Probi shoots for growth in probiotic markets amid COVID-19 disruptions

09 Apr 2020 --- Probiotics player Probi says the global probiotics market is pegged for growth as consumer interest in immunity is on the rise in light of the COVID-19 outbreak. This is detailed in its annual financial report, where CEO Tom Rönnlund states that the company hasn’t seen the growth and profits it expected in recent years. Rönnlund, who took over as CEO in January 2019, says that the company also seeks to further expand its reach in emerging markets such as Asia, and is evaluating possibilities for strategic collaborations.

“We can’t overlook the effect coronavirus may have on the global demand for probiotics. However, we have not yet seen any negative impacts on the market or major disruptions in our supply chains. An increased focus on health and a stronger immune system may increase the interest in probiotics in the long-term. So despite moving toward a much more uncertain global development, we see continued great potential in our markets,” Rönnlund notes.

He goes on to explain that Probi’s growth has not been satisfactory in recent years, amid an expanding global market. This has made the company determined to grow further and its main goal is to report double-digit growth going forward. Earlier this year, Probi’s reported bouncing back from “weak” Q3, amid stable performance and profitability in Q4 of 2019.

“In 2019, we implemented a number of measures to position our company for this. In times of great uncertainty caused by the spread of the coronavirus, it will be crucial how we succeed in implementing these measures. An important part has been a review of our business strategy. We have thereby created greater clarity, especially internally, in regard to our priorities for markets and development projects,” Rönnlund says.

Financial results for 2019
Probi’s net sales for the full-year of 2019 amounted to US$61.2 million (SEK 626.2 million). The total increase was US$2.2 million, amounting to a 4 percent increase compared with the year on-year period. At the preceding year’s exchange rates, net sales for the full-year would have been US$78,700 which is 0.8 higher year-on-year.

Probi CEO Tom Rönnlund states that the company seeks to further expand its reach in emerging markets such as Asia.Net sales in Probi’s largest market of the Americas (North and South America) amounted to US$502.3 million (SEK 468.9), corresponding to 75 percent of Probi’s total net sales. The increase of US$2.4 million (SEK 24.6 million) corresponds to a 6 percent growth, which was largely due to a stronger US$ value. 

Sales in EMEA (Europe, the Middle East and Africa) rose 13 percent year-on-year to US$121.6 million (SEK 113.5 million). The increase was attributable to a new large Turkish customer-company, but also to growth in existing customers. The APAC region (Asia Pacific) reported net sales of US$46.9 million (SEK 43.8 million), down 26 percent. This was mainly the result of tighter regulation, which led to a temporary slowdown in the Chinese market.

Probi today is the result of a merger between Swedish Probi and the US company Nutraceutix and in 2019, Probi repaid all of the bank loans raised in connection with the acquisition of Nutraceutix in 2016, according to the report.

Wide-ranging product portfolio
Rönnlund highlights that Probi has a broad product portfolio that is meeting demand from large parts of the market – from customers requesting the scientific evidence for their probiotic products, to those who offer probiotic products without making any specific health claims. 

During the past year, Probi launched a completely new range of products for consumers of all ages in the Nordic market. New products in the Probi family are Probi Baby, Probi Gravid, Probi Family and Probi Active 50+. 

During the past year, Probi launched a completely new range of products for consumers of all ages in the Nordic market. In addition, the company recently entered into a strategic joint venture with the US based health and wellness company Viva5 Group. The collaboration named VivaPro is focused on exploring, researching and co-developing products in probiotic-related market segments adjacent to existing core business areas of the two companies. 

Growth by targeting global markets
Probi has also identified that the strongest growth potential lies in those market segments where its most documented strains have clear competitive advantages. “To increase growth as fast as possible, we reviewed our commercial resources in 2019. All three geographic regions, USA, APAC and EMEA, represent growth potential, albeit in different ways,” Rönnlund explains.

In the US, the company expanded its sales team and Probi is now represented in the most important regions of the country. This led to a positive trend in just a short time and during the year, the company signed several exclusive supply agreements with major customers, which has created a stable base for the future. 

“We have an established position in the US with our LiveBac portfolio of products, and we see growth potential in this segment. At the same time, we have also strengthened our position in the premium segment, which is providing conditions for accelerated growth. To secure a stronger presence in the APAC region, we have also expanded our sales team there, mainly in China,” Rönnlund highlights. 

The company is also looking to further bolster itself in the Asian market. “Our strategy is to work with partners in order to achieve a better reach in the large and growing Asian market. We are actively evaluating various possibilities for strategic collaborations in the region and see good opportunities to create a stronger market presence through partnerships moving forward,” he adds.

Rönnlund goes on to explain that the probiotics market in Europe is showing stable and healthy growth despite a challenging regulatory climate, and Probi has been focused on stronger and clearer marketing in several key markets. “During the year, our increased presence had a rapid impact and we grew 26 percent in the region outside Sweden, albeit from a relatively low level,” he notes.

“From a scientific perspective, we had a particularly strong year. In 2019, we laid a solid foundation that we will benefit from in the years ahead,” Rönnlund concludes.

By Kristiana Lalou