Archive for the ‘Optifreeze’ Category

In this post, CESI will touch upon general global frozen food business metrics – innovation as the key driver, the dominant players and the outlook.

“Development of advanced freezing technologies have enabled efficient preservation of the nutritional value of fruits and vegetables for longer times, have reduced material losses and have resulted in longer product shelf life. All of these factors have helped boost popularity of frozen fruits and vegetables among consumers. Given, the dynamic and intensely competitive market environment, product innovation ranks as a key to success in the marketplace.” (Frozen Fruits and Vegetables – A Global Market Perspective  – PR Newswire)

Advancements in freezing technologies is fueling the growth for frozen fruits and vegetables, which allows the manufacturers to preserve the nutritional value of the vegetables and fruits for a longer time period and in some cases restore key nutrients once lost using prior freezing processes.” (by foodproductdesign)

Nestlé Invests $53M to Focus on Frozen, Chilled Foods: “Nestlé S.A. will invest $53 million to establish a new building that will expand the existing R&D facility in Solon. The new center will be designated as a global Product Technology Center (PTC), dedicated to frozen and chilled foods research, and will serve Nestlé’s businesses worldwide. Construction is expected to begin this summer with plans for the facility to be operational in late 2014. The glass-faced facility located on 18 acres will house offices and labs for approximately 100 scientific, professional and technical staff. The 144,000-square-foot building also will include a pilot plant where new recipes and the latest technologies will be tested and evaluated.”

Not surprisingly, the first announced Optifreeze partner Orkla and its broad pipeline (62.8 Billion NOK Market Cap) also strongly drives innovation:

“Innovation is Orkla’s primary tool for creating growth, and is therefore pivotal to the way Orkla is run.”

“In the coming years, Orkla’s focus on innovation will remain its first priority, and all employees will work continuously to ensure that local brands are consumers’ first choice by making them a better, simpler and healthier part of everyday life.”

Optifreeze is true innovation and the key issue,  a possible (or non possible) scale-up of the Optifreeze technology, now seems eliminated:

“New year means new opportunities. 2015 will be just as eventful as last year and it feels more stable as we make progress on several fronts. Let me mention four key strategic areas.

The Company’s method developers are working to broaden and deepen our knowledge of more and more products. Eda, Rei, and Kasia has tested a range of vegetables, fruits, berries and herbs for us to develop a product map, that is, to find out which products can easily be treated with our method and who works less. This work is coordinated with the next area.

Companies that sell fresh and frozen herbs have shown interest in the OptiFreeze technology.

Secondly, together with Orkla we have started preparations (panels and focus groups) for the planned market tests. The goal is to conduct these tests in the first half of 2015. Optifreeze will also conduct its own market analysis in order to define which products that have great acceptance in the global food market, not least in order to identify the products that have the potential to provide good revenues. The goal is to broaden and deepen the knowledge of the various markets and companies we will process. In the current situation, we have good indications of products that can provide the company with good revenues in the short and long term. It has also become evident in the various industries and sectors that OptiFreeze will find customers and partners. Examples of these are food industries that produce foods, companies providing fresh frozen products, refrigeration technology and bakery and also confectionery companies producing desserts and cakes.

Optifreeze has received and constantly receives requests from companies around the world with the desire for collaboration. We are likely to initiate collaborations with partners in 2015, but only on condition that it fits into the company’s strategy.

A third area is the up-scaling and industrialization of the technology. The first steps we took last fall. And I’ll admit that it was with a certain nervousness and high pulse, I viewed how the treated products were placed on a production line and subsequently transported into an industrial freezer and frozen to below minus 20 degrees. After a few seconds, the products came out the other end of the freezer. To our great delight, we found that the products survival rate was high and reached by a wide margin up to the demands of the food industry. Hence, we live up to our motto “we have a technology that enables the taste, shape and structure can be maintained throughout the freezing and thawing process.” This shows that we are on the right track. Our technology opens up entirely new niches, product groups and markets as we work strategically to broaden and deepen OptiFreeze.” source link (in Swedish)

Structure of the freezing industry
Freezing industry can be divided into two segments. One part consists of companies that specialize in individual freezing of vegetables, fruits and berries. This Business is often located near the major cropping areas. Several large such companies are located in Belgium and the Netherlands has specialized in vegetables and potatoes. These Businesses usually offer standard and customized product mixes. For example,  strawberries used in Sweden are often frozen in Egypt or Poland. In Sweden we have e.g. Magni Hill in Mörarp, cultivating and freezer your vegetables. Polarica in Haaparanta as sells frozen wild berries such as e.g. lingonberries. Polarica also owns a company in Poland as deep freezer your strawberries, raspberry and black currant. Nordic Food Group own several production of berries in Sweden, Bosnia and Latvia. The second part consists of brand manufacturers which offers a large selection of branded goods. These often belong to different international groups. Examples are Findus and Procordia (Orkla group), while Dafgård is a family owned business. These companies buy most of their frozen ingredients from specialist suppliers. Findus also freezes vegetables grown on contact straight basis. A third is the intermediary supplier, e.g. Food Impex in Helsingborg. They exports peas and wild berries and imports a wide variety of frozen vegetables, fruit and berries.

