Optifreeze have now segmented the target markets into four different areas. Customers and applications with similar need and buying behavior are grouped together. Each segment is also considered having a potential that is large enough to have it´s own focus.
Comments per customer segment
During Q3, the company has created a separate flower (cuttings) category – OptiFlower. This category was previously part of OptiFresh segment. The process is identical for both, however the cuttings customer group is vastly different compared to the OptiFresh ones. In addition, the OptiFlower potential is enormous, requiring a separate focus for this particular category. Since the OptiCept process has made it possible to both vastly reduce waste amounts and create vast supply chain savings, the interest in OptiFlower has been immense.
We believe that this is the area where the first orders coming in. We are solving a problem the industry is struggling with.
Plants are typically grown and harvested in Africa, flown to Europe / USA. After the flower cuttings are harvested from mother plants, their shelf life is 4 days. During this period the product need to be packed, transported to Europe and planted. We extend this period up to 11 days. After the cuttings are planted the growth rate of them is dramatically increased during the first couple of weeks.
There are 500 million Geranium (Pellargonia) cuttings transported to Europe every year and 30 % of the unrooted cuttings taken during one season are thrown away. We do not see any market barriers to introduce the Optifreeze concept in this industry. During the autumn, we have intensified the dialogue with one of the leading European suppliers and made tests in Lund on samples supplied from the customer. These results have been very positive, and we are now discussing next step.
The technology implementation within the OptiDry application sector reduces drying times by 30 to 50 percent. This enables an increased production capacity as well as reduced energy costs. Also the preservation of aroma and color is maintained in treated products that make it possible to have a “premium product” for the customers and consumers.
The future supply to these customers will only include the PEF part of the OptiCept line. There are no additives needed and by that not continues sales during the life time. Revenue will come from the investment and service.
We have discussions with producers of dried vegetables and herbs and their customers / OEMs. The producer sees clear benefits in increased production capacity in the drying process and reduced energy consumption. The OEM / retailer sees the benefits from a product with higher quality in terms of aroma and color.
During the autumn, we have performed customer tests in Lund to prove the concept on the customer’s products. We are now discussing the next steps.
As the new pilot plant was successfully implemented, the talks with food industry clients were intensified. The previous – slightly cautious – food industry attitude has been replaced by interest in more concrete discussions. The clients clearly see the vast technology advantages. The sales process will most likely take longer time with these clients compared to the OptiFlower and OptiDry sales processes. This is due to the clients being more cautious before introducing new manufacturing technology as this brings about changes in the delivery chain.
Our focuses in these segments are towards customers supplying to the food service industry. The work done towards this industry is better described as marketing the concept. We need to have the EU approvals in place and the customers need to better understand how the additives work in products. We are adding natural ingredients into the fresh fruits and vegetables. The cells in most of the cases are consuming these ingredients. Still the industry is conservative, but we do see a serious interest during our autumn customer interactions. Short term customer focus is towards Food Service providers.
During November the first customer start sending samples of their product to Optifreeze for proof of concept.
The demand from the traditional industry is to reach a survival time of more than 12 month in frozen condition. At this time our technology does not reach that. More development work is needed to meet market requirement.
Our present strategy for this segment is to focus on customers handling fresh products. By introducing a freezing step in their supply change they will reach a time of 2-6 months of fresh products, instead of todays 5-10 days. We are exploring this strategy with our partner in the frozen segment, JBT.
Our long-term development projects with Orkla continues, with the demand to reach longer times in frozen condition than what is possible today.
Client focus and goals
During the upcoming quarters there will be a heavy focus on sales, as well as on installing the first lines in the segments OptiFlower and OptiDry. The OptiFreeze and OptiFresh market processing will focus on the client logistics solutions, as well as on emphasizing the market for those products receiving vastly prolonged sustainability thanks to the technology.
We are at this point not changing our short-term goals. The previously announced goals of a 2 sold OptiCept lines minimum during 2018 remain.
Lund, November 29, 2017
Göran Hedbys, acting CEO