EnWave Builds Further Momentum in the Dairy Snack Space

While EnWave’s (TSXV:ENW – $1.16 CAD & OTC:NWVCF – $0.91 USD) dehydration technology has proven to be very successful in a number of sectors such as fruits, vegetables, and meats, especially the dairy market is outpacing all others.

The success of Moon Cheese, which is being produced by EnWave’s 51% owned subsidiary NutraDried LLC and distributed in over 20,000 retail stores across North America, has attracted many food processing companies to try to replicate that feat in other parts of the world.

To date, EnWave has signed eight commercial licenses for the production of cheese snack products using its Radiant Energy Vacuum (REV) technology in countries that include the United States, Canada, Costa Rica, Chile, Portugal, Spain and Turkey. In addition, it has closed a Technology Evaluation and License Option Agreement (TELOA) with a major Australasian dairy company, which will conduct a research program.

Earlier this week, EnWave added another TELOA to that list. It closed an agreement with the Mexican food processor New Products R&D de C.V. (NPRD). The agreement gives NPRD, during eight months, the exclusive right to use EnWave’s REV dehydration technology to develop dried cheese products for the Mexican market.

New Products R&D (NPRD) is the latest business venture of a group of Food Technology entrepreneurs. Unfortunately, no further details were provided about management, except that they have launched a number of successful food enterprises in Mexico. Consequently, they have been able to build a vast network that reaches both industry and retail customers throughout Latin America.

The initial focus of NPRD will be to develop Moon Cheese type snacks, but most likely with Mexican style cheeses.

Cheese Snacks Around The World

The list below details with which company EnWave has already signed a commercial agreement in the dairy sector. It also states for which country each company received an exclusive license from EnWave.

• NutraDried LLP for the United States;
• Umland LLC for high kosher products in the United States. Production and distribution of the snacks has commenced;
• Gay Lea Foods for Canada;
• Lake Blue Spa for Chile. First production is expected shortly;
• Dominant Slice for Portugal and Spain. In this case first production is also expected shortly;
• Agricola Industrial La Lydia SA for Central America. They will receive a 10kW nutraREV unit for initial production and plan to expand their business in 2016;
• Ereğli Agrosan for Turkey. The license actually grants the company the exclusive right to process a variety of fruit, vegetable and cheese products. A 10kW REV machine is scheduled to be up and running at Ereğli Agrosan’s facility shortly; and
• Kesito LLC for Greece. The company will receive a 10kW commercial REV machine, which will allow Kesito to complete product development and initially enter the European market with a high-quality, shelf-stable dried cheese snack product.

Furthermore, market tests with Moon Cheese have started at retail chains in Japan and Taiwan. If the outcome is successful, distribution will increase which will result in larger purchase orders for NutraDried.

The list clearly illustrates the success the Company has achieved worldwide in this market segment.

Mexican Tax on Junk Food

Obesity is a major health concern in Mexico. According to the World Health Organization, almost 70 percent of Mexicans are overweight, and about a third are obese.

In an attempt to reduce junk food purchases, Mexico in 2014 instituted an 8% tax on foods and beverages that contained more than 275 calories per 100 grams (3.52 oz). These taxes are applied to domestic and imported products.

A recent study by the National Institute of Public Health in Mexico indicates that the tax is successful, as there is a 5.1% decrease in purchases of the taxed items.

Note that also in some areas of the United States a similar junk food tax is being implemented. Berkeley, in California, became the first US city to tax soda in 2014. And a few weeks ago Philadelphia did the same.

All of this is good news for EnWave, as its dehydration technology is able to dry food items so that they retain most of their flavor, eliminating the need to add sugars. As a matter of fact, we heard that EnWave is exploring other potential partnerships in Mexico to tackle this issue.

Conclusion

The agreement with New Products R&D de C.V. is further proof that EnWave is building momentum in the dairy snack space.

NPRD’s management group has extensive experience in the Mexican food processing industry. They plan to leverage their existing network to evaluate the market opportunity for dried cheese snacks throughout Latin America.

EnWave continues to focus on securing additional partnerships for cheese products worldwide. We’re convinced the Company will be successful in this endeavor, as the snacks are an obvious success and food companies are eager to launch new innovative products. Typically, EnWave receives between 3% and 5% royalties on all cheese snack sales produced with REV machinery. Buy recommendation.

For important disclosures, please read our disclaimer.

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