Global frozen food market is highly fragmented. The large multinational companies face intense competition from local companies in terms of their price offerings. Some of the leading companies (and potential futureOptifreeze partners) operating in the global frozen food market include

  • Amy’s Kitchen Inc.
  • Unilever Plc,
  • McCain Foods,
  • Maple Leaf Foods Inc.,
  • H.J. Heinz,
  • The Schwan Food Company,
  • ConAgra Foods, Inc.,
  • Nestle,
  • Tyson Foods Inc
  • Allens, Inc,
  • Ajinomoto Co. Inc.,
  • General Mills Inc,
  • Birds Eye Foods, Inc.,
  • Iceland Foods Ltd,

Europe is emerging as a leading market in frozen food and all aspects of correct hygiene in this business are critical:

Europe emerged as the leading regional frozen food market with over one third of the total revenue. Consumer’s reliance on high state of hygiene related to frozen food products had a positive impact on the regional market growth. Ref

The global refrigerated transport market is another indicator of the freezing industry’s great outlooks…

“The cold chain market in China is growing as it serves as a lucrative market for U.S.-based service providers for investment in cold chain infrastructure and also due to e-commerce and food safety regulations introduced by the Chinese government.

The global refrigerated transport market is growing at a considerable rate. In North America and Europe, refrigerated trucks, vans, and trailers are also witnessing a considerable growth in demand as they provide flexibility to deliver goods in multiple locations at flexible timings. Consumer demand fresh food through online shopping has also increased, which has triggered the increase in refrigerated transport by road. Reefer containers transported by sea are also contributing to the growth of refrigerated transport due to technological improvements which maintain the shelf-life of perishable foods.

Chilled, frozen, and deep-frozen are the temperature ranges through which products are stored and transported using a cold chain. The chilled products accounts for the largest share globally, as most fruits & vegetables are stored and transported through this chain. The frozen food market is also witnessing a substantial growth for the next five years

Globally, the meat & seafood market has the largest share, by application, followed by dairy & frozen desserts, and fruits & vegetables. The consumption of these perishable foods is increasing globally, thereby increasing the inter-trading of perishable foods among different countries.”

Frozen Potato. Letś also touch upon the general global outlook for one of Optifreeze’s potential applications – frozen potato. Today, CESI does not posses the competence or enough information from Optifreeze to estimate any relevance or potential impact within the frozen potato industry (the largest segment is logically french fries). However, it is interesting to highlight the trends within the business:

“Frozen Potato Highlights Exports of frozen potatoes from the world’s 3 leading suppliers,
at over 3.0 million metric tons, are up nearly 35 percent from 4 years earlier. U.S. exports are estimated at 1.0 million tons, up nearly 40 percent, on rising demand from Asian countries outside Japan. Tastes and preferences are changing in those markets, as a result of greater exposure to Western-style, fast-food restaurants. EU exports have skyrocketed 75 percent to an estimated 1.1 million tons. The bulk (nearly 4
0 percent) of that growth is driven by rising demand from the fast food sector in Saudi Arabia and other regional markets. However, the EU is also expanding globally to markets in South America and Asia.” (reference: page 2 here)

However, there are enormous theoretical opportunities within the dessert segment, primarily fresh frozen berry opportunities: “Frozen ready meals, including frozen pizza, desserts, snacks, entrees, etc., accounted for more than 30% of the total global market revenue in 2012 ($224.74 billion). Expected CAGR is 3.9% from 2013 to 2019. Frozen food made with natural and organic ingredients have shown huge market opportunity for manufacturers. (by foodproductdesign)

In addition, “alive deep freezed strawberries or spinage etc” are not available on the market today (that is fruits and veggies that can not survive freezing). With the Optifreeze technology (more info in original post) this might be possible in a near future…

optifreeze 2015-03-07 20:25:10

The frozen food growth driver “A Shift in consumer lifestyle towards ready to cook meals on account of lack of cooking time and hygiene is expected to remain a key driving factor for global frozen food market. Storage for longer duration is expected to increase shelf life of fruits and vegetables, which is also expected to have a positive influence on the market growth over the next six years. Availability of refrigeration media for commercial and industrial freezing is further expected to drive the global frozen food market.

