Interview: Chr. Hansen Tapping into Emerging Markets and Opportunities with LGG

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31 May 2017 --- The probiotics category holds strong untapped potential in emerging markets and synergies between strains could also serve as inspiration for NPD. This is according to the company’s Senior Vice President Human Health, Lasse Nagell, who was strongly promoting the recently acquired LGG strain at Vitafoods Europe 2017 in Geneva. 

In September 2016, Chr. Hansen signed an agreement with Valio OY to acquire the Finnish company’s Lactobacillus rhamnosus GG (LGG) business for €73 million (US$82 million). According to the company, LGG has been used in food and dietary supplements since 1990, described in more than 800 scientific publications and studied in more than 200 clinical studies.

As part of the agreement, Chr. Hansen took over a number of specialty strains already in production and a bacterial collection of around 3,200 strains. In addition, Chr. Hansen and Valio entered into a strategic research and development collaboration to extract further value within dairy. 

Click to EnlargeNatural solutions that advance human health are in high demand and the expected growth for microbial solutions in this industry is 7-9%. Chr. Hansen is the world’s leading supplier of probiotics to dietary supplements, infant formula and dairy, and through the acquisition of the LGG business, the company is now further strengthening its microbial platform across all three categories.

Nagell gave NutritionInsight an update on the addition of LGG into its portfolio.

“Chr. Hansen has had a manufacturing relationship with Valio for more than ten years for the production of LGG for the food supplement industry, so when this opportunity presented itself, it gave us a chance to also work with LGG in the food space, primarily in the dairy space,” Nagell says. “So we now have an ingredient we can sell in the food space, globally, but also in the dietary supplement market.”

“Valio did an outstanding job in the home market, so primarily North Europe and Russia, but in a lot of the emerging markets, such as APAC, China, LATAM, there are still tremendous pockets of growth; not just in the supplement space, but definitely also on the food side. At Chr. Hansen, we have established businesses and networks there, which is what we will take advantage of.”

“The deal closed in November, and we have spent the months since pitching this product to our local sales teams, going out to present this to customers, so we have really been building our pipeline,” Nagell says. “On the food supplement side, we already have very strong partners that are working with LGG, so we are carving out additional spaces for them to continue to grow. We are taking a very strategic look at the trademark and are wanting to build stronger brand equity than Valio was able to do. So we are quite restrictive [in terms of] who uses the trademark and how they are going to promote the product. So this has been our focus over the past half year or so.”

“We continue to look for opportunities to combine some of our strains, for example, BB12, where there is strong scientific evidence on the combination of two ingredients, and there are still opportunities to come up with new dosage forms, as well,” Nagell says.

“The benefit [of synergies between probiotics] is that when you have a bifido and a lactobacillae, you can have a stronger effect on strengthening GI. LGG is well documented as being able to support the immune system,” Nagell says, adding that the company will continue to invest in clinical studies into the benefits of combining ingredients and strains.

Nagell notes that the company remains confident about the potential for growth in the probiotic market.

“If you look at the data, there is still growth in the European market, even with the claims situation that the industry has been facing. In North America, even though growth has been slowing down somewhat, there is still projected to be double-digit growth. And then we have the emerging markets where I think we are just seeing the beginning of the probiotic category,” Nagell says.

Click to Enlarge“In the yogurt space, there is untapped potential, especially if you look at what has been happening in the probiotics category. We believe we can use our LGG products as a vehicle to get growth back in that market,” Nagell says.

EFSA’s mass rejection of Article 13.1 generic claims in 2012 led to many segments of the nutritionals space opting for company specific Article 13.5 submissions. The probiotics category has been largely notable for its absence from these types of submissions, with Chr. Hansen still quiet on efforts from this regard.

“Until there are changed guidelines from EFSA, more clarity, [the situation] remains difficult. Am I surprised that there aren’t more submissions? No. I think a lot of people are looking into new areas to strengthen the science and are trying different avenues to get to clients,” Nagell says.

At the moment, Chr. Hansen has no submissions pending, but the company will continue to look into new scientific studies and new probiotic strains, which will hopefully be the ones that get approved for claims by EFSA, Nagell concludes.

NutritionInsight currently features an overview of some key products with probiotics, highlighting that probiotics continue to be applied outside their more common domain of dairy. One notable development is that indulgent products, such as snacks and confectionery, are receiving a health boost via the incorporation of probiotics, resulting in better-for-you appeal.

Today (4pm CEST/10am EDT), Innova Market Insights will be hosting a live webinar on the latest developments in the market for gut-health related products. To register for this event see here.

by Lucy Gunn and Robin Wyers

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