Functional Technologies' initial commercial focus is the global wine and distilled spirits yeast market, estimated at US$1.5 billion. In this market, our IP-protected yeasts are expected to receive premium pricing and high-margin opportunities ranging between $50 and $150 per kg. The uniqueness of our solution (via protected IP) also provides significant strategic advantages. Our yeasts have been tested successfully in more than 500 wine fermentations, including 75 commercial fermentations in California and Chile (among which are three of the top 10 U.S. wine producers).
Acrylamide mitigation
The company's acrylamide mitigation yeast technology has potential application not only in the multi-billion-dollar baker's yeast market for bread-making and baked goods manufacturing, but also in a number of additional large markets, such as potato chips and French fries, baby food, cookies, crackers, breakfast cereals and battered foods --- any food market in which starchy ingredients are fried, baked or toasted with the result that acrylamide is formed and present in the end-use products. Food manufacturers in these industries are working closely with regulatory authorities to devise methods for mitigating acrylamide formation in their affected food products.
Wine
The specialty wine yeast market worldwide is estimated to be worth more than US$300 million annually. This is the initial and primary target market of Functional Technologies' Phyterra brand of yeasts. An estimated 90% of wine companies are affected by H2S, a well recognized and costly industry problem (in terms of both lost revenue per contaminated bottle and the immeasurably negative impact on a brand's reputation). The cost of yeast in itself, is insignificant - a fraction of a penny per bottle - allowing for premium pricing; thus, price is not a barrier, as it is of lesser concern to winemakers than their much greater interest in the improvement in quality delivered by Phyterra's H2S-reducing yeasts. Phyterra's yeasts can also enhance winery profitability by curtailing the revenue reductions that flows from the product downgrading and price discounting often required to sell H2S-contaminated wine.
Distilled Spirits
Distilled spirits (whiskey, brandy, etc.) represent an estimated US$1.2 billion yeast world market utilizing some 23 million kg of yeast annually, with prices typically starting around US$50 per kg and ranging upward from there. Our yeasts should command this same pricing and high margins. The company is moving ahead with developing yeast varieties targeting this high-value market.
Beer
Global beer production uses an estimated 29 million kg of yeast annually at price ranges estimated between US$4 and $6 per kg. This represents a yeast market worth $125--$190 million each year. Once the higher-value wine and distilled spirits markets have gained traction, the company's plan is to develop versions of its yeasts for the brewer's yeast market, as it similarly contends with the problem of H2S and ethyl carbamate.
Bread
The global baker's yeast market consumes an estimated 2.5 billion kg worth $2.5--$5.0 billion annually. Pricing in this largely commoditized market is estimated at $1--$2 per kg. Found in bread, ethyl carbamate levels are heightened upon toasting or heating. The concern for the health and regulatory community is the risk of ethyl carbamate ingestion due to the high consumption pattern of bread in the human diet. Replacing baker's yeast with our acrylamide-reducing yeast requires a simple transition with no changes in yeast production or food manufacturing processes.