An Emerging Market for
Microalgae-Based Omega-3:
Maximizing Algae Productionand its Key Market Drivers
INSIGHTS BY: DIEGO SHIMIZU
PRINCIPAL CONSULTANT
FROST & SULLIVAN JAPANPowering clients to a future shaped by growthOmega-3 is a type of nutritional lipid with historical negative associations with cardiovascular or otherchronic diseases due to its oil or fat content. However, consumer awareness of the health benefitsof Omega-3 has come a long way in recent years, especially in the Asia-Pacific (APAC) region. The
most common ingredients of Omega-3 include EPA, DHA, and ALA, with two that can be sourced
from microalgae oil—DHA and EPA. The market for microalgae-based Omega-3 was valued at about$641 million in 2019, highlighting its potential. It also has an optimistic outlook with a healthy 12.04%
CAGR, beating the market for plant-sourced Omega-3 (CAGR of 8.51% and 2019 value of $568million).
Typical end-use applications of Omega-3
include dietary supplements, infant nutrition,
food, beverages, cosmetics, and personal careproducts. The market segment for microalgae
oil includes a higher price point at $60 on
average per kg in 2019 compared to other
Omega-3 products sourced from plant, seed,or nut oil, which average around $2.78 perkg. In the coming years, the price point for
microalgae-based Omega-3 should decline andstabilize as more efficient production methods
come to fruition, coupled with increasing
competitors and manufacturers in the market.
APAC countries such as China, South Korea,and Vietnam have increased microalgae-based
Omega-3 production, leading to an overall
decrease in pricing.
Besides, Japan is prone to natural disasters, such as earthquakes and floods. Hence, it is essential
for the country to build a robust digital infrastructure and adopt a resilient cybersecurity practices. Itwill help the nation to overcome such catastrophes and ensure the success of the SDGs, particularly
numbers nine, 11, and 16.

Maximizing Production for Microalgae-based Omega-3
Sourcing microalgae oil for Omega-3 is an emerging market popularized for being sustainable,safe, and vegan-friendly. Compared to fish oil, algal oil has many advantages, such as less odor, aconsistent composition leading to easier algae biomass pr, and a lack of cholesterol and contaminants.
Microalgae are grown in a saline laboratory and involve five key stages in their production process:fermentation, biomass filtration/centrifugation, drying of the biomass, microalgae oil extraction, andfurther purification. During microalgae oil extraction, algal cells are disrupted. If the cell walls areruptured, the algal concentrate can be exposed to oxidation, leading to an odorous by-product thathumans cannot ingest. To maximize production stability, efficiency, and yield, innovative technologythat enhances the safe disruption of the algal cells for extraction, decreases by-product waste,
and maximizes feedstock utility (sugarcane molasses, for example) during the initial fermentation
stage must be created. For dietary supplements in pill form, encapsulation technology is also key toprotecting the Omega-3 isolate from unwanted moisture or contaminants.

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Compared to Omega-3 products sourced from krill or fish oil, the production of microalgae-based
Omega-3 is more sustainable and leads to increased fish development and harvests. Harvesting
microalgae commercially can be accomplished in a stable and well-controlled laboratory setting,limiting uncontrollable factors. Recent technology development in algal-based oil has increased
efforts to create a more sustainable and durable method of providing necessary Omega-3 ingredientsfor aquaculture harvesting.
BASF SE, a German chemicals company with production plants across the Americas, Europe, Asia,and Australia, partnered with Cargill to produce LatitudeTM Technology. This innovative technology
highlights an industry movement toward sourcing alternatives to fish oil that are instead algae-based.
Canola oil is infused with algal oil and other plant matter rich in all three Omega-3 ingredients (i.e.,EPA, DHA, and DPA). LatitudeTM Technology promotes the growth of quality fish by replacing or
blending with fish oil in aquaculture feed production. Not only can algal-based technology benefit
the fish industry, but it can also be used in direct applications of Omega-3-infused food and dietary
supplements. Recent technology advancements by the New Zealand Institute of Plant and Food
Research Ltd. in detecting Omega-3 concentrates in supplement pills without destroying them (andalmost instantaneously) have been patented.

Breaking Down Key Trends and Highlighting Country Cases
Key drivers in the algae market in the APAC region include rising consumer awareness of the healthbenefits of Omega-3, increased consumer focus and preference for healthier and mindful living,
and growing demand for quality infant development formulas. Need for fish-based Omega-3 has
had the highest market value compared to other ingredient sources such as plants, seeds, or krill oil.
However, concerns about a depleting marine population and the sustainability of aquaculture farming
for fish harvesting have led to increased manufacturing of algae-based Omega-3. These short-term
trends will likely impact the market in the next three to four years. General macro-level trends such as
rising disposable incomes and quality of life in the APAC region are also affecting the market. Lastly,
specific APAC country trends have already begun to impact the decisions of value chain holders, fromtargeting specific health benefits during product formulation on the manufacturer side to wholesaleretailers adapting to changing consumer preferences.

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The Case for India: High Demand for Omega-3 in Infant Nutrition
Concerns about India’s lower life expectancy than most competing developing countries in the APAC
region, such as China, Japan and Australia, have been partially attributed to a deficiency in Omega-3
EPA and DHA nutrients. This had led to Indian health officials establishing a reference for daily intakefor locals, thus increasing awareness and demand for daily supplements for adults and fortified infantnutrition. The health benefits of Omega-3 EPA in infant brain development are expected to increase
sales of infant nutrition formulas. Coupled with factors such as rising population rates and increased
disposable income for Indians, the infant nutrition market for India is the fastest growing after China’s
booming market.
More than half of the Omega-3 market in India is sourced from fish, and algae-sourced products are
the next biggest source. With a depleting source of marine life and an increasing vegetarian andvegan population, algal Omega-3 is quickly becoming a popular alternative to fish oil Omega-3 andis more sustainable in its production. Beyond the rise of product development in infant nutrition, theOmega-3 market for India also has other opportunities in end-use products such as pet food, animal
feed, and dietary supplements.

The Case for Japan: Omega-3 for an Aging Population
In Japan, changing demographics that emphasize a high geriatric population with at least a quarterof its total population aged 65 years or older have led to an increase in the intake of Omega-3 in thedaily lifestyles of Japan’s elder generation. The key to harnessing this growing Japanese market for
Omega-3 (especially rich in DHA and EPA) is producing more consumer-friendly products that aretransparent in sourcing quality ingredients that emphasize health, wellness, and sustainability.
Research efforts at the university level,such as Japan’s Hosei University andTeikyo Heisei University, have focusedon developing quality and effective
Omega-3 EPA and DHA. Support fromthe government in promoting dietary
supplements as healthy alternatives fornutrition intake has increased Japanese
consumers’ awareness of the healthbenefits of Omega-3. Algal oil sourcing
has increasingly become a factor in
infant nutrition, as seen in India. In fishproduction, Japan has established its
presence in the APAC region as a leadingfish oil producer. However, with theadverse effects of the COVID-19 pandemic
on the industry, many fish harvesting facilities have been on strict lockdown and have reduced
harvest yields after the Japanese government declared a state of emergency. Demand for fish-based
Omega-3 has been steady in the Japanese market, but production limits and growing consumerawareness of microalgae Omega-3 make algal-based Omega-3 an emerging competing product.

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Frost & Sullivan Japan
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5-2-20 Akasaka, Minato-Ku
Tokyo 107-6123 Japan
Tel:+81 50-6875-0901
Email: marketing.jp@frost.com

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