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    Features

    Herbs and Botanicals Overview

    Sales continue to suffer as withering confidence and confusion reign supreme amongst consumers and companies search for a little light at the end of this tunnel.

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    Rebecca Madley-Wright07.01.03
    The above quote belongs to the late Dr. Varro Tyler, one of the most prominent figures in the herbs and botanicals arena, who used these words in a foreword to the book Herbal Medicine: Chaos in the Marketplace by Rowena Richter. It seems since he wrote that foreword in 2001 that the state of affairs on the herbal front remains unchanged.

    However, there may be a silver lining to this seemingly black cloud. Monumental educational efforts, such as those undertaken by the American Botanical Council (ABC), Austin, TX, may prove to be the industry's best defense in the war on herbs. Furthermore, specific categories such as women's and men's health and weight loss/management may serve as avenues of opportunity for companies that approach these segments with caution and resolve.


    Market Performance & Trends



    The mainstream channel continues to experience negative growth as compared to the natural channel where the more loyal consumers are and where growth is a lot more positive. And although the category as a whole is down approximately 8%, there are some bright spots when examined in more detail. Herbal formulas are leading the way over single herbs in terms of growth and products are becoming increasingly condition-specific. Furthermore, women's herbal formulas in the mainstream channel and women's topical herbal formulas in the natural channel are stealing the spotlight, exhibiting 25% and 26% growth, respectively, within the last year. (See Table 1.)

    Current market trends reflect the desire of companies to investigate patent opportunities, capitalize on major trends such as weight loss/management and hormone replacement therapy (HRT) alternatives and to create unique formulas for specific indications. Brien Quirk, technical director, Draco Natural Products, San Jose, CA, discussed the patent aspect, weaving in a little bit of a research perspective. "We are seeing a significant trend in the use of applications type patents for botanicals, which may have a negative impact on our industry as that greatly escalates the cost of bringing a product to market and thereby limits new product development, since most companies don't want to rely only on the one supplier who holds the patent," he said, adding, "Some patents also appear to be somewhat frivolous in that they encompass every imaginable use for a botanical whether or not there is significant scientific research to back it up. Many of the applications had been used by indigenous peoples and should not be given patents as new inventions since they don't qualify as novel discoveries."

    A stagnant marketplace has also compelled several companies to differentiate instead of riding on the coattails of the few herbs that retain a relatively prominent status. Mr. Quirk explained, "We are now seeing a diversified, broader product base market in which many more new ingredients are being used instead of the huge volumes we once saw for products like St John's Wort, ginkgo, echinacea and ginseng."

    Companies are also looking to take advantage of recent controversies, such as HRT and ephedra. Issues such as these have opened up opportunities for herbs to step up and play a role where other products have failed.

    Discussing ephedra replacements and HRT alternatives was Katie Ferren, director of botanical products, BI Nutraceuticals, Long Beach, CA. "We have definitely seen an increase in ephedra alternatives. Specifically, we have seen rapid growth in sales over the last few months in green tea extracts and powder. Other products like yerba mate are also selling well due to ephedra replacement reformulations," she said. "We have also seen a continued increase in women's products like black cohosh powder and extract due to the negative HRT press."

    Singling out weight management as one of the more popular categories for herbs and botanicals was Todd Norton, president and COO, Sabinsa, Payson, UT. "Applications for weight management always seem to get attention because consumers can easily relate to these types of products," he said, adding, "However, too much emphasis on these products does a disservice to the herbs and botanicals category overall because there are so many other good applications for them."

    David Garner, executive vice president, Marco Hi-Tech, New York, NY, also talked about weight management from an ingredient perspective. "The most popular thermogenic products are citrus aurantium and green tea extract," he said. "Citrus aurantium has synephrine, which acts as an ephedra replacement without crossing the blood-brain barrier, and green tea, known for its antioxidant properties, is now being hailed by researchers as having thermogenic properties, especially the EGCG (epigallocatechin gallate) component."

    Mark Blumenthal, founder and executive director, American Botanical Council (ABC) and editor and publisher, HerbalGram, also said that citrus aurantium continues to gain momentum. "The increased use of bitter orange peel and its extract (including its primary active compound synephrine) as a substitute for ephedra is gaining considerable traction as more companies bail from ephedra due to rising liability insurance costs, negative publicity and regulatory concerns," he said. Furthermore, Mr. Blumenthal discussed Rhodiola rosea as another herb that seems to be garnering a lot of interest from industry. As an adaptogenic herb, he said, it can be used to help prevent or relieve various forms of stress.