The future of frozen food (Boardbia) The full report is very comprehensive, attached are a few conclusions:

 Re-inventing frozen food through innovative product and retail environments

  •  As more women enter the workforce and lifestyles change, global demand for frozen meals and ingredients will grow
  • This natural preservation allows food to be captured at its nutritional best. As awareness of the health benefits of specific nutrient rich food grows, consumers will look for easy ways to integrate these into their daily diets. Again, frozen food is uniquely placed to meet this growing need
  • The growing desire for convenience and the changing retail landscape will continue to have an impact on how, when and where people shop
  • Frozen food manufacturer, distributer and retailer, Picard, is leading the way in redefining frozen food and changing consumer attitudes about the category in France. Picard is one of a small number of premium frozen food brands in the world, and has few competitors even in Europe, where perceptions of frozen food have been improving. Innovative products and tailored marketing have helped the brand succeed with middle to high income consumers in a nation where good food is an essential part of the culture. The majority of Picard’s products have origins in French cuisine, though new lines are being added that tap into the growing desire for more ethnic and international foods.
  • In store tastings help bring its products to life for shoppers and introduce the smells of freshly cooked meals into the store. Every
    product in the shop has the name of the person who made it on the packaging.
    In the UK, frozen food manufacturer and retailer Cook is challenging the stereotypical image of frozen food by offering more premium, home made style family favourite
    foods. The boutique feel of its stores, with the use of warm colours, bunting, wood panelling and old
    fashioned signage reflects the authentic, rustic feel of its products.

Letś focus on the Optifreeze long term potential metrics. Of course, the latter is impossible, therefore CESI will present in total 3 separate approaches to extract roughly estimated potential trade values.

  • 1 The Strawberry approach
  • 2 The global and general food metrics approach
  • 3 Extrapolation of the “official Optifreeze 2017 target” approach

1 The Strawberry approach.  The straight forward and non complex approach. Until very recently, strawberries could not be frozen and thawed while keeping the cells alive. Therefore, the frozen strawberry / fresh strawberry market ratio should drastically increase within a very near future. This straight forward (and of course way to simple) Strawberry approach also excludes all other potential Optifreeze applications such as new product opportunities e.g. fresh frozen herbs, exotic fruits, deserts and cakes. Conclusion: If Optifreeze can secure 1 % of the 16.8 Billion SEK fresh strawberry market, this would correlate to a yearly trade value of 168 MSEK (based on the below attached European Fresh Produce association metrics). This first approach Strawberry approach was published in the original CESI Optifreeze blog post. Of course, the 1% estimation of market penetration over time is a wild prediction. The future number could be substantially lower or higher. However, the Optifreeze technology is patented, initially appreciated (Orkla) and unique.

2 The global and general food metrics approach. Optifreeze potential metrics calculated from global and general frozen food metrics assuming 0.1% market penetration within the relevant potential segments. Global Frozen food, a +2000 Billion SEK market and increasing. If we exclude frozen meat and fish/seafood from these numbers, frozen ready meals and frozen fruits and vegetables corresponds to a value of approximately + 1000 Billion SEK . Logically, within the big ready meals segment, Optifreeze might add and extract value of only a minor segment because a big piece herein correlates to pizza, nuggets etc. The combined total segments potato, vegetables, fruit and berries (roughly 15%) would translate to approximately 150 Billion SEK globally as a theoretical maximal number. Hence, a 0.1% market penetration (the wild speculative prediction) results in roughly a 150 MSEK trade value. Logically, CESI believes that all successful Optifreeze applications such as new product opportunities e.g. fresh frozen herbs, exotic fruits, desserts and cakes should be included in these numbers (a conservative approach?).

3 Extrapolation of the “official Optifreeze 2017 target” approach. In the memorandum p17 (Swedish language), Optifreeze states that the 2017 targets are 6 production lines (at one or a few customers). This should generate a turnaround of approximately 100 MSEK and a revenue of approximately 15-20 MSEK. These numbers could then provide guidelines for the continuation and growth of the business. If the 2015-2016 planned full scale production is successful, the turnaround and revenues growth might/should also have more of an exponential character, compared to a linear character (of obvious reasons).  Especially if /when new customers are announced. According to the memorandum, after setup of the full production, the partner(s) business network will enable the near future Optifreeze product pipeline to “reach a big share of the European market”. If the planned Orkla-Optifreeze launch is successful, how many production lines will this specific collaboration trigger in the second generation activity pipeline? 12? 24? If/when new customers are announced, how many production lines will that eventually trigger 6? 12? 24? Of course, CESI does not have a clue, but still speculates that the total number in 2019, 2020 might be high (50?).

Speculative conclusions might best be performed based on the extrapolation of the “official Optifreeze 2017 target” approach: If the critical 2015-2016 full scale production and launch outcome is successful, Optifreeze could likely and relatively quickly (due to the frozen food European and Global business structure) obtain a market cap in the “2 billion SEK region” (2018-2019, ~30 production lines, P/E ~25-30) . Time will tell.

