Sweet success: BioNeutra wins with three-in-one VitaFiber
Recent growth is backed by almost 30 years of ground-breaking research.
Bill Smith chuckles a little when he recalls how he became involved with Edmonton biotechnology firm BioNeutra North America roughly 14 years ago. “To tell you the truth I never even thought about joining another company at that stage in my life,” he says.
It was 2005, the year after he stepped down as mayor of Edmonton, when BioNeutra founder, president and CEO Dr. Jianhua Zhu asked him to join the fledgling company’s board. “I did some investigation, and I thought, Wow! This is a new and exciting little company,” says Smith, who earned the nickname “Booster Bill” during his tenure as Edmonton mayor from 1995 to 2004, due to his unwavering promotion of the city.
“I thought the timing was great because the world was looking for healthier products, and sugar was the big elephant in the room at the time, so their sweetener product, VitaFiber, fit right in,” Smith explains. “It was also the only product in the world that we knew about that was a three-in-one ingredient: it was a fibre, it was naturally sweet and it was a prebiotic for digestion. I didn’t know much about the process, but I met Dr. Zhu and I was very impressed with his knowledge and with what he wanted to do with the company – he had a sincere desire to create healthy products for people. So I started out on their board, then chairing the board, and I ended up working for them full time in 2007.”
Today the 83-year-old former mayor, business owner and Grey Cup champion (Smith played for the Edmonton Eskimos during the 1950s and early 1960s) is still chair of BioNeutra’s board, as well as senior vice-president of the company. His belief in the product has been more than validated, and the now publicly traded company has grown sales of its proprietary sweetener alternative VitaFiber IMO an incredible 1,378% in the past five years.
While many biotechnology companies fail, crushed by cash and regulatory challenges, BioNeutra continues to rack up awards and accolades. It hasn’t always been an easy road, Zhu admits, although his determination to develop more accessible, healthier products has never wavered.
“I’m not one to throw in the towel, and though we’ve had some close calls with the banker, I was certain that eventually we would succeed, and we did,” Zhu says. “Most importantly, we are helping to improve people’s health – that was always the goal.”
BioNeutra’s sweet success is actually the result of 27 years of innovation and research, starting in 1990s China, where Zhu, a chemical engineer, worked as a divisional vice-dean at the South China University of Technology.
“I came from a family that was dedicated to public health,” he says. “My parents and two sisters are medical doctors and my grandparents were involved in developing eastern medicines, so I had some entrepreneurship in my blood. Inspired by them and university professors, I wanted to make a difference in public health, but by pursuing research.”
At that time universities “were being called upon to play a key role in China’s drive towards industrialization,” explains Zhu, who enabled some of the 300 scientists working under him to commercialize their research and “use the profits to reward the innovators, while also helping supplement the low pay the faculty received across the board.”
That was when Zhu first began working with four colleagues on a novel process to produce what would become the functional food ingredient VitaFiber IMO, based on his own goal of developing “a healthy new food ingredient to improve people’s health that could be produced commercially and inexpensively.”
Committed to innovation
Research continued when Zhu was offered visiting professorships at Japan’s Yokohama National University and at the University of Alberta in Edmonton, where he and his family eventually settled in 1998.
After moving to the private sector and working for a succession of under-funded biotechnology companies, Zhu realized his concept would only be commercialized through his own efforts, and in 2003 established BioNeutra. When Smith joined the firm two years later it was housed at the Edmonton Research Park, a business incubator for start-ups and growing businesses, using a pilot plant for R&D.
Financing was an enormous challenge for the struggling company, and because Zhu was developing a novel process and functional ingredient, there were considerable regulatory hurdles to clear before getting VitaFiber to market. Regardless, interest from investors and government grew steadily, which Zhu says, “was key to getting private investment. The money was important, but the government funding provided a halo effect and legitimacy. That reassured investors the project was viable.”
Roughly $13 million went into research to fund collaborative projects at the University of Alberta, including clinical studies and human trials in Canada and the US.