    Ellen Schutt, marketing director, RFI Ingredients, Blauvelt, NY, said she sees a trend toward culinary herbs that also offer health benefits, especially when approaching large food companies. "There is more interest in the culinary herbs (spices) like rosemary, sage, curcumin and ginger along with other herbs used in foods because they already have GRAS (generally recognized as safe) status," she commented. "If an herb is not GRAS then major food companies won't even consider it."


    Issues, Issues and More Issues



    The market currently has to contend with an uncertain regulatory future, unresolved consumer confidence/education issues and the propensity of people to look at herbs as drugs.

    Sabinsa's Mr. Norton discussed the latter. "Herbs and botanicals as a category have not enjoyed the same brilliance and luster that they did four to five years ago, mainly because people have had a tendency to hold herbs and botanicals to drug standards," he said, adding, "I don't think that has served the category very well over the past few years, especially when it comes to the mainstream media and the damage they have done to this side of the business."

    Moreover, Mr. Norton said the lack of consumer confidence is a result of the overselling of product benefits. "Maybe we need to go back and help consumers understand that dietary supplements are not drug products and are not likely to have an immediate physiological experience as would be expected with a pharmaceutical," he said. "In some ways the industry may have raised consumers' expectations with some of the claims that were made and when they didn't experience what was promised in the timeframe they thought they would experience it, they were left with unfulfilled expectations."

    Also discussing consumer confidence was Jim O'Donnell, vice president of sales and marketing, Blue California Company, Rockaway, NJ, who said it has taken a big hit because of the negative campaign being launched by pharmaceutical companies toward the industry. "Pharmaceutical companies view this industry as competition," he said. "As a result, I think there is an underlying current working against us for which pharmaceutical companies are directly responsible. The smear campaign that pharmaceutical companies have launched has had a direct effect on consumer confidence."

    According to ABC's Mr. Blumenthal, legislative requirements related to the proposed GMPs and the Bioterrorism Act are the most important issues on the table for the industry. "The newly proposed GMPs, the additional burdens of the Bioterrorism Act, proposed requirements for registration of all supplement manufacturers with FDA, possible requirements for mandatory reporting of all major adverse reports and proposed warnings on ephedra products are all new issues of paramount importance," he said. "Also, initiatives by some states and local governments to ban ephedra portend the possibility of a patchwork of non-uniform laws and regulations that will raise difficulties for manufacturers marketing products nationally."

    Jeff Spencer, president and CEO, A.M. Todd, Kalamazoo, MI, said he thinks current market issues can be resolved through legislative means. "I think there is still a lot of confusion with consumers," he said. "To get rid of the that confusion there really has to be some intelligent legislation put into place that is going to allow clinically proven, safe ingredients to start making some real claims about their efficacy."

    The U.S. market is not the only one to fall on tough times. Even somewhat stable markets such as Europe are having their share of problems as well. Dr. Joerg Gruenwald, president, Phytopharm Consulting, Berlin, Germany, explained, "In Europe we are also facing difficult times from the regulators. The ban of kava products was decided much too fast."

    Discussing European regulatory issues further, Dr. Gruenwald offered, "In Europe we see some forms of harmonization of European member state laws in the near future. However, the actual dietary supplement directive does not include botanicals and it is unclear whether a second directive will cover botanical products at all." He also said the traditional herbal medicines directive has been decided on the European level and is now ready for implementation on a national level. This directive, Dr. Gruenwald said, will open up the regulation of botanical products, which have at least 15 years of safe traditional usage in the European Union. However, the directive is still the subject of debate in Europe, especially because liberal countries such as the U.K., The Netherlands and the U.S. must overcome additional regulatory hurdles. Other countries, however, remain positive because, Mr. Gruenwald said, "This directive creates new opportunities for new combinations (e.g. combinations of botanicals and vitamins and minerals) to be registered rather easily on the basis of their traditional usage."


    Crossing Over



    The crossover of ingredients from supplements to functional foods will continue to provide additional business opportunities, however, several experts have expressed a cautionary attitude with respect to entering the functional food market.

    Robin Ward, sales and marketing manager, Linnea, Riazzino, Switzerland, was positive about functional foods, indicating that the main delivery of these ingredients would be through liquid drinks and confectioneries. For these particular applications, Mr. Ward said, soy and red clover will be prime candidates.

    Victor Ferrari, COO and executive vice president, Horphag Research, Geneva, Switzerland, said while functional foods is definitely a growing trend for herbs and botanicals, companies must keep in mind that there are some limitations with claims, which are not going to be solved in the short term. "There are many herbals that make sense to be included in foods be it for taste or activity. However, the regulations don't allow specific health claims in this field for classic herbal remedies," he said.

