News

Fermentalg looks to DIC deal to accelerate expansion

19 Sep 2017

The contract announced with food colourings company DIC should, the company said, lead to an acceleration in Fermentalg's expansion in the natural pigments market.

French microalgae company Fermentalg has announced that, for the half-year, its gross cash position amounted to €10.2 million at 30 June 2017, versus €15.7 million at end-2016 and €12.7 million at end-March 2017.

The slowdown in cash expenditure is in line with forecasts, the company said, and comes on the back of controlled spending, notably through cuts in administrative costs (primarily fees), as the Group prepares for its future industrial deployment. Operating income for the period came in at a negative €3.1 million, compared with a negative €2.8 million for the first half of 2016 and a negative €4.9 million for the second half of 2016.

The second half of 2017 will see Fermentalg focus on signing new distribution contracts and the first sales for DHA350, which is the first product to be marketed by the Group.

The contract announced with food colourings company DIC should, the company said, lead to an acceleration in Fermentalg's expansion in the natural pigments market. Backed by Fermentalg's historical shareholders, it believes the new alliance should also enable the Group to strengthen its financial resources in order to underpin its development in the years ahead.

The agreement between Fermentalg and DIC targets the fast-growing market for natural alternatives to artificial food colourings. The partnership will bring together Fermentalg’s microalgae strain bank and its integrated biotechnology platform with DIC's applied research, industrial and commercial resources.

In its medium-term management plan, DIC has identified the nutrition and health industries as key targets for the future and DIC says it believes that the combined capabilities of DIC and Fermentalg will enable DIC to develop natural food colouring products that meet consumer needs and expectations in a fast-growing market.

DIC and Fermentalg have also signed a three-year joint development agreement for the development of microalgae-derived natural pigments, including an innovative phycocyanin, the main blue pigment used in natural food colouring (for confectionery, ice cream, beverages, etc.) as an alternative to artificial food colouring. DIC claims a 90% global market share in phycocyanin, the source of the natural food colorant, Linablue, and expects annual demand growth of 50% between 2016 and 2020.

DIC said it believes that combining the technologies of DIC and Fermentalg will open a new way of producing natural pigments, which should position them in a strong competitive position in a fast-growing market.