"A commodity with a personality." That's how a brand was defined by Mitchell Gooz, president of Customer Manufacturing Group, who spoke at Nutrimarket 2000 last year. The challenge is defining your brand's personality, making it desirable and then educating consumers about it.
"To impress indelibly." That's how Webster defines branding. In the nutraceuticals industry, ingredient suppliers are attempting to do just that with a host of branded ingredients across the product spectrum.
Nutraceuticals World asked ingredient suppliers why they chose to brand their raw materials and the answer was unanimously "to create value." Bill Frose, marketing director at Pharmanutrients, Lake Bluff, IL, manufacturer of CLA One conjugated linoleic acid, explained, "Branding helps our customers differentiate their products in the minds of consumers. It's like Intel Inside; they can help create awareness by teaching customers to look for the CLA One brand on products."
Competitive insulation is how Bill Spencer, vice president-sales and marketing at La Haye Laboratories, Redmond, WA, manufacturer of AstaZANTHIN brand astaxanthin, described branding. "We needed to show that the product is not just a commodity and you can derive added value from it," he said.
"We branded our ingredient to reduce the feeling of commoditization," Phil Brown, marketing manager at Ester-C supplier Inter-Cal, Prescott, AZ, agreed. "Our product was very different, we have a patent and we have metabolites that help absorption. We had to make customers understand that."
"The brand is to create value and to protect the value of our product," said Laurent Leduc, international marketing manager at Schouten USA, Minneapolis, MN, manufacturer of Soylife soy germ. "We have financed a great deal of research on the soy matrix and we need to recoup some of that investment with our brand name since we cannot patent the material."
Also commenting on the patent angle was Max Motyka, director-marketing and sales at Albion Laboratories, St. Claire Shores, MI, which manufactures Ferrochel iron as well as other chelate brands such as Chelazome and Chelavite. "We branded to put up barriers to protect our intellectual property," he said. "We are the only company that has research behind our chelate products and there are still companies trying to skirt the edges and use our research for their benefit."
There are other reasons that branding works as well. For instance, sometimes the consumer is never going to learn the name of the ingredient and the brand is a shortcut to education. This is the case with Glucosol, a glucose-lowering formulation based on corosolic acid from Soft Gel Technologies, Los Angeles, CA. According to the company's marketing director Katie Ferren, "It made sense to promote the brand name and encourage marketers to purchase from us."
Likewise, ForsLean is a newly available Coleus forskohlii product from Sabinsa, Payson, UT. "We are promoting the brand rather than the category since no one really knows the category," said Todd Norton, president. Sabinsa also trademarked Nature's Lean Machine in conjunction with ForsLean.
Rhonda Witwer, director, business development at Galagen, Minnetonka, MN-supplier of Proventra colostrum-offered another perspective, "Colostrum is very polarizing to the mainstream population, so we've chosen to brand the ingredient under the Proventra name and describe it as a dairy ingredient. Because we are focused on the mainstream market, we want the immune benefits of the product to be our focus, not where it comes from."
Offering a perspective from the food segment of the business was Anthony DeLio, president, Protein Specialties and Nutraceutical Division at ADM, Decatur, IL, which manufactures Novasoy, a branded isoflavone ingredient that can be added to foods as well as available in supplement form. "We can emphasize the health message of the product, while our customer concentrates on the taste message," he said. "Generally consumers perceive functional foods as not tasting good; we are one step removed and have greater credibility with the consumer. We can individually focus on what we do best."
In summary, Sabinsa's Mr. Norton said, "One of the reasons to brand is that now your product comes with a pedigree. For example, ForsLean is clinically proven with a sustainable supply, and toxicity and safety studies have been done. You are getting a thoroughbred product."
Educating The Consumer
"A brand is an assortment of expectations established by the seller that, once fulfilled, forms a covenant with its buyers," said Mr. Gooz of Customer Manufacturing Group, and suppliers talked about establishing more than a name in consumers' minds. Mr. DeLio of ADM referred to a book EVEolution: The Eight Truths of Marketing to Women, by Faith Popcorn. "Ms. Popcorn says, and I agree, that the future of branding requires inviting people, particularly women, to join your brand," he said. "You are not just advertising a brand, you want to make them feel a part of the brand."
