04/09/2007

In business, you can have all the ambition in the world, but without the funds, the people, the right products and distribution networks, ambition alone is not enough.

That’s exactly the position that Auckland based nutraceutical manufacturer, Vital Foods, found itself in a little more than a year ago.

With big aspirations and a number of promising products in the pipeline, Vital Foods lacked the funding and the people to turn their ambitions of expanding the company and bringing their newly developed product to market into a reality.

However, as Vital Foods can attest, a lot can happen in a year.

In just over a year the company has undergone a complete management restructure; has received an injection of funding to the tune of $7 million, and has recently successfully completed clinical trials of its latest natural digestive aid product, Phloe Healthy Bowel, which has just been launched in the New Zealand market.. The company also has plans to widen its distribution network, exporting its products to a number of international markets.

Vital Foods was founded in the early 1990s by former agricultural scientist, Bruce Donaldson, who discovered a way of making Kiwifruit into a frozen drink. The juice, marketed as Kiwi Crush, was bought as a health drink by many hospitals who found it had an unexpected bonus. It increased bowel regularity in patients and so reduced the amount of money the hospitals spent on laxatives. Kiwi Crush had steady sales throughout the 1990s, won a product innovation award and the 1992 National Heart Foundation Award.

With a successful product behind them, Vital Foods continued to research the health benefits of Kiwifruit derived products and also developed and patented technology that enables them to produce their key Kiwifruit derived ingredient Zyactinase™.

But by 2005, the company needed an injection of funds and energy to allow them to drive the business forward and provide the means by which they could develop further products and markets.

And that’s exactly what the company got when, in early 2006, BioPacificVentures (a $100 million Australasian food, health and agbio venture capital fund) led an investment co-funded by Seeka Kiwifruit Industries Ltd, that contributed the first $4m of what is now a $7m investment into Vital Foods to support the company’s commercialisation and expansion process.

Part of that expansion process involved a complete management restructure.

The first part of the restructuring involved appointing a new CEO – someone with relevant business experience who would be capable of leading the company forward.

That person was Trevor Wilkinson, who was appointed CEO in February, 2006.

Prior to joining Vital Foods, Mr Wilkinson spent ten years working for the €1.8 billion Dutch based multinational specialised nutritional company, Royal Numico, in positions that included Managing Director of Nutricia New Zealand Ltd and senior management roles in the US and the Netherlands.

As the newly appointed CEO of the company, Mr Wilkinson had three main objectives: to strengthen the management team at Vital Foods, to create a solid scientific platform that supported the safety and efficacy of the company’s latest product and to create a strong brand under which it could be launched.

Says Mr Wilkinson: “When I joined Vital Foods, it was a company that had a lot of potential on paper. It was an entrepreneurial company, and as is typical of most entrepreneurial companies, we didn’t have the resources or the right people to capitalise on our strengths. Part of the challenge was getting some structure into the company, and appointing a team of experts who were capable of taking the company forward.”

Mike Hollier, co-founder of the company continued in his role as Chief Financial Officer utilising his extensive experience in IT and corporate financing. To further strengthen the team two new roles were created in Sales and Marketing. Peter Burton formerly head of Reckit Colemans NZ and with a lifetime of experience in FMCG and Pharmacy was appointed as National Sales Manager, and Cameron Bower, formerly in Sales and Marketing roles with Pfizer was appointed as Marketing Manager.

With such emphasis being placed on scientific support for their products Vital Foods also needed an appropriate person to structure and supervise the company’s new science plan, which included clinical trials of its latest product, Phloe Healthy Bowel.

World renowned scientist, Dr Iona Weir, who has significant experience in clinical trials and who is one of only half a dozen scientists in the world specialising in both plant and mammalian physiology, joined the Vital Foods management team last October to undertake that critical role.

Mr Wilkinson comments that Vital Foods now has “an incredibly strong management team that is very capable of taking the company through its next stage of development.”

Dr Weir has a PhD from Auckland University and in 1997 was awarded an international award, the Young Scientist of the Year by the International Society for Analytical Cytology. Dr Weir established the bioactives screening platform for HortResearch and has extensive knowledge of Kiwifruit. She was chief scientist for Aegis BioActives, a joint venture between ENZO and HortResearch, before becoming Research Director for BioDiscovery.

With the management team firmly in place, Vital Foods then turned its focus towards completing the necessary steps to get its latest product, Phloe Healthy Bowel, to market.

The first step involved clinically trialling the product.

While supplement companies are not required to clinically test their products, Mr Wilkinson says that Vital Foods strongly believes in backing up all of its products with strong clinical research and science.

Says Mr Wilkinson: “We had all the anecdotal evidence that our product was effective in treating constipation and improving long term intestinal health, but we wanted the science to back it up. Given that we are a company founded on the philosophy of combining nature with science, it was essential that we clinically tested our product.”

Rebecca Sanders, a Business Manager with the Foundation for Research, Science and Technology, who have provided assistance to Vital Foods, says the company has taken an exemplary step in validating the science underpinning the natural health product.

“Vital Foods is setting an excellent example by carrying out such rigorous testing. There is increasing demand in overseas markets for proof that natural products do what they claim to do. Natural doesn’t automatically mean safe, so it’s important that companies have strong scientific evidence to meet regulatory requirements and consumer expectations.”

The clinical trials were conducted earlier this year through an innovative partnership between Vital Foods, Dr Weir, and Auckland based Bioactives Research New Zealand Limited. The two trials investigated the effectiveness of Vital Foods’ latest product, Phloe Healthy Bowel, in relieving constipation. One trial included 134 people and the other included 58 people, all of whom suffered from moderate to severe constipation.

Says Dr Weir: “The results of the clinical trials were outstanding. We demonstrated that we could deliver a significant improvement over the period of one week.”

Vital Foods does not call its new product, Phloe Healthy Bowel, a laxative, but a digestive aid, because not only has it been clinically shown to promote regularity but it also, through its combination of prebiotics, enzymes and fibre, has the added benefit of promoting long-term intestinal health.

With New Zealander’s spending around NZ$9.35 million a year on constipation relief products, Mr Wilkinson admits that the market is extremely competitive, but says that there are very few products that compare to Phloe Healthy Bowel.

Says Mr Wilkinson: “Our product is quite unique in that it’s completely natural and safe for both short and long term use, and has been clinically shown to promote regular bowel movements while also improving long term intestinal health.”

Dr Weir says that the research work showed the prebiotics, enzymes and fibre in the product worked with the microflora in the gut to gently progress digestion. She plans to write up the results to publish in medical publications early next year.

While Vital Foods is very excited about the commercial potential of its new product, it has no intention of being a one or two product company.

Says Mr Wilkinson: “For the past year we have focused on getting Phloe Healthy Bowel to market. We are really encouraged by the results of our recent clinical trial and, armed with science and research, we are confident that we will be able to develop a range of natural health products with clinically proven health benefits that are based on Kiwifruit.”

In addition to plans to develop a comprehensive range of health products based on Kiwifruit derived ingredients, Vital Foods also hopes to grab a slice of the lucrative New Zealand nutraceutical export market, which returns around NZ$300 million a year, by widening their distribution networks and exporting their products internationally.

The company is currently exporting its original Kiwifruit derived product formulation Zyactinase™ (in powder form) to Japan, where they have a solid list of clients working on developing the market.

“Our strategy is just like any other normal business. We will establish a home market here and from there we will develop distribution through selected export markets where we can see the potential to develop a sound business. We are currently looking at potential markets including Asia, Europe, the USA and Australia,” says Mr Wilkinson.