The capacity of the factory - based in Pasadena, Texas - has been increased by 50 percent from 1000 metric tonnes annually to 1500 metric tonnes.
The Canadian company said that the expansion was in anticipation of increased demand for its cholesterol-lowering ingredients, Reducol and Phyto-S sterols, particularly in Europe where it has recently signed several deals.
"This marks the achievement of one of Forbes' key objectives for 2004," said Charles Butt, the firm's CEO. "The expansion will help address pending demand from the recently announced three year $24.4 million sterols sales agreement, our planned European product launches plus overall growth of the nutraceutical market."
Butt told NutraIngredientsUSA.com that since the EU Commission granted novel foods approval for the use of Reducol in milk-based products in November, there has been lots of interest from European manufacturers because its product is not GM.
The majority of plant sterol ingredients on the market are derived from soya but traditional sources of the crop, or GM-free varieties, are becoming increasingly difficult to source.
This has held back the use of sterols made by soy processors Cargill and ADM on the European market. Forbes' ingredient however is derived from by-products of the forestry industry.
"Moreover, Europe is ahead of the game in terms of functional foods," Butt added.
However, he said Forbes has definitely not turned its back on North America, where the functional business is "gathering some momentum" and the company is in "ongoing discussions with manufacturers".
The UK dairy foods company Fayrefield Foods became, last month, the first company to launch foods containing Reducol in the EU.
Fayrefield, which makes and exports both branded and private label dairy products throughout Europe, the Middle East and North America, said the product would attract extra interest because it is GM-free. Its first product is due to reach the market during the first half of 2005.
Last week, Finnnish healthcare company Scanvit announed that it would be the next firm to use Reducol, adding it to its milk-based drinks.
"The Scandinavian market has demonstrated a strong preference for functional foods and Scanvit has the infrastructure to take advantage of such an opportunity," said Butt.
Jukka Santavirta, the chairman of Scanvit, noted that Finland was one of the original sterol markets where products such as Benecol were launched.
"Reducol's clinically proven ability to lower cholesterol provides a distinct competitive advantage in one of the world's most well-developed functional foods market," she added.
Applications for additional food groups are expected to be filed before year-end, according to the company.
Forbes' revenue guidance for 2004 is C$16.5 million and next year's objective will be provided in the first quarter of 2005.