Why Nanollose is on the verge of a major market opportunity with its fibre conversion technology, as global fashion brands come knocking
Health & Biotech
Health & Biotech
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Nanollose is on the cusp of a transformative year, with its revolutionary technology that converts fermented waste into environmentally friendly fibres for the fashion textile industry.
Australian-based biomaterial technology company Nanollose Ltd (ASX: NC6) has partnered with one of the world’s largest fibre manufacturers, as leading fashion brands eagerly await results of the pilot spin of its tree-free lyocell fibre, later this month.
Trademarked “Nullarbor”, from the Latin phrase “nulla arbor”, meaning “no trees”, Nanollose’s tree-free lyocell fibre is the second generation application of its technology which it has developed with Birla Cellulose, a business unit of Grasim Industries Ltd (NSE:GRASIM) – the world’s largest producer of viscose rayon fibre with a market cap of US$15 billion.
In 2021, the partners filed a joint patent application for ‘High Tenacity Lyocell Fibres From Bacterial Cellulose and Method of Preparation Thereof’ and have been working together to scale up the production of Nullarbor fibre at Birla’s facilities in India.
Birla and Grasim are part of global conglomerate Aditya Birla Group – a major global rayon producer -and provide Nanollose with a globally recognised partner to accelerate development and commercialisation of Nullarbor.
Nanollose’s first generation fibre was a tree-free viscose rayon fibre, over which Nanollose has also filed global patent applications.
“Rayon has two main types; one is the hundred-year old viscose technology, and the other is lyocell which is a much newer, cleaner technology which produces a better quality fibre with less environmental impacts,” Founder and CEO Dr Wayne Best said.
“Initially we started making viscose, but through our partnership with Birla, we were quickly able to adapt our technology to the lyocell process, which provides better opportunities for Nanollose due to its superior properties, reduced environmental impact, and higher margin.”
Nanollose has caught the attention of global fashion houses with its revolutionary Nullarbor lyocell fibre, which is seen as an eco-friendly, sustainable alternative to traditional rayon and cotton — both of which can cause significant environmental impact.
It’s a potentially lucrative opportunity, with Nanollose set to make its move in a global market for rayon products that’s forecast to reach $20.9 billion by 2024, with a global compound annual growth rate (CAGR) of ~7.8%.
Brands have been knocking at the company’s door, and it’s now being selective as to just who it will partner with for the innovative product.
“We are really on the cusp of it now and following this pilot spin we expect to see increased newsflow as our fibre moves out of the factory and into the fashion houses over the coming months,” Best said.
“The feedback has been fantastic and there’s no doubt there’s huge demand for this product with the brands very active in contacting us.”
The company has undertaken limited outbound marketing, but has still managed to attract big name brands in the industry, as all the major players in the fashion industry scramble to find commercial and sustainable solutions to an industry wide environmental crisis.
“We haven’t had to do much outbound marketing. Often, it’s a case where brands are picking up our ASX announcements or stories in the fashion media and contacting us directly – and we are talking with some of the largest fashion houses in the world, as they all demonstrate their commitment to making long-term sustainable changes in the industry,” Best said.
Nanollose’s fashion industry consultant, Carla Woidt, has been using her in-depth knowledge and networks in the fashion industry to further assist with its strategy of commercialisation and implementation.
While Nanollose has demonstrated the lyocell technology at lab scale, and is in the process of creating a garment out of that fibre with the help of a leading Australian designer, the company is now undertaking its maiden pilot spin to create meaningful quantities of the next generation lyocell fibre, and prove the viability of the technology at scale.
“For the past couple of years leading brands have been contacting us and asking for access to our fibre and this is the first opportunity we have to give them a meaningful amount,” he said.
“It’s a very tactile industry and all about the hand-feel. Our partners aren’t that interested in the technical details of the fibre initially. They want samples of fibre, yarn, or fabric which they can test in their own systems, to build capsule collections, and actually feel the finished garment.”
“We are in advanced discussions with a number of brands and the availability of samples from the pilot fibre spin will be the catalyst we need to put pen on paper for initial agreements with those brands.”
