In 2010, the botanical and natural ingredient export trade reached approximately $33 billion, according to the Market News Service (MNS) “Medicinal Plant and Extracts” report, published in the MNS December 2011 bulletin. By 2015, the international herb supplement and remedies market is expected to reach $93 billion, according to a report by San Jose, CA-based Global Industry Analysts, Inc.
There are multiple reasons for this continued gain in popularity. Fundamentally, “In many countries throughout the globe, botanicals are the first choice in preventative health,” said Michael Wang, president, NuLiv Science USA, Walnut, CA.
Why people are using botanicals is as varied as the people themselves. Besides the increasing numbers of people discovering the health benefits of botanicals, many are also seeking to cut costs. A substantial 81% of shoppers are trying to save on medical expenses by staying healthy, according to a report released by SymphonyIRI Group, Inc., Chicago, IL.
And the costs are not just monetary. “Conventional healthcare is costly both monetarily and in many, depressed quality of life results due to side effects,” said Dean Mosca, president, Proprietary Nutritionals Inc., Kearny, NJ.
Naturally, botanicals addressing common health concerns often drive consumer choices. For example, by 2030 almost 24 million people will die from cardiovascular diseases, according to the World Health Organization.
Undoubtedly, botanicals associated with supporting heart health top the list of global best sellers. Turmeric, renown for its anti-inflammatory properties, is a perfect example. Between 2010 and 2011, India exported nearly 70 million kilograms of turmeric, according to the MNS report.
Sales of botanicals are expected to continue increasing in the more mature markets like the U.S. and parts of Europe, but the most growth is expected to come from emerging markets such as China and Brazil—and this goes beyond botanicals. Indeed, the International Monetary Fund recently estimated world economic growth for 2012 would reach approximately 4%, while developing economies like China and Brazil are expected to expand by nearly 6%. A similar scenario is forecasted for botanical sales.
The U.S. Market
Although rates of diabetes, obesity and cardiovascular disease are high, many of the estimated 314 million Americans are serious about their health. In fact, more than two-thirds of U.S. adults are actively working to improve their physical health and half are attempting to incorporate wellness goals into their daily routines, according to a Packaged Facts “2011 Consumer Insights Study.”
Of this burgeoning health-minded community, 23% of them are using botanicals, according to a recent survey commissioned by the Council for Responsible Nutrition (CRN), Washington, D.C.
The top health concerns for Americans are the same top health concerns experienced by most industrialized nations. According to HealthFocus, these include heart health, mental sharpness, cancer, vision, appearance/skin, arthritis and joint health.
In the natural channel dollar sales increased approximately 8% for herbal formulas, 9% for teas and 13% for herbal singles and flower essences, according to SPINSscan data, 52-weeks ending March 17, 2012. The top 10 selling products addressed inflammation, prostate health, immunity, adrenal support, detox, stress relief, sleep and libido.
In the single herb category, turmeric/curcumin products took six of the top 10 best selling spots. Oregano and holy basil had one product each in the top 10, and stevia had two, according to the SPINSscan report.
There’s no mystery to stevia’s appearance on the best sellers list. Packaged Facts data show Americans are the heaviest consumers of sweeteners in the world. Not surprisingly, after the FDA approved stevia’s use as a sweetener in 2008, sales have skyrocketed ever since. In 2008, stevia sales worldwide were approximately $21 million. Forecasts for future growth vary from $1-2 billion by 2014.
Stevia-based Truvia is now the No. 2 branded sugar substitute, overtaking Equal and Sweet N’Low, and second only to Splenda, according to data from SymphonyIRI Group.
Now a year old, FDA’s draft guidance on New Dietary Ingredients (NDIs) states that any new ingredient not sold in the U.S. as a dietary supplement before Oct 15, 1994—the date congress passed the Dietary Supplement Health Education Act (DSHEA)—is considered a NDI, which means companies marketing these ingredients are required to notify FDA of intent to market 75 days prior to introduction to the U.S. market. And the biggest category that guidance will impact is herbs and botanicals.