Much research goes into these brand names. Mr. Leduc shared his experience with Soylife, "When we created the name in 1995 we did considerable research and some said not to use the name because it had the word 'soy' in it. We chose from a list of over 100 names and it was the best decision we ever made. It's positive marketing, health-oriented, soy for your life."
Once you've established a name, it's time to build consumer awareness and this brings its own set of challenges. For many, the first step is category awareness. According to Steve Hanson, director, marketing at Kemin Foods, Des Moines, IA, which manufactures FloraGLO lutein, "The challenge is knowing when to promote your brand versus the whole ingredient category. As the lutein category grew, we spent a lot more time focusing on building category awareness. That came first, although you have to do both simultaneously to do a significant branded campaign," he said. "When we got started in 1996, we spent a lot more money on category awareness, with limited FloraGLO communication. Now that lutein has gained in awareness, we have been able to change our focus to build our brand, but we continue to do lutein awareness as well."
"At least 90% of our funds are spent on education about DHA, rather than advertising of the brand name," said Marian McClure, director of marketing, ingredients at DHA Gold supplier OmegaTech, Boulder, CO. "We want consumers to understand DHA and to view OmegaTech as the information source and consumers would much rather read an article than look at an ad."
This brings up the controversy of whether it is better to do direct-to-consumer advertising or a public relations marketing campaign. Both have their pros and cons. ADM, with close to 50 branded partners and a significant amount of capital behind its product, is one of the most visible brands on the market. The company has been actively marketing to the consumer, in the past year spending $3 million on advertising. This year ADM will undertake a mobile tour, building a bus with three stations for bone density scans and attending 15 events over the course of the summer to spread the message about bone health and menopausal health.
Nina Likins, marketing director at Natural, Inc., Vernon Hills, IL-suppliers of Tonalin CLA-commented on the public relations angle, "We do direct to consumer education, primarily through publicity. We have invested significant money in research and clinicals because this is what attracts the consumer audience. CLA as an ingredient is still not very well known, although that is starting to change. We've started to generate interest; the science spoke to the press and the ingredient is starting to gain momentum."
Also focusing on the science was Inter-Cal's Dr. Brown. "Branded ingredients give consumers confidence," he said. "They want the science, the credibility; we concentrate on having science behind our product. We are offering true value, not just hyped value," he said.
In general, brands are doing better in the health food channel than in mass market, because this channel draws the more educated, less price sensitive consumer. But the mainstream market is coming along. "Branding works in both channels. Two strong complementary brands are better than one strong brand," said Mr. Hanson. "Look at Intel and Nutrasweet. This has changed the mindset of consumer dynamics in terms of branded ingredients. It used to be difficult to get an ingredient brand included on the package; now consumers think a product that doesn't include an Intel processor is inferior."
The segment of the market in which the ingredient is involved makes a big difference in awareness. Take soy. "Soylife is in a good position right now, able to capitalize on the success story of soy itself," said Mr. Leduc. He gave an example. "We have Soylife soy germ in a ravioli product by Mama Rosie. When they put the Soylife logo on the package, sales jumped 25-30%."
While public relations and advertising are one component of a successful marketing campaign, there are other avenues to explore. In addition to the consumer, Kemin also targets the health care practitioner. With a targeted ingredient like lutein, the company is able to concentrate on a particular doctor population and has been working on building the brand among influencers such as optometrists and opthalmologists. "We have been educating doctors about age-related macular degeneration, lutein and the link between the two," said Mr. Hanson.
Likewise, ADM has targeted the health practitioner market with menopause leaflets distributed to more than 5000 ob/gyn's and alternative healthcare providers.
In addition, today's web savvy consumers are open to surfing the Internet for information and many companies are capitalizing on this. National Enzyme, Forsyth, MO, manufacturer of NZimes, EDS and Cercalase, has set up enzymeuniversity.com, which educates consumers about enzymes but does not sell product.
ADM is also building an information-focused website. "We are working to make this a reference site for all supplements," said Mr. DeLio. "We are going to provide third party objective opinions about supplements, covering both the pros and cons. We want consumers to look to us as an information source."
