Rajen Manicka, CEO of Kulala Lumpur-based biotech firm Holista Colltech, delivered the above message to delegates at the first NutraIngredients Omega-3 Summit, which was held in Singapore from February 20 to 22.
The ASX-listed Holista Colltech owns premium omega-3 brand PRISTIN, and Manicka was keen to impart knowledge from his experience in building a brand that been Malaysia's top omega-3 name for six years, according to Nielsen.
More consumer options, fewer corporate choices
He said: "Consumers have become much more sophisticated, the market has become much more competitive, and the product choices have also become much more refined. It’s a market where, if you don't get your act together, you die very quickly.
"The hard truth is that omega-3 is becoming a commodity. It doesn't matter where you are in the world, be it Australia, the US or Europe. Consumers are now desensitised to pricing — the cheaper and the more they can get for their dollar, the better."
For this reason, he added, brand loyalty had been steadily diminished over the last decade. This has been compounded by an increasingly saturated market, with an ever-increasing number of players — mainly manufacturers, suppliers, and large pharmacy groups — in the field now.
Manicka likened the situation to that in the commercial aviation world: "The more people fly, the less airlines make. It's very similar because people take a lot of things for granted. It’s now a matter of trying to be relevant in a market where brands are becoming more and more irrelevant."
When they go low, we go…lower?
Companies in the omega-3 sector have typically responded to this situation in one of two ways: slashing prices to encourage more sales, or raising prices by positioning their offerings as premium.
Manicka said: "As we move further into the mass market, players who want to differentiate themselves want to get out of the mushy middle and either go to the extreme low end by adopting a budget airline-style strategy, or go up to the very high end and fly only business or first class."
Painting a decidedly bleak picture of today's omega-3 market, he said: "In the retail pharmacy world, which is the business we are in, companies are always challenging one another on pricing.
"They don't care about consumers anymore — they use them as chips in their own price wars, and that's a horrible thing to be involved in. Consumers are treated as ammunition, so companies can use their margins to kill one another, then come back to squeeze customers dry."
With regards to Malaysia in particular, Manicka said constant discounts and price wars were 'raging', with consumers now expecting products to become cheaper as time went on.
Another growing trend has been observed, especially among chain pharmacies. Such pharmacies buy in bulk and lower their prices to "almost nothing, margin-wise", attracting more customers and creating more cash flow.
This in turn creates a cycle whereby "you either die because you can't compete, or you get sucked in and play the game".
Turning his attention to e-commerce, Manicka said Malaysia had now become a 'big online market' where brands would rush to capture the increasing number of online shoppers by offering further price reductions.
On the other end of the spectrum, he mentioned the rise of MLM firms, saying: "They don't necessarily follow any pricing model. They pay out high margins and work on niche groups, which they call their 'field leaders', and again, take away market share from that segment.
"Wherever we are going, it’s not a good place."
The staying power of sustainability
He then spoke about PRISTIN, which Holista Colltech saw fit to position as a high-end brand for a niche market.
The brand, known for its range of halal-certified Concentrated Omega-3 Fish Oil soft gels, was touted by Nielsen as Malaysia's number one omega-3 brand from 2008 to 2013.
The product comes in bottles of 30, 60 and 150 soft gels, and is said to be free from GMOs, artificial preservatives, mercury and heavy metals.
Additionally, the fish oil the brand uses is a proprietary ingredient called Epax AS, imported from Norway and said to be traceable all the way from marine extraction to the final product.
Manicka said: "We made the decision to go to the high end and cater to a niche market by focusing on the purity of our ingredients, innovation, and omega-3 concentration.
"We are also able to go up the value curve by increasing purity and innovation in our products, which then allows us to increase our product range and our prices."
Furthermore, co-branding with Epax, along with pharmacist-led brand surveys and medical endorsements, lend PRISTIN added credibility.
Manicka also said it was necessary to bolster that credibility with a sustained media presence, not only through positive public relations, but also through regular media engagement and reports, as well as online campaigns that appealed to consumers who wanted the assurance they were getting their money's worth.
A well-established brand with a good reputation can then safely venture into product diversification — in PRISTIN's case, it has added PRISTIN Gold and PRISTIN MOPL (marine omega-3 phospholipids) to its range of soft gels.
Manicka said, "It's easy to be number one — for a while. Anyone can achieve this, depending on his product.
"But we want to keep improving so we can stay number one, so we will focus more on purity, market challenges, and our relationship with our end-customers."