The good news is these are guidelines, not regulations, and “thus are not implementable,” said Josef Brinckmann, vice president, Research & Development, Traditional Medicinals, Sebastopol, CA.
Critics say the guidelines misrepresent the original intent of the law. As a result, several industry and consumer organizations have mobilized in an effort to thwart this potential threat to consumer choice. In fact, as this issue went to press, FDA had agreed to re-think the NDI guidance (more details can be found in the Industry News section, on page 16). But only time will tell if this results in meaningful changes.
As of June 2010, manufacturers were required to be compliant with the Good Manufacturing Practices (GMPs) FDA issued in 2007. Inspections and adjustments continue as manufacturers adapt to these guidelines. As with NDIs, many herb/botanical companies are hitting some major bumps in the road.
Perhaps the biggest surprise is that some botanicals, which were acceptable prior to implementation, no longer are.
“With GMPs in full force several companies are realizing that the supply chain has shrunk dramatically due to ingredients that cannot pass the identity and quality GMP requirements,” said Roy Upton, president, American Herbal Pharmacopoeia (AHP), Scotts Valley, CA. In other words, ingredients that used to readily pass manufacturer specifications are now failing when proper identity and quality tests are applied.”
This trend will likely continue as demand increases and the availability of quality raw materials decreases. Only time will tell which botanicals will support demand and who will pay the price.
Across the Pond
Europe’s botanical industry continues to advance amidst economic and regulatory uncertainty. In terms of the latter, European Food Safety Authority’s (EFSA) article 13.1 claims evaluations are progressing. This process will eventually yield permissible claims for dietary supplements.
While most claim applications have been evaluated, those for probiotics and botanicals are still outstanding. According to Joerg Gruenwald, PhD, president, Analyze & Realize, Berlin, Germany, “It is unclear when EFSA’s opinions on botanicals and probiotics will be published.”
While regulatory uncertainty might be discouraging product innovation, “it is doubtful consumers have even noticed the partial disappearance of health claims from the labels,” said Dr. Gruenwald, adding that, “It is undeniable that botanicals have health benefits, and sooner or later the legislative background will reflect that.”
In the EU, consumers are using botanicals for heart health/circulation, brain/memory, liver/detox, immunity, digestion, bone/joints, weight management and anti-aging, said Dr. Gruenwald.
Best-selling botanicals in the EU include some of the “old favorites like ginkgo biloba, St. John’s Wort, ginseng, garlic and soy,” said Dr. Gruenwald. “Relatively new botanical extracts of plants such as green tea, cocoa, blueberries and tomato are also selling well. Plant ingredients such as sterols/stanols and bioactive peptides are also gaining.”
Another one to watch is stevia. The sweetening components, steviol glycosides, gained approval from the European Commission in November 2011 for use as a sweetener. Sales from here are expected to be robust.
Perhaps one of the countries with the greatest potential is Brazil. Several factors contribute to this large and diverse country’s solid ground—the region is rich in natural resources, including minerals, gas and oil and, there is a large domestic market of approximately 195 million people, and in particular an exploding middle class.
Although Brazil is renown for its botanical abundance, some of the most popular botanical supplements are imported from other countries, including ginkgo, ginseng, horse chestnut, white willow and artichoke, according to Aloizio Lino, manager of the Botanical and Sustainability (Farming) Division at Centroflora Group, Botacatu, Brazil.
Despite its natural profusion of botanicals, current regulations are inhibiting research into Brazil’s native species. “The bureaucracy is enormous and the actual scenario is that companies are avoiding the study of Brazilian species until new [and promised] legislation is enforced,” said Mr. Lino.
Responding to the increasing consumer base and regulatory shifts, food supplement companies across Latin America have come together to form a regional association to help guide policies and regulations. The Latin American Responsible Nutrition Alliance (ALANUR) is the first of its kind in the region, initially comprised of 10 companies marketing in more than 10 countries.