Best regards, CESI

The author, Cutting Edge Science Invest, is currently an Optifreeze share holder. Cutting Edge Science Invest can not guarantee, or take into  accountability, the content of truth and accuracy of the information in this article/post.Thus, Cutting Edge Science Invest requires that a possible reader gather complimentary information if any type of investment in the company described above is considered. Cutting Edge Science Invest provides personally biased information and at best also “general information and opinions”. The article/post does not contain professional investment advice.

Fruit, vegetables and berries lose flavour, shape and structure from freezing. This is because ice crystals formed during freezing causes the cells to “explode” resulting in immediate cell death. This event is particularly visually obvious for plants with soft structure, such as strawberries, but also applies to root vegetables such as spinach and lettuce. Most likely, you are also familiar with the sad appearance of your spinach or strawberries when retaining room temperature after long term storage in the freezer.

OptiFreeze AB has a patented CEPT technology that enables the taste, shape and texture of vegetables, fruit and Berries can be ensured through the freezing and thawing process. The technology opens up completely new markets and business opportunities for food industry companies and companies in freeze/refrigeration technology around the world. The result of the Optifreeze CEPT technology is that the cells of vegetables, fruits and berries incorporates natural antifreeze protein and sugars that keep the cells alive (!) through both the freeze and thaw process and thereby preserving the flavour, shape and texture. Today, there are no known direct competitors. C.E.S.I.´s initial concern was that no big player within the global food industry would be a sufficiently attracted prior to any product launch (proof of market concept). Now, the announced Optifreeze-Orkla ASA activities has removed this C.E.S.I. concern. There´s more than a single potential driver for the global food industry partner: Increased Quality, Less waste, Better access, New products and Lower Transportation Costs.

C.E.S.I. decided to learn more about the global strawberry market and surprisingly, the current trade value metrics are mind-blowing:

Strawberry in perspective “ Fact and figures in Europe and in the world”

  • According to European Fresh Produce association, the 2013 world´s total strawberry world´s trade value is roughly 16.8 Billion SEK (1.8 Billion Euro, page 8) and rapidly increasing.
  • Spain exports generate 4.8 Billion SEK (9.34 was applied as € – SEK currency converting factor)
  • Value growth of exports between 2008 and 2012 was 42% while volume growth was 18% on the same period

StrawExp

And from the European perspective: Intra EU trade ( shipment ):

EUStrawberry

Let´s scrape the surface of the current US market…

Commodity strawberry profile – By Hayley Boriss, Henrich Brunke and Marcia Kreith, Agricultural Issues Center, University of California, March 2006 (Updated May 2014 by Linda Naeve, Program Specialist, Iowa State University Extension and Outreach)

“Over the last two decades, the U.S. strawberry industry has experienced increased rates of consumption at a higher rate than other fruits and vegetables. Strawberries are the fifth most preferred fresh fruit in the United State. Year-round availability of fresh strawberries has significantly influenced their consumption by Americans. They nearly doubled their annual consumption of fresh strawberries since 2002, with per capita consumption rising to almost eight pounds (2012)”

“The drought that plagued California in 2013 is continuing in 2014 and affecting several crops. Industry estimates range from a half-million to 1 million acres of agricultural land in California likely to be affected by the current drought. The state’s governor, Jerry Brown, declared a state of emergency in January due to the lack of water. Timothy Richards, professor of agribusiness at Arizona State University believes between 10 and 20 percent of the supply of certain crops from the state could be lost. He estimates retail berry prices will likely rise by 21 to 43 cents per pound in 2014.Growers outside the Western U.S. are likely to offset shortages of strawberries, however, the industry’s traditional pattern of drawing supplies from different areas in response to local disruptions such as weather or disease is likely to be tested this time because of the magnitude of the California drought and the state’s dominance in the national supply.”

“Year-round availability of fresh strawberries has significantly influenced their consumption by Americans. They nearly doubled their annual consumption of fresh strawberries since 2002, with per capita consumption rising to almost eight pounds (2012). Annual per capita consumption of frozen strawberries remained consistent at 1.8 pounds in 2012. Although Florida produces about fifteen percent of the nation’s strawberries, it produces nearly all of the berries harvested in the U.S. during the winter months. However, Mexican strawberries also pour into the market during that time. Strawberry imports have risen from 198 billion pounds in 2010 to 302 billion pounds in 2012. Increased production and import of strawberries from Mexico may challenge the future of Florida’s strawberry industry, which showed a decrease in yield from 2011 and 2012. With the increase in production of fresh-market strawberries, the value of production increased due to higher fresh product prices. The total value of U.S. strawberry production in 2012 was over $2.4 billion. Fresh market 2012 market production value totaled just over $2.2 billion, while the value of processed strawberries was nearly $199 million.”

