Last week I read that Martek continued to create value for its shareholders in a year riddled with diminished returns, layoffs, and widespread panic in the global stock markets. The company has carved a niche for itself, especially in the infant nutrition world, where it is a dominant supplier of fatty acids to infant formula companies.
Martek supplies formula companies with docosahexaenoic acid (DHA) and arachidonic acid (ARA) derived from microalgae; scientific research has linked these omega-3 and omega-6 fatty acids to developmental health benefits:
- Visual Development
- Mental Development
In fact, the company credited infant formula customers with generating $77.3 million of its fourth-quarter revenue, which certainly proves the strategic value of identifying a need and then targeting a market niche. Although Martek has experienced rising costs associated with raw materials, it is fairly optimistic going into 2009, which sets it apart from most companies in corporate America.
Experts have always agreed that breast milk provides the best nutrition for babies. In reality, however, some mothers will decide to supplement their natural milk with formula or rely on formula exclusively to provide their children with the next best thing.
This is where Martek comes in: it has nearly cornered the market on providing infant formula companies with fatty acids. Today DHA and ARA supplemental ingredients are found in leading infant formulas:
- www.enfamil.com
- www.similac.com
- www.nestlegoodstart.com
- www.parentschoiceformula.com
- www.membersmarkformula.com
- www.brightbeginningsformula.com
- www.vermontorganicsformula.com
Aside from infant nutrition, Martek’s DHA products are making headway in a variety of nutraceuticals, including dietary supplements and fortified beverages and foods. According to the company, sales of its dietary supplements rose 22 percent to $5.4 million, while its contract-manufacturing operations experienced a growth of 24 percent to $3.7 million.
Listen to a nutraceuticals industry veteran: identify a niche market, develop a nutritional product with a pharmaceutical benefit, and contract manufacture for other companies and you will end up with a nice little business plan. If martek sticks to its business plan, I guarantee it will weather the storm and enjoy continued (albeit reasonable) success with fatty acids in '09.
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