Biggest Customers Truly Show EnWave Potential – Part I

This is the first in a three-part series about EnWave Corp’s (TSXV:ENW – $1.02 CAD & OTC:NWVCF – $0.80 USD & Frankfurt:E4U – €0.69) most significant clients, the influence of their REV dried products on the market, and the impact of their success on EnWave’s sales and earnings.

Milne Fruit Products, Inc, a processor and global supplier for the industrial food ingredient, beverage, and health & wellness markets, is first. The U.S. based company has made significant inroads into developing and offering a vast portfolio of REV dried fruits and vegetables.

The most common drying processes, which include freeze drying, drum drying, and infusion with sugar or other substances, all result in significant differences in appearance, flavor, mouthfeel and other aspects of product quality. There are high stakes for food processors to get it right.

EnWave’s innovative REV drying technology is changing the game. This method allows for production of ingredients with enhanced nutritional value, wider range of product attributes, and increased product versatility.

[metaslider id=9083]

This versatility is the basic principle behind Milne MicroDried ingredients. Many MicroDried ingredients, including blueberries (the first product to be dried using REV), are available as whole pieces, while others are available as powders and fragments with and without fines. From salad to dessert, plus beverages and snacks, they can be part of every new consumer product.

Milne offers ingredients made from more than 20 different types of fruits and vegetables, including blueberries, strawberries, cherries, mangoes, carrots and lentils.

Moreover, after four years of prototyping and production runs, MicroDried has fine-tuned the process and became experts at delivering their customers the exact particle size and moisture level required.

Wide Variety of Applications

Milne introduced MicroDried REV dried products to the market in 2012. Blueberries and blackberries were among the first to be commercialized. But it was only after strawberries, cranberries and other products were added to the product line, that things took off for Milne.

The versatility of MicroDried ingredients means that a lot of applications, both current and potential, use them. In fact, more than 50 consumer products on the market today already use MicroDried ingredients, including:

• Peach, black currant, strawberry and cranberry powders for teas, both bagged and instant.
• Strawberry and mango for a two-compartment yogurt pack.
• Powder and whole pieces of blueberries, strawberries and other berries, for hot and ready-to-eat (RTE) breakfast cereal.
• Various powders and fragments for candy, cookies, popcorn and other confections.
• Strawberry and other powders for ice cream and gelato.

One of MicroDried’s many satisfied customers is Zuke’s LLC, a pet-food processor based in Durango, Colorado. Zuke’s niche is high-end, high-energy food and treats for active dogs and other pets. It has a line of grain-free dog food that uses MicroDried ingredients, including sweet potato, peas, cranberries, blueberries, carrots, cherries and mango.

Other applications include craft beer, nutraceutical products such as pills and tablets, protein dry mixes, hot and cold cereals, trail mixes, granola bars, baking mixes and more.

What makes this versatility possible, is the high quality of MicroDried ingredients over those dried by other methods.

REV vs Other Drying Methods

Radiant Energy Vacuum technology gives users the ability to produce a wide variety of product specifications. It’s a matter of understanding how much energy needs to be introduced under a certain level of vacuum, to remove X amount of water. Based on specific metrics, the energy requirements necessary to achieve the desired moisture content can be determined. This degree of precision confers a number of advantages over other methods of drying.

That’s not the only advantage either. When comparing MicroDried ingredients against freeze-dried ones, there are a number of advantages, one of them being the color of the fruit. The inside of a freeze-dried blueberry, for example, tends to be white or pink, while a MicroDried blueberry will be blue all the way through. Color uniformity is especially important if the fruit is going to be reduced to very small pieces or a powder.

REV dried fruits are sturdy and have better particle integrity than those dried by competing methods, which makes them easier to blend. Milne’s customers have the flexibility to specify the desired particle size given the characteristics of the finished product. When juxtaposed, freeze-dried particles are too fragile and infusion-dried ones are excessively sticky to be reliably reduce to that size.

All in all, an independent third-party test which compared MicroDried products to air-dried and freeze-dried products in a variety of applications, revealed overall superiority in appearance, flavor and texture.

Conclusion

Since 1956, Milne Fruit Products has been an industry leader in creating fruit juices, concentrates and purees from Concord grapes. Over the years, the company has expanded its product line to include over 25 different all-natural fruit and vegetable varieties and more than 50 ingredient products. Today, it is conquering the market again with its MicroDried product assortment.

Broadly speaking, the main advantage of the REV process, as used in Milne’s MicroDried product line, is that it results in ingredients that are 100 percent pure. They are simply healthier than many traditional options and produce better, more nutritious consumer products, with natural fiber, protein and antioxidants.

All MicroDried products offer a clean, single ingredient label with no added sugars, color, preservatives or additives of any kind. The healthy ingredients use the whole fruit and vegetable, including skin and seeds, to maximize antioxidants and phytonutrients.

The high quality, versatility and adjustability of the MicroDried process means that MicroDried ingredients are being used in a growing range of applications.

Up until now, Milne has produced all these products on a large scale commercial dryer. That machine has been running 24/7 for months and has been capable of supporting six major cereal launches, along with all other customer contracts.

A few months ago, Milne placed an order for a second large-scale unit, a 120kW quantaREV, to expand processing capacity. Milne is now in the process of commissioning the second line. The company is on target to start selling product from the new dryer early this summer.

Steve Nugent, a Director at Milne was quoted saying, “This will more than double our capacity. What takes us two days to do on the original line, we’ll be able to do in 12 hours on this second line. I see us fully using all of that capacity in the very near future. If the company continues on its current trajectory, the plant will be ready for another addition. We’ve got the synergies in place to further expand the plant quickly, because we sized the infrastructure for expansion. If we keep growing the way we have been, we’ll need more capacity. It’s a good problem to have.”

All of this is excellent news for EnWave, knowing that a full-scale commercial REV dryer roughly sells for $1.5 million and generates between $200,000 and $400,000 in royalties per year at full utilization. Recommendation BUY.

For important disclosures, please read our disclaimer.

Latest Company Report (pdf)