And there's always the celebrity spokesperson approach, which has worked for many companies. Mary Nelson, director, sales and marketing, Eastern region at Technical Sourcing Inc., Missoula, MT, said, "Ostivone is backed by a tremendous amount of research in Europe and Japan but is not known here. By branding the ingredient and using Linda Evans as a spokesperson we were able to build awareness. It was a tremendous success."
Branding Challenges
In terms of challenges, most suppliers agreed that justifying the higher price of branded ingredients is one of the biggest challenges they face. "Our product is twice as expensive as our competitors," said Sarah Sullivan, manager-customer relations, Martek, Columbia, MD, manufacturer of Neuromins DHA. "Our challenge is to make consumers understand the difference."
OmegaTech's Ms. McClure concurred. "We are not going to reach the level of Intel Inside penetration. We don't have the funds for that and while a number of finished product companies would like to see that level of awareness, it's not fiscally responsible," she said. "I would rather spend the money on clinical trials."
Added Rick Kaiser, vice president-sales at Nutrition 21, Purchase, NY, maker of Chromax and Selenomax, "The challenge is the cost of consumer reach. We want to create pullthrough with the consumer but creating this level of brand awareness is extremely expensive."
Finally, Natural Inc.'s Ms. Likins said, "This isn't CocaCola. The challenge is that we have the mediums through which to communicate but not the dollars to get the word out in a cost effective manner. Yet," she said, "it is important to build a branded ingredient. There are a lot of questions in the consumer's mind about quality and if you're in it for the long haul, it's worth it to stand out."
While cost is one issue, proving your company's product offers added value is another. "The challenge is competing against the perception that all ingredients are the same," said Mr. Frose. "It is our job to convince the consumer that there is value in this branded ingredient. Some words of wisdom: If you're going to do a branded ingredient, make sure the added cost equals the added value. Hopefully we can raise the bar for the whole category by having a branded ingredient."
Mr. Hanson added, "The challenge is making sure consumers know the differences between ingredients. If you make a product that's meaningful to the consumer, particularly the 'smart' health food store consumer, they will reward you with loyalty."
Supply chain issues are also a challenge. "Some larger companies have a policy of not naming their ingredient supplier, either because their name is strong enough or because they don't want competitors to know," said Mr. Leduc. "Also, some don't want to tie up with only one supplier."
Mr. DeLio agreed. "The biggest challenge is working with our customers so they see value. Everyone is bottom-line focused and companies are sometimes reluctant to be locked into a relationship. We must work to tailor a program that works for them."
Soft Gel Technologies' Ms. Ferren added, "Some products like SerenPure, which is a saw palmetto product, are standardized to certain specifications. Yet customers want to buy the ingredient from us but use the generic term rather than the brand. We need to educate marketers about the value that comes with the name. Soft Gel Technologies specializes in new product development more than other soft gel manufacturers and we spend more time creating brand recognition. This is important for our customers to understand."
Ms. Nelson of TSI added, "There are companies that are branding for branding's sake. They have no clear advantage and it's hard to compete with that. We have patents, research and we've made a significant investment in marketing capital; we are very selective about the brands we choose."
Future Diversification Seems Key
For the future, suppliers are working on ways to leverage their brands and the science and intellectual property behind them. One way is product diversification. "In addition to our own patents," said Ms. Witwer, "GalaGen has licensed patent rights to combination colostrum products such as colostrum and probiotics and colostrum and dietary fiber (prebiotics) and we are using these to strengthen our brand presence," she said, adding that the company will shortly be sublicensing these combination patents to GalaGen partners.
Nutrition 21 is following a similar tack. "We are now working to strengthen our brand portfolio, diversifying away from simple chromium picolinate and using brands to communicate the benefits of chromium," explained Mr. Kaiser. The first product, Diachrome-which debuted last month-targets people with diabetes. Other target areas include cholesterol, PMS, depression and weight loss. "When you have an ingredient that can help in many different areas, it sounds too good to be true. We need different brands for different products to build credibility into the product," explained Mr. Kaiser.