The alliance is helping create harmonizing legislation between the diverse Latin American countries, including Mexico, Columbia, Peru, Brazil and Argentina.
“The trend across the globe, including across Latin America, is toward more rather than less regulation, more demanding legislation, and a greater need for high quality, scientific, technical, regulatory guidance for decision-makers,” said David Pineda, regulatory affairs director for the International Alliance of Dietary/Food Supplement Associations (IADSA), a Belgian-based NGO.
With its estimated 1.2 billion people, India, the world’s 10th largest economy in 2011, will become the fifth largest economy by 2020, according to the Centre for Economics and Business Research, Washington, D.C.
While approximately “42% of all Indian children under age 5 suffer from malnutrition,” according to a 2012 report from the Naandi Foundation, 300 million people are part of an expanding middle class.
Those with growing incomes are helping support the estimated $2 billion Indian Ayurvedic market. In contrast, the U.S. Ayurvedic market is worth approximately $30 million, according to Nutrition Business Journal estimates.
India’s tradition of herbal medicine is thousands of years old, so it’s little wonder botanicals play such an integral part of life in India. “Consumers in India defer to their Ayurvedic doctors for direction on health supplements and Ayurvedic herbs,” said Patrick Rea in a New Hope 360 Blog, posted December 21, 2011. “The most pressing health conditions in India include diabetes, joint health, bone health and cardiovascular disease.”
Helping spur interest in traditional remedies is the fact that modern research often supports traditional usage. “Traditional healing systems such as Ayurveda and TCM (Traditional Chinese Medicine) have thousands of years of successful use, empirically and through more modern, sophisticated research and technology that has identified compounds within the herb that validates historic use,” said NuLiv’s Mr. Wang.
Dietary supplement regulations in India continue to evolve leaving many wondering how emerging legislation will reconcile modern, corporate research and regulations with ancient traditions.
Count on China
The approximately 1.3 billion people in China are helping fuel the estimated $11 billion dietary supplement market. In fact, “China will evolve into the largest global producer and consumer of nutraceutical ingredients by 2020, surpassing the U.S. and Western Europe,” according to a recent report from The Freedonia Group.
Projected revenue of TCM supplements, which rely heavily on botanicals, will generate an estimated $430 million in 2012, and are backed by regulations considered “some of strictest in the world, as well as time and capital intensive,” said Jeff Crowther, executive director for the U.S.-China Health Products Association, in an article published in the July/August 2010 issue of Nutraceuticals World.
Despite an estimated 500 million Chinese citizens making less than $2 a day, according to a November 2011 article published in the Christian Science Monitor, there continues to emerge a shopper eager and able to purchase imported and costly botanical supplements, which are often deemed of higher quality.
This trend is not limited to botanicals. For example, profits for one of the country’s main automakers, BYD Co., fell 44% in early 2011. Conversely, high-end automaker BMW reported a 37% increase in sales in China the first quarter of 2012.
In fact, many in the industry are hoping high-end consumers will continue paying the price as costs increase. “Flooding and drought conditions, increasing labor costs, industry growth, and market speculation are reportedly resulting in a surge in prices for TCM herbals,” according to the Shanghai Daily News online. In fact, raw material costs have doubled in the past year for 84% of ingredients used in 537 traditional Chinese medicines, according to the Association of Traditional Chinese Medicine, London, U.K.
Traceability: A recent Food Marketing Institute (FMI) report indicated 71% of shoppers are “very/extremely” concerned about products from China. “Yes, there is especially a healthy skepticism about herbs from India and China. This is unfortunate as both countries produce the lowest and highest quality botanicals in the world. The real problem is not with India and China as countries of origin for botanicals but the ignorance of U.S. manufacturers shopping for the cheapest materials or not knowing how to discern Ayurvedic and Chinese herb quality,” said AHPs’ Mr. Upton.