In 2009 Zhu and his four colleagues were awarded two patents in the US for the enzymatic conversion process that produces VitaFiber, followed by two Canadian patents in 2010. As a result, VitaFiber became the first IMO approved by Health Canada, the US Food and Drug Administration, the European Food Safety Authority, and Food Standards Australia New Zealand, allowing it to be sold in 30 countries. Food and beverage products containing the ingredient are allowed to use a health claim on the label that it “contributes to healthy digestion and weight management.”
VitaFiber IMO is an Isomalto-oligosaccharide (IMO), a sweet, digestion-resistant carbohydrate found naturally in honey, miso, sake and soy sauce. IMO is manufactured through the “enzyme-catalyzed hydrolysis of starch” from various plant sources, according to Health Canada, and is a prebiotic and a soluble dietary fibre, meaning that it isn’t metabolized in the small intestine. Instead it ferments in the colon to produce beneficial bacteria in the digestive system. Because it’s 50% to 60% as sweet as sucrose, IMO can be used as an inexpensive, low-calorie, natural sugar alternative, while offering the additional advantage of overall good gut health and weight management.
“We use a patented, highly controlled enzymatic progress to transform starch molecules into branched-chain molecules made of four to seven units of glucose that contain a series of alpha (1-6) bonds,” Zhu explains. “The bonds are poorly digested by humans, they deliver fewer calories while providing fibre-like benefits.”
BioNeutra uses starch from peas, potatoes, tapioca, and non-GMO corn to produce VitaFiber in syrup or spray-dried powder format for use in a wide range of manufactured products, including bars, beverages, baked goods, confectionary and ice cream toppings. The versatile ingredient is vegan, certified halal and kosher, and is free of allergens, artificial colours and preservatives.
Smith believes BioNeutra’s patented process and commitment to continual improvement has kept it growing while so many biotechnology companies fail. “The difference really is the product,” he says. “Dr. Zhu came around at the right time – the world was looking for good, clean healthy products, and for more natural ingredients, and we had the right product at the right time. When we started we had virtually no money to do advertising and promotion. We had one salesman going out and talking to manufacturers. It was a lot to do with word of mouth.”
As well as its functional properties, VitaFiber works well as a binder in food and beverage products, which Smith says, “helps in manufacturing and gives us a big edge up with some companies.”
Although BioNeutra has some direct-to-consumer sales, the majority of VitaFiber IMO is sold as an ingredient to manufacturers, with the largest demand coming from the US. Interest in IMO has grown significantly in recent years, as consumers increasingly avoid sugar due to health concerns, and as the market for digestive solutions matures along with our aging population. That’s been a boon to business for BioNeutra, which went public in November 2014. Zhu says sales of VitaFiber grew to “more than $750,000 per week in the first nine months of 2018,” pushing total sales to between $125 million and $130 million in the past five years. Along its journey the company has been recognized with numerous business and innovation awards, including BioAlberta’s Emerging Company of the Year Award in 2006, the 2015 Ernst & Young Entrepreneur of the Year – Prairie Region award for Zhu, an Alberta Export Award in 2017, and an Alberta Business Award of Distinction in 2018.
Last year BioNeutra opened an $11-million research and production complex in Edmonton featuring 5,000 square-feet of office and lab space, and a 45,000-square-foot plant with the capacity to produce 5,000 tonnes of product annually. The majority of production (roughly 15,000 tonnes annually) takes place at contract manufacturing plants in Indonesia and China, where Smith says the enzymatic process is identical, guaranteeing quality consistency. “We also have our own personnel in the plant in Indonesia checking on it all the time, and the [production] in China is a joint venture with us, so the control of the product is very tight.”
Smith says BioNeutra will launch branded products for retail later this year, while continuing to develop new functional food ingredients. “We’ve got great research and development people within the company, and I’m looking forward to some next-generation products that we’re working on. It’s an exciting time for the company, and I hope I can be around long enough to watch it grow.”
Carolyn Cooper is a freelance business writer based in Kawartha Lakes, Ont. who has deep roots in the food and beverage industry. E-mail firstname.lastname@example.org.
This article appears in the May-June 2019 print issue of PLANT Magazine.