For a company on the cusp of a major market opportunity, Nanollose could be described as an ASX technology company that’s still sliding under the radar. The stock listed on the ASX in 2017, and currently trades at around 10c, giving it a market capitalisation of around $15 million.
It maintains a tightly held register, and offers an interesting investment narrative that began with a quirky scientist and a bad barrel of wine.
In the tradition of other great accidents like, penicillin, the microwave oven, and the pacemaker, Nanollose’s lead product was an accidental discovery.
As an organic chemist, Best had been working in the field of pharmaceuticals and drug discovery for most of his career and led a contract research and drug discovery company at the time.
He would get lots of people come through the doors with crazy ideas they wanted to commercialise, but every now and again someone would come in with a really interesting idea and in 2014 that happened.
Agricultural scientist Gary Cass who was working in a winery botched up a batch of wine during the fermentation process.
When Cass came back to check on the wine, he had vinegar instead of wine but had the foresight to notice a very peculiar scum floating on the top.
“It was this leathery like biofilm we call a pellicle and at the time he was working with some other creative people in the art space looking at making clothes from food,” Best said.
Cass teamed up with a local designer and used the leather-like material to make a dress. The dress was brittle, needed to be wet to be worn, and smelt like two week-old red wine.
“As an organic chemist I knew the potential of cellulose, so when Gary said it was made from cellulose a light bulb went off.”
Realising you could make cellulose by fermenting waste, together with a few others, Cass and Best started Nanollose.
“Everyone thought we were mad, but we managed to get some seed funding and since then it’s just gone from strength to strength,” he said.
Nanollose’s technology has come a long way since then, with Nanollose refining its fibre such that it now mirrors the characteristics of traditional rayon (and no longer smells like wine).
Best said, as there are so many uses for cellulose – which is the main component of paper, cardboard and textiles – narrowing down the company’s focus became essential.
“We initially explored the paper industry, but it became clear to us that, in the beginning, our product would be much more expensive than wood pulp, which has been made on a huge scale for over a hundred and fifty years, with pricing as low as it can go.” he said.
“Our initial production quantities were low, so naturally our price was never going to be competitive with wood pulp in the short-term, and so it became clear that we needed to focus on higher value applications to get traction.”
High-end fashion seemed the obvious sector to focus on, with high margins, and strong demand from brands and consumers who are desperate for an environmentally friendly alternative to traditional materials.
Best said cellulose is an abundant natural polymer but when people think of polymers, they tend to think of synthetic ones like polyethylene, polyurethane or polyester, which have been popular for decades.
“Unlike these synthetic polymers, which are made from petrochemicals, cellulose is completely natural, renewable and biodegradable. Cellulose is a major component of plant material and makes up almost half the weight of wood. It’s a wonderfully versatile raw material but sadly its uncontrolled exploitation has contributed to deforestation and loss of native habitat.” he said.
“Our microbial cellulose is just as wonderful but is made from waste not trees. Microbial cellulose is also purer than plant-based cellulose and it doesn’t require the wood pulping process.
But while the high-end fashion sector is Nanollose’s initial target market, the company has also signed a collaboration agreement with Codi Group, Europe’s leading producer of personal wipes, both in their own name and for other leading brands, to develop an eco-friendly consumer wipe product.
The personal care wipe market is forecasted to reach US$24 billion by 2023 with a CAGR up until 2023 of ~5.2%.
Further, with the Nullarbor fibre project having moved out of the laboratory into the pilot plant, Nanollose has recently reactivated some other exciting research projects that had temporarily been put on hold to focus on its “fibre first strategy”.
“There’s some really good ideas from vegan leathers to engineering materials.”
Nanollose currently uses coconut water as its waste product for producing its fibre but is also looking at molasses and other low value agricultural wastes.
“Molasses is a by-product of the sugar industry and is currently used as a food supplement for the beef industry as well as for making rum and bioethanol,” he added.
“Molasses is available in very large quantities and is an ideal waste for making microbial cellulose due to its high sugar content. It’s also readily available in India where the Nullarbor fibre will be made. So there’s a good opportunity to co-locate the entire production from waste to fibre in one area, further reducing the cost and carbon footprint of the process.
This article was developed in collaboration with Nanollose, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.