    Frank Assumma, director of marketing, Natural Health Science, Hillside, NJ, which is the North American distributor of Horphag's Pycnogenol, said consumers must use caution when considering purchasing functional food products because labels can be deceiving. "Companies are fully aware of the lure of certain vitamins, minerals and herbs, which is why they feature them on product labels. The problem is that when consumers see these ingredients highlighted they assume they can be assimilated by the body, and in many cases that is not true," he said. "If an ingredient in a product is not bioavailable-for instance if it is not water-soluble-then that product is making a false claim by highlighting that ingredient, even when it is not making an outright claim."

    Sabinsa's Mr. Norton said although the functional foods segment is an attractive avenue for many companies, attaining GRAS status is another story. "While functional foods continue to enjoy a lot of discussion, the inclusion of botanicals in such products, still have some uphill challenges. In terms of GRAS status, it is very costly and time consuming," he explained. "If going the self-affirmation route it would cost a company roughly $20,000-45,000 and about six months to a year to get approval. If a company chose to go the FDA route, then it would cost them hundreds of thousands of dollars and take between two and three years to get approval."

    Ms. Schutt of RFI feels the trend toward functional foods has fallen short of industry expectations. "In general, I think there is a trend toward functional foods. However, with herbals I don't think functional foods is a hotter category than dietary supplements," she said, adding, "I think people expected there to be more herbals going into food but I just don't think it's happening to the level that people predicted five or six years ago."


    Research Perspectives



    The good news is that research is becoming more of a priority in the marketplace as companies look to leverage research they have conducted in order to ethically promote the benefits of herbs. In addition, FDA and FTC crackdowns have pushed companies to take the high road as well.

    Draco's Mr. Quirk discussed research from a claims perspective. "Research is becoming increasingly necessary to prove a claim on an ingredient, even if it has traditional evidence or support," he said. "People simply want to make sure that an extract has retained the active compounds." In the end, Mr. Quirk said significant safety, pharmacokinetic and pharmacodynamic studies will be needed to prove that a botanical does not have side effects, does not interact with various medications and is not contraindicated in specific and common medical conditions.

    Similarly, Horphag's Mr. Ferrari said there are too many companies promoting products based on claims that are not substantiated. "The only way to tell a story about a product is to prove it and today the only way to prove a story is through clinical research," he commented. "In the future, the trend will be to promote only those products/ingredients that have been peer-reviewed and/or subjected to double-blind, placebo-controlled studies." Unfortunately, said Mr. Ferrari, there is no standard for research in the current market.

    Sharing an optimistic point of view on the state of research was Sonya Cropper, director of operations and communications, Geni Herbs, Noblesville, IN. "Not only is the private sector moving forward and producing more research, universities also see opportunities and are actively involved," she said. "Funding from the National Institutes of Health (NIH) has also helped in this area."

    ABC's Mr. Blumenthal discussed the research efforts of the National Center for Complementary and Alternative Medicine (NCCAM). "Most of the research being conducted in the U.S. is being funded by NCCAM, which recently indicated its intention to shift from emphasis on clinical trials to more basic pharmacological/mechanistic research," he said. He also suggested that companies take research into their own hands by funding their own clinical trials on their own products. If such trials are successful, properly designed and of adequate size, he said, these results can be publicized as being related to a specific brand.


    What's on the Horizon?



    According to Draco's Mr. Quirk, the fact that almost every nutraceutical ingredient originated from an herb or plant-based entity-with a few exceptions-signifies the category as the greatest potential resource for new products. "Increasing study of the biochemistry of existing or new phytocompounds will provide the impetus and basis for new product development," he said. "Traditional herbal medicine may also provide new ingredients with which to use in whole extract form, even if it is not known which compound is responsible for the activity."

    Also expressing a positive outlook was A.M. Todd's Mr. Spencer. "I think the fuure will be quite good as consumers continue to be more educated. This migration toward functional and medicinal foods will be key," he said, adding. "As healthcare costs continue to escalate, people are going to start looking more at alternative medicine and complementary and alternative medicinal techniques to treat ailments themselves because they are not going to have the financial means to constantly rely on the prescription avenue."

    Offering a different point of view was ABC's Mr. Blumenthal, who said, the future will be challenging due to increased costs related to GMP requirements, manufacturers vying for too few consumers, increased skepticism and opposition from some medical and consumer groups, increased vigilance and limiting initiatives in Congress and even the possibility of increased regulatory restrictions on a state-by-state and local government level. Despite this, he said, "Herbs have been an integral part of health and healthcare for centuries and will continue to play a vital role in public health for generations to come. Despite the many challenges faced by the herb industry today, there is still a strong future for properly manufactured and well researched herbal preparations."NW
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