Brand New Brands: Giving Birth Four Times in Two Years

When Nutraceuticals World caught up with Brand New Brands in 2005, it was just getting ready to launch its first functional food company, LightFull Foods. Today the company is also the proud parent of three other companies: Corazonas Foods, Attune Foods and Dreamerz Foods. Remarkably, in less than two years, the company has leveraged the expertise of many in the natural products, functional food and dietary supplement industries to launch companies and products that are all market firsts, with the expectation, not hope, that they all will achieve some degree of market success.

Will Rosenzweig, the "birth coach" of the four fledging companies, is also one of the financial backers, as well as a board member of each company. Although the short timeframe for launch of the four companies wasn't ideal, Mr. Rosenzweig says it forced them to make smart decisions quickly. "A lot of incubators get stuck doing just R&D or just launching a business. Having the time constraints we did was a great launch dimension for us," he said. "The tricky part was matching the science with the brands and making sure all facets of the business were in place prior to launch."

Brand New Brands started out as a brand "incubator" with a mission to bring together the entrepreneurial spirit of a start-up and the resources of an established corporation to create new foods and beverages that promote health and wellness. The construction of Brand New Brands and their subsequent spin-offs was made possible through the support of a variety of investment partners, including Unilever Ventures, Prolog Ventures, Burrill & Company and Great Spirit Ventures. The company also utilized the experience of several veteran food and supplement executives.

With financial backing in place, Brand New Brands moved on to the next stage, which involved developing product prototypes that could deliver on three very important conditions-taste, efficacy and bioavailability. This was the job of veteran product formulator Pete Mattson of Mattson & Company. "Going to the bench and developing prototypes went a long way toward making sure the products could satisfy these three criteria," Mr. Rosenzweig said. The group assembled to incubate the various products ideas initially generated 75 concepts. From there the group narrowed it down to 12, then to seven, and finally four ideas. The four ideas, while similar in the fact that they are considered functional foods, differ in product design, positioning and distribution.

Mr. Rosenzweig described the first of the four concepts. "LightFull has an all-natural orientation to it. With this concept we were betting that satiety would become a very popular position in the market," he said. The company's debut product was the LightFull Satiety Smoothie, an all-natural 90-100 calorie snack containing 5-6 grams of fiber and 6 grams of protein to help keep people full for two to three hours on average. "This product is probably more suited for the natural products consumer," he said.

As for Corazonas, Mr. Rosenzweig said while it is an all-natural product, they decided to go after the mainstream consumer using a "healthy" snack positioning. Inspired by the Spanish word for heart, corazón, Corazonas Heart-Healthy Tortilla Chips represent the first snack chip to offer proven heart health benefits. Featuring whole oats and plant sterols, Corazonas have been clinically proven to lower LDL cholesterol by up to 15%. Additionally, the company says its chips are: a good source of fiber; cholesterol-free; trans fat-free; low in saturated fat; all-natural; and depending on flavor, a low or reduced-sodium.

The third launch, Attune Wellness Bars, went national with Whole Foods right out of the gate, according to Mr. Rosenzweig. Even more interesting, the bars were shelved in the yogurt section. "When we were working on this we decided the world was ready for probiotics," he said. "We were in the right place at the right time." Attune Foods is one of the first company's to offer probiotics in a non-dairy or non-beverage format. Attune Probiotic Wellness Bars contain more than five times the beneficial probiotics found in yogurt and come in two varieties-a Chocolate Wellness Bar and a Yogurt & Granola Wellness Bar.

Brand New Brands' latest creation is Dreamerz, which is the first all-natural sleep aid to come in the form of a beverage, targeting the 70 million Americans that have regular sleep issues. The company claims this new functional milk-based beverage treat delivers clinically proven active ingredients-a patented, low-dose of melatonin (0.3 mg) to help promote sleep, along with Lactium hy­drolyzed milk casein to reduce stress and promote relaxation. "While the taste may be habit-forming, Dreamerz is safe, non-addictive and has no after effects," the company says. Distribution for this product is still up in the air, according to Mr. Rosenzweig. "We're not sure if we want to offer it direct or in mainstream channels," he said. "Right now it is going through market testing in a mass chain drug store."

In reflecting on the last several years, Mr. Rosenzweig says he expected to be in the position he is today. "When you enlist the resources we have there's no question regarding success. I expected we'd be here," he said. "Where I think we've exceeded is in the caliber of people we've recruited."

At the helm of each company is an entrepreneur that has as much experience as passion in functional foods and dietary supplements. In an interesting twist, each entrepreneur also has a stake in the success of the other three companies. "Each entrepreneur possess stock in each other's companies," Mr. Rosenzweig explained. "We have formed a federation of companies that are independent and live or die by their own success. But at the same time, they are linked spiritually and financially."

Even though Brand New Brands still has an identity, Mr. Rosenzweig says it is done incubating new companies for the time being. And Mr. Rosenzweig has moved on too, sort of. Currently, he is the managing director of Physic Ventures, San Francisco, CA, which provides capital and support to entrepreneurs focused on building exceptional science-based, consumer-directed health, wellness and sustainable living companies. Will Physic be a proud parent in the future? Mr. Rosenzweig says, "We'll see. That's a strong possibility."

The Dannon Company: Paving the Way for Probiotics

The Dannon Company, White Plains, NY, actually began its rise to fame in Spain nearly a century ago. This is where Isaac Carasso founded the company, according to president and CEO Juan Carlos Dalto, who said, "Having previously lived in the Balkans where yogurt was a dietary staple, Mr. Carasso decided to introduce this nutritious product in Barcelona. He started with a small yogurt business and called it 'Danone,' meaning 'Little Daniel' after his son."

At the time, Mr. Carasso was well aware of the scientific advances being made with fermented milk through the work of Elie Metchnikoff at the Pasteur Institute in Paris, France. Armed with this knowledge, Mr. Carasso went a step further and perfected the first industrial manufacturing process by combining the traditional method of making yogurt with the pure cultures that had been isolated in Paris. Meanwhile, "Little Daniel" was