricing pressures

Brands also report being affected by the commoditization of fish oil, with competing sellers offering products, often online, at much lower prices.

“There is a downward pressure on prices—it is not a bad thing," Dr. Manicka said. “Consumers benefit when prices go down, but it’s a bad thing if, in the process, companies in that supply chain start to make compromises. For example, some may be selling their fish oil omega-3 in plastic bottles instead of glass bottles.”

Competing in a price-sensitive consumer market is also putting increasing pressure on brands to keep prices low.

“Consumers are looking at the label and thinking how much do these milligrams of omega-3 cost,” he added. “Everybody is in a price war and so there is downward pressure on prices. Products that have the highest prices tend to suffer the most but everyone else will see declining margins.”

Dr. Manicka, who is also the president of the Malaysian Dietary Supplement Association (MADSA), urged consumers to consider products prior to purchase and whether lower prices might be due to lower grade fish oil.

H&H Group’s Cheang highlighted that fish oil has become a target of commoditization because its health benefits are widely understood among consumers.

“Fish oil omega-3 has been commoditized,” she said. “By commoditization, I am referring to how there are more unregulated brands entering the market; we do not know exactly the source of their fish oil and how they have obtained it.

“Commoditization will be the greatest challenge for reputable, imported brands that have always taken into consideration the process of how to source omega-3, proper registration, communication and channels of distributing products. ”

H&H Group is addressing the issue by working with local regulators and on consumer education to help them identify legitimate brands. In Malaysia, for example, health supplements must have the MAL identifier code and the National Pharmaceutical Regulatory Agency’s (NPRA) approval code and hologram sticker on the pack.

Pricing pressures are further complicated by the rising cost of raw material prices, leaving brands squeezed between keeping maintaining competitive retail pricing and protecting profit margins. In markets such as China, raising prices is particularly challenging because consumers are often unwilling to accept increases even in periods of supply shortages.

Countering counterfeits

In addition to the challenge of commoditization, brands are also having to compete with counterfeit products infiltrating the market.

Dr. Manicka noted that Holista Colltech is actively combatting Pristin counterfeits sold on third-party e-commerce platforms, some of which have been found to contain soybean oil and showed high levels of rancidity.

“We are now working with our government authorities in trying to engage all the online players to have some sense of responsibility in regulating their stores,” he said. “They have to blacklist those stores selling counterfeits.”

One way of reducing counterfeits is to require e-commerce platforms to ensure that supplements sold on their platforms supply legitimate documentation from local regulators.

“It is all the fly-by-night operators selling counterfeits,” Dr. Manicka said. “You can shut down their stores on the third-party platforms, but they can open another store tomorrow. These third-party platforms have to get these sellers to give the date of approval and registration documents of their health supplements.”

He also advised consumers to purchase products directly from brand websites or from reputable offline pharmacies.