C.E.S.I. Conclusion: -Yes, the above attached data is in fact total market data primarily corresponding to today´s “conventional fresh berry market” simply because there has not been any alternatives – until now. If Optifreeze can secure only 1 % of the 16.8 Billion SEK market, this would correlate to a yearly trade value of 168 MSEK (based on the above attached European Fresh Produce association metrics). Furthermore, Optifreeze will likely establish a broad pipeline of various fruits, berries and vegetables. These parallel markets are also global…

Veggies, fruits stay fresh with new freezing method (youtube video)

What is CEPT?

CEPT is Closed Environment PEF Treatment. PEF is the abbreviation for Pulsed Electric Fields (PEF) or electroporation,  a technique that is routinely used, for example, in the introduction of new genetic materials into cells.

OptiFreeze is the result of a long period of research at the Department of Food Technology, Lund. The company was founded in 2011 by Arc Aroma Pure AB (also listed at aktietorget), LU Innovation and a number of researchers at the Department of Food Technology at Lund University. Operations are based on Skiffervägen in Lund the company conducts method and product development in-house and with partners. In the next few months, the company will, together with partners, industrialize the technology.

The breakthrough press release?

November 17, 2014 Optifreeze Press Release:

Orkla and OptiFreeze have signed an agreement under which Orkla will participate in the industrialization and commercialization of the OptiFreeze technology.

The goal is to implement a market test with treated products in 2015 and achieving large-scale production in 2016. The long-term cooperation agreement means that the parties will jointly contribute to industrialize and commercialize OptiCept ™ and Opticap ™. The goal is that frozen products treated with the OptiFreeze method will be tested on the market in 2015. This will be implemented before a major launch planned in 2016.

This agreement is a very important piece of the puzzle that has fallen into place in the efforts to industrialize and commercialize the company’s products. Orkla is a strategic partner that brings a lot of know-how in a number of important areas, says Fredrik Westman, President OptiFreeze AB. As we previously reported, the pilot tests conducted with Orkla terminated prematurely when the parties were pleased with the results. The collaboration has run very well, Orkla is a competent and important partner. I note that we have now taken an important step forward in accordance with the company’s strategy, while the agreement gives us the opportunity to implement other collaborations with some of the parties (ongoing discussions). These collaborations can be completely separate projects in other segments but also another company within the same project, says Pär Henriksson, Chairman OptiFreeze AB. OptiFreeze is working on several fronts and in discussions with potential international partners. The focus of the objective is to industrialize the company’s products, and find companies that have the capacity to handle the marketing, sales and support at the international level.

Orkla, General business information

Orkla ASA is listed on the Oslo Stock Exchange and headquartered in Oslo, Norway. Orkla is a leading supplier of branded consumer goods and concept solutions to the grocery and out-of-home sectors in the Nordic and Baltic regions. In addition, the Group holds good positions in certain product categories in India, the Czech Republic, Austria and Russia. The company is also a major supplier to the European bakery market. Orkla’s vision is to improve everyday life with healthier and more enjoyable local brands. As at 31 December 2013, Orkla had around 17,000 employees. The Group’s turnover in 2013 totalled NOK 33 billion.

C.E.S.I. Conclusion: Orkla seems to be a perfect match for Optifreeze. The successful Optifreeze-Orkla pilot test was a critical milestone for Optifreeze company.

Comments from the CEO Fredrik Westman (November 26, 2014, edited and translated by C.E.S.I.)

“In recent months we have made great progress and we are approaching one of the most important goals at a rapid pace; industrializing the OptiFreeze technology. Our products OptiCept ™ and Opticap ™ allows food industries making the impossible possible, namely to freeze products that normally do not tolerate freezing. Thus, we have the potential to transform the market for frozen vegetables, fruits and berries. The reason is that we have the knowledge and a unique technology to open new markets, products and business opportunities.

With our technology, sun-ripened fruits and berries in South America can be harvested at exactly the right time, cut into perfect pieces, frozen at the very same place and finally transported to the food, bakery and confectionery businesses and consumers around the world. Swedish berry companies can export red and sweet strawberries to the Swedish communities in North America. African vegetable and fruit growers are given the opportunity to refine and sell great products for example in Asia and Europe. Examples of opportunities are many and it has become increasingly evident that OptiFreeze has a technology that has the potential to change the conditions for growers, distributors, food processors and refrigeration technology companies, consumers, restaurants, pastry shops and bakeries. New types of products can be offered in new ways to new markets. Thus, we make it possible to add value and profitability in a variety of industries.

Since the last report, we have reached another important goal, namely signed an agreement with Orkla to cooperate closely where we jointly industrialize and commercialize the company’s technology. Having a reliable industrial partner who believes in OptiFreeze and our technology and its capabilities brings us even closer to industrialize the technology. The work has been flying start. Currently the company’s product and method developers are working together with, among other things, Pär Henriksson and Anders Boman at Arc Aroma Pure and several other people with the up scaling of the technology. The work is supported by knowledgeable and experienced people in OptiFreeze´s newly elected Board of Directors. Within a few months, we have built a team of employees, board members and partners.