Within the natural products industry, increasing numbers of manufacturers and trade organizations are responding to this growing concern. In the U.S., organizations such as Austin, TX-based American Botanical Council (ABC), AHPA and AHP are disseminating information about botanical quality assessment.
Suppliers are also responding by implementing programs addressing consumer concerns. “For us traceability is very import and necessary, because this ensures quality for the business,” said Mr. Lino of Centroflora Group. In fact, the company’s mission statement is: “Supply traceable products and services with assured quality and without harming the environment, generating added value for clients, vendors, communities, employees, and fair and permanent return to shareholders.”
Retailers are also launching initiatives helping educate consumers. In a vendor meeting at the most recent Natural Products Expo West show in Anaheim, CA, a Whole Foods Market management team member said, “We want to give customers insight into the supply chain of our vendors,” adding that, “transparency is our ultimate goal.”
Adulteration: “There is a major problem in the global herb and dietary supplement industry in which there appears to be a persistent availability of adulterated herbs, herbal extracts, essential oils and other plant-derived dietary ingredients,” said Mark Blumenthal, founder and executive director of the American Botanical Council.
This is hardly a new phenomenon. “Adulteration of botanical ingredients is as old as the herb and spice trade,” said Mr. Brinckmann, adding that, “The buyers can be as responsible as the sellers. When buyers create very flexible or weak quality specification requirements, and demand low prices at the same time, they help create a market for adulterated ingredients.”
Countries worldwide are incrementally implementing measures to address this persistent problem. In the U.S., three prominent organizations—ABC, AHP and the University of Mississippi’s National Center for Natural Products Research—have launched a comprehensive program to educate herbal and dietary supplement industry members about ingredient and product adulteration.
The joint effort will produce a series of detailed white papers, which will serve as an authoritative source of information on botanical adulterants with references to published official and unofficial analytical methods for companies and/or third-party laboratories to help detect the presence (or absence) of known adulterants.
While incidents of adulteration may persist, most believe the majority of buyers and sellers “are all trying to do the right thing by testing their ingredients for identity, purity, quality, strength and/or composition,” said Elan Mikel Sudberg, CEO Alkemists Labs, Costa Mesa, CA.
Sustainability. “Sustainability has always been an issue in the supply of herbs as many botanicals used medicinally are considered ‘exotic,’ coming far from most consumers’ ability to assure sustainability. The higher the cost for a botanical, the greater at risk the botanical is for unsustainable harvesting practices,” said Mr. Upton.
Besides sometimes-disreputable harvesting practices, shifting weather patterns are also affecting the supply chain. Recently Russia experienced its hottest day in 190 years. Early this year Europe experienced a cold snap that killed hundreds of people. March 2012 was the warmest March in the U.S. in recorded history.
It could be global warming, climate change or simply the natural rhythms of nature. Regardless of what you call it, “Climate has always affected yields and availability of botanicals. Floods, storms, drought and other natural disasters have always had an impact on supplies,” said Mr. Upton.
“For example, the past 10 years have seen bumper crops for saw palmetto berries as well as low yields that led to adulterated saw palmetto oil…a number of years ago, floods in North Eastern China affected the supply of numerous Chinese botanicals, including schisandra fruits,” Mr. Upton added.
Changes in weather patterns, evolving legislation and shifting consumer trends will continue to shape the highways and byways of the botanical trade. And yet regardless of all these twist and turns, botanicals will continue steadfastly supporting health and well-being, as they have done for thousands and thousands of years, long before there even was a “natural products industry.”
About the author: Julie Dennis is a frequent contributor to natural products industry trade magazines, national science educator for a respected dietary supplement manufacturer and founder of NaturalCommunityReview.com. She has also provided editorial support for books, including The Handbook of Clinically Tested Herbal Products, The American Botanical Council Clinical Guide to Herbs and Dolphin Mysteries: Unlocking the Secrets of Communication, Yale University Press. She can be reached at 530-478-1737 or firstname.lastname@example.org