NPRI grows O2P business in US and Europe

The company, which began life as a contract manufacturer in 1994, initially developed its patent-pending O2P (oil-to-powder) technology as an in-house manufacturing tool to cater for the needs of clients who wanted to use nutritional oils in tablet and capsule formulations.

O2P is a gravity seed-type process carried out at room temperature and in a nitrogen-rich environment to preserve stability and the nutritional profile of the oil.

In early 2004 NPRI decided that the technology had business legs of its own. The decision was taken to move away from contract manufacturing and make the technology its core business.

In just 18 months it has outgrown its two existing facilities, with a combined area of 17,000 sq ft and the ability to process between four and five metric tones each day. The new, 30,000 sq ft plant will be able to process the same quantity every hour, sales and marketing director Bill Froese told NutraIngredients-USA.com.

It is hoped that it will be up and running by the end of 3Q/beginning of Q4, depending on when the FDA and USDA carry out certification. Total construction and relocation expenses have not yet been calculated in full.

Froese revealed that the company is also considering investing as much as $0.5 million on a plant in Europe. It already has "consistent distribution"​ in the UK, France, Iberia, Italy and the Benelux countries, as well as a sales office in Amsterdam. It is also on the point of entering the German market.

But at present, all processing is carried out in the US, which is more expensive due to air freight costs.

NPRI's two-year expansion plan includes the establishment of a European production facility by the end of 2006, but Froese said it could be earlier, depending on volume requirements. To make the venture worthwhile, it would need to be processing between five and 10 metric tonnes a month.

"The EU does make it attractive for companies to invest in bricks and mortar on the continent, and that has sped up the company's expansion plans. Up to 70 percent of costs can be met with capital investment grants or loans, depending on the country and the overall impact on the economic environment,"​ said Froese.

He added that while NPRI has not yet decided on a location, the facility will not be a 'green grass' building but an existing warehouse structure that meets air and material handling requirements.

The decision to move away from contract manufacturing was governed by the "aggressive competitiveness"​ of the industry which, according to Froese, is becoming a commodity business.

"We didn't see what value we could add to the customer,"​ he said.

With O2P, on the other hand, there is more scope to offer customers something unique and to develop new products with them. For example, it has recently worked with Aloecorp to develop a powdered form of vitamin E with aloe vera, and with omega-3 suppliers on a cosmetic grade omega-3 powder.

Before the switch to O2P as the core business, NPRI recorded losses of $157,283 ($0.015 per share) for the full year ended December 31 2003 and $7,250 ($0.0025 per share) for the prior year.

The most recent results available (as the company is in process of migrating from the Pinksheets to NASDAQ OTC BB) show a loss of $315,559 ($0.03 per share) for the first nine months of fiscal 2004.