Currently, we are evaluating a range of potential partners and strategies and we are well aware that the company has a technology that food industries and freezing technology companies are interested of. But we are also careful that future policy options are not closed. We do not want to rush off and give any actor great benefits without the shareholders and the company guaranteed to make a profitable deal in return. And a company that has the potential to transform the market for frozen products can afford to set high standards.

In Q3, the company completed yet another essential measure of the company’s strategy by completing what we call “tech transfer”, the transfer of technology from the university to the company, which means we are now engaged in the development of methodology in their own labs. During the quarter we invested quite a lot of money in lab equipment. In return, facilitated cooperation with our partners and we can focus more on development work faster leading to cash flow. Meanwhile, we have a fantastic collaboration with researchers at the Department of Food Technology at Lund University.

Now, we are continuing at a rapid pace so that we achieve our goals. In particular, we industrialize our technology so that we can sell the products. Because that’s basically the products in combination with the knowledge contained in OptiFreeze that can change the market and help us earn money.”

Hearing with the Optifreeze CEO Fredrik Westman and the chairman of the board Pär Henriksson (May 8, 2014, selected questions edited and translated by C.E.S.I., full version in Swedish here)

Alias Axl08: Hi! How does the company in five years?

Optifreeze: In 5 years we are a company that comprehensively focuses on methodology and technology to take us into new markets and be able to apply the method to new products. In 5 years we have become a famous brand in the food sector, from producer to consumer.

Alias Purfärsk: Is there anyone, as far as you know, who have tested similar technology to freeze food?

Optifreeze: No, we are not aware of any similar technology.

Alias Purfärsk: What is the biggest challenge for OptiFreeze the next two years?

Optifreeze: The biggest challenge is to scale up from pilot to full scale. And to strengthen the team. We are focused on the task and the company has a number of driven people who work hard.

“We will work hard to lift out the methodology and technology from the research environment to commercial application.

Alias jordgubben (edited/shortened question): ”I can understand that electroporation can reach the strawberry´s outer cell layers. Will the electroporation also reach the inner parts of the berry? After treatment, will then the berry be “totally perforated” or what is the outcome?

Optifreeze: It is not only the outer parts of the product that is treated. It is also the inner parts. In fact, it is easier to treat the inner part of the strawberry.

Alias jordgubben: Is the technique also applicable on fruits and berries that must be peeled (hesperidum)

Optifreeze: In principle, yes: If the peel is relatively thin. We aim to explore the technique on apples

Alias jordgubben: How does thickness and size of the substrate correlate to the  result of the treatment?

Optifreeze: In principle, size and thickness are of no relevance, but today we find the treatment simpler for smaller products. Currently, scale-up work is being pursued to enable treatment of larger products.

Alias jordgubben: You raised money in a share rights issue. How long do you estimate this money will last (May 8, 2014)?

Optifreeze: The money should last for approximately two years.

Alias Ess: What is the cost of treatment of 1 g of product? How much energy is consumed?

Optifreeze: Today, the cost is 1,5-8 SEK per kilogram and included is cost of compound (protein and sugars)

Alias Nyfiken: Many research companies remain in the lab for years. How will you avoid this and instead be successful in the market place.

Optifreeze: Already, we have started the productification work and aligned our work in a way that the company can start making money from sales of OptiCept and OptiCap. We have ”cut the umbilical cord” with the researchers at Faculty of Engineering LTH (Lund University), but we will continue our collaboration. Jointly, we will explore new applications and products. However, currently we focus on vegetables, berries and fruits of interest for the food industry.

Moderator: Is Optifreeze dependent of the Arc Aroma Pure´s CEPT-technique?

Optifreeze: No! There´s other providers of generators, but we benefit from having access to the competence provided by Arc Aroma Pure.

Moderator: Which OptiFreeze – Arc Aroma Pure collaboration opportunities and synergies do you see?

Optifreeze: Optifreeze is a company which focuses on chemistry and food. Product development will be in focus. Arc Aroma Pure is specialized in electronics and product development. We believe we will complement each other. Arc Aroma Pure is a more mature company, administration included, and the company has been listed (Aktietorget) for a longer time. Therefore, Arc Aroma Pure is also more mature in respect to leadership, quality and internal routines. Furthermore, the company is specialized within electronics and product development. Within all these areas, the companies can mutually benefit from collaborations.

Moderator: Can Optifreeze be classified as a GMO company (GMO = Genetically Modified Organism)? Thus, are the product´s genes modified?

Optifreeze: No, we do not modify the genes in the treated products.

Moderator: How will you secure that the market place won´t classify your products as GMO products?

Optifreeze: We capture all possible opportunities to inform about our methodology and at these occasions we also stress that our business is not about modifying genes.

Alias a: Who are your competitors?

Optifreeze: Conventional freeze technology and air transport of immature products. For example, there are a company that combines drying and freezing, but then water must be added during the thaw process. Today, we face no direct competition. In addition, we believe our patent portfolio is strong.

Alias a: Could you inform us about the company´s business- and revenue model?

Optifreeze: We will charge both for the treatment line entitled OptiCept and for Opticap that is the compounds, namely sugars and anti freeze protein. OptiCap will generate recurring revenues.

Alias Ess: Will you apply for a US version of the CE mark?

Optifreeze: Yes, that is for sure. However, this is a future plan.

Alias a: Have you industrialized the process? Have you demonstrated the process to be successful also in a non research lab environment?

Optifreeze: Currently and already, we have the capacity to treat products in kilogram scale. The planned pilot project will address scale-up in an industrial setting (2014-05-08 10:23) C.E.S.I.: IMPORTANT NOTE: The outcome of this pilot project was successful – Please see the full version press release attached above (November 17, 2014 Optifreeze Press Release: Orkla and OptiFreeze have signed an agreement under which Orkla will participate in the industrialization and commercialization of the OptiFreeze technology.)

Alias a: Are all necessary permissions already granted by Livsmedelsverket (National Food Agency)? (2014-05-08)

Optifreeze: We have had this discussion with specialists from a food industry company. Their conclusion is that no specific permissions are needed. The relevant question is if information should be printed on the product´s table of content. The added compounds are natural compounds and these are also used in other products such as ice cream etc.

Moderator: What is the cost of treatment (fruits, berries and vegetables)?

Optifreeze: We plan to charge 12000 SEK for the OptiCept™ cassette. One cassette is dimensioned for a range of 1.5-4 metric tonnes of product. This translates to an additional product cost range of 1.5-8 SEK / kilogram of product excluding capital- and cost of production.” (2014-05-08)

Note: Currently, C.E.S.I. does not understand the meaning of “capital-” in this stated phrase.

Alias jordgubben: Is there a risk that access to anti freeze protein will be limited and thereby a liability for Optifreeze?

Optifreeze: In the past, the access to antifreeze protein was limited, but currently both the usage and the access are increasing. Therefore, the price of anti freeze protein is rapidly falling.

Alias Ess: Will the company Arc Aroma Pure be a long term owner (also post the May 2014 share rights issue)?

Optifreeze: Yes.

Alias a: The Optifreeze methodology seems to aggressively increase cost compared to conventional freezing. How will your customers motivate this fact?

Optifreeze: – By increased quality, less waste, better access, new products and lower transportation costs. In addition, only a very small amount of compound is used per kilogram and the price of the compound is rapidly decreasing.

Moderator: Will the food industry increase the price on products that have been treated with your method? Will the end customer pay a higher price compared to today?

Optifreeze: Champagne and Swedish strawberries on New Year’s Eve! We believe a higher cost will be accepted. However, it is fundamentally impossible to answer this question today. Some products that today are conventionally freezed can potentially be replaced be replaced with our products/technology. But the primary driver for the food industry companies is new products to market, independently of the year´s season or geographical distance. It is these business opportunities that attract the food industry companies.

Alias a: Have you performed market research in the aspect of price sensitivity? What type of feedback is obtained regarding the increased cost (1.5 – 8 SEK / kilogram)?

Optifreeze: Yes, we have performed through market research and the food industry´s interest is strong. The food industry predicts that they can increase the number of products and also revenue.

Alias a: What is today´s number of employers? (May 8, 2014)

Optifreeze: One employed method- and product developer. A hard working board and several (paid) consultants.

Moderator: Which products can be treated with this method?

Optifreeze: We have performed sharp tests on spinach, strawberry and parsnip. Generally, the method is most successfully applied on vegetables, fruits and berries with homogenous structures.

Moderator: How large is the market for the Optifreeze products? Can the market be estimated in financial terms?

Optifreeze: It is impossible to estimate the market in financial terms. The only thing we do know is that food industry companies visualize business opportunities, because they can offer new markets and new products, but also old product in a new regime. We also know that there are new products out there waiting to be produced. We have a squared sheet of paper in front of us and on this paper only a few squares are currently filled.

Moderator: When will Optifreeze launch the first product (May 8, 2014)?

Optifreeze: The goal is to sell the first two CEPT platforms next year, 2015

Moderator: Who will buy the products? Who is the customer?

Optifreeze: A simple question but still hard to answer. The user is a food industry company holding a segment of freeze products or a company that desire such a segment. The customer might be the actual company but also a provider of production systems or freezing facilities or even a company within logistics that provides custom services

Alias jordgubben: Are the result affected by the actual freezing temperature?

Optifreeze: To some degree. Today, well-controlled industrial freezers must be used.

Moderator: Are there currently ongoing discussions with food industry companies and/or Freeze technology?

Optifreeze: We have very good contacts within both food industry companies and freeze technology companies. The feeling is very positive due to that a few companies actually have contacted us, not vice versa. These companies are curious and interested. We have had a live demonstration of the method and since the interest has grown even stronger.

Alias a: Will this technique replace current freezing technology or is it a complementary technology – a “niche technique” – that focuses on a specific area?

Optifreeze: Primarily, our technique is a complement but will presumably be a replacement in some cases, e. g. when immature vegetables, fruits and berries are air transported to customers. A relevant example is strawberries. Frozen strawberries are easily accessed, but the applications are limited due to the low quality of conventionally frozen strawberries. We want to change this fact.

Moderator: Is it the end customer that will thaw the products?

Optifreeze: Yes feels like the natural answer, but it could be the retailer that will thaw the products and subsequently sell them as fresh products.

Alias a: How do you define industrial scale? What is the capacity per machine?

Optifreeze: That depends on the customer, but more likely metric tonnes than kilograms.

Alias a: What is your estimated turnaround- and revenue growth in the next 2-3 years?

Optifreeze: In 2017, Optifreeze aim to have 6 OptiCept in production.

Alias a: Which are the greatest risks in the company and the strategy?

Optifreeze: Technical risks during scale-up, that the market will erroneously classify us as a GMO business, key persons that leave the company, funding and external world factors. In fact, a lot, but we are focused on our task.

Alias a: Will there be Optifreeze industries which will freeze products on demand or will you solely provide installations at the customer´s facilities (as the Nespresso-concept)?

Optifreeze: We will not hold own industries. We will solely sell installations and compounds, but as previously stated: We aim to become a method- and technology development company.

Alias a: What is your estimate of profit margin?

Optifreeze: Final price = Cost of production x 5 (C.E.S.I. : !).

Optifreeze patent family (2013):

Patent

Patentnummer                             Land

8 563 060                                     USA

2 201 084                                     Finland

2 201 084                                     Frankrike

60 2008 023 322.7                     Tyskland

2 201 084                                     Ungern

2 201 084                                     Italien

2 201 084                                     Holland

2 201 084                                     Polen

2 201 084                                     Spanien

2 201 084                                     Sverige

2 201 084                                     Schweiz/Liechtenstein

2 201 084                                     Storbritannien

Source: http://www.aktietorget.se/pressdocs/optifreeze/documents/optifreeze%20-%20memorandum%202014%20-%20final-1.pdf (p 25)

 

Financials:

OptiFreeze: Interim Report 2014-01-01 – 2014-09-30

Summary of Q1 – Q3 2014

The following summary covers the period 2014-01-01 to 2014-09-30 with comparative period 2013-01-01 to 2013-09-30.

  • Revenues for the period amounted to SEK 0 (0 EUR)
  • Profit for the period amounted to -1,847,168 SEK (-46 544 SEK)
  • Cash and cash equivalents amounted to 8,076,791 SEK of which 8,000,000 SEK in interest-bearing investment
  • Capitalized costs amount to 179 028 SEK (0 USD)
  • Number of shares amounts to 7,800,000 pieces
  • Earnings per share -0.24
  • Equity ratio 89.8%

Summary of Q3 2014

The following summary covers the period 2014-07-01 to 2014-09-30 with comparative period 2013-07-01 – 2013-09-30.

  • Profit for the period amounted to -802 374 SEK (-42 844 SEK)

Optifreeze: Further reading (In Swedish):

“Full original story” (Memorandum) http://www.aktietorget.se/pressdocs/optifreeze/documents/optifreeze%20-%20memorandum%202014%20-%20final-1.pdf

http://upbis.com/ag/pdf-analyses/optifreeze.pdf

Swedish television highlights Optifreeze (SVT): http://www.svt.se/nyheter/vetenskap/ny-frysmetod-for-gronsaker

http://bit.ly/H7Zn2c

The above attached SVT link can only be accessed from sweden (copywrite limitation)

http://optifreeze.se/

http://www.redeye.se/aktiebloggen/optifreeze-brannhet-nylistning

Further reading – Strawberries metrics 

http://www.fred.ifas.ufl.edu/pdf/webinar/Strawberry.pdf

Further reading – Spinach metrics

http://www.agmrc.org/commodities__products/vegetables/spinach-profile/

Best regards, CESI

The author, Cutting Edge Science Invest, is currently an Optifreeze share holder. Cutting Edge Science Invest can not guarantee, or take into  accountability, the content of truth and accuracy of the information in this article/post.Thus, Cutting Edge Science Invest requires that a possible reader gather complimentary information if any type of investment in the company described above is considered. Cutting Edge Science Invest provides personally biased information and at best also “general information and opinions”. The article/post does not contain professional investment advice.