Fermentalg joins DIC to create natural food colorings as it announces half-year results

12 Sep 2017 --- Fermentalg, a French company providing microalgae products for nutrition and health, and DIC Corporation, a Japanese company in the global chemicals industry, have announced the signing of a cooperation agreement. The agreement was revealed as Fermentalg announced its 2017 half-year financial report, which shows a slowdown in cash expenditure that is in line with forecasts, 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.

The Fermentalg agreement with DIC has two components: a €5 million (US$5.98 million) investment by DIC Corp. in Fermentalg in the form of bonds convertible at €5.00 per share, and a three-year joint development agreement of two products, including a phycocyanin, a natural blue pigment.

The global, multi-year agreement “targets the fast-growing market for natural alternatives to artificial food colorings,” according to Fermentalg. The partnership will “bring together Fermentalg's unique microalgae strain bank and its integrated biotechnology platform with DIC's significant applied research, industrial and commercial resources.”

“This alliance will enable us to accelerate our expansion into microalgae-derived natural pigments, our company's second major development focus alongside omega 3 rich oils,” Philippe Lavielle, Chairman and CEO of Fermentalg, says. “This agreement is proof of the effectiveness of Fermentalg's biotechnology platform and of our ability to win over global industry leaders.”

“DIC Corp.'s investment in our company clearly demonstrates their confidence in our ability to create value together in the coming years in the area of natural pigments,” Lavielle continues. “I would like to thank our key shareholders, particularly Bpifrance and Demeter, for renewing their commitment to Fermentalg and stepping up their financial support.”

“In our medium-term management plan, we have identified the nutrition and health industries as key targets for the future and we believe that DIC and Fermentalg's combined capabilities will enable us to develop natural food coloring products that meet consumer needs and expectations in a fast-growing market,” comments Kiyotaka Kawashima, Executive Officer of DIC in charge of the Corporate R&D Division.

Three years joint development agreement (JDA)
Fermentalg and DIC have signed a three years joint development agreement (JDA) for the development of microalgae-derived natural pigments, including an innovative phycocyanin, the main blue pigment used in natural food coloring (for confectionery, ice cream, beverages, etc.) as an alternative to artificial food coloring. DIC claims a 90 percent global market share in phycocyanin, the source of the natural food colorant, Linablue, and expects annual demand growth of 50 percent between 2016 and 2020. This co-development program will start on 1 October 2017.

Fermentalg's technological platform, including its leading microbiological bank and its proprietary technology (predominantly-heterotrophic mixotrophic), will be implemented in this JDA. Combining with the expertise and industrial capabilities of DIC, Fermentalg has announced that it is opening “a new way of producing natural pigments, which should offer it and its partner a strong competitive position in a fast-growing market.”

Once the various transactions have been finalized, Fermentalg has announced that a representative of DIC will join Fermentalg's Board of Directors as an observer.

NutritionInsight spoke to Jean-Louis Caradec of Fermentalg at Vitafoods Asia in Singapore last week about new opportunities with microalgae-based ingredients. You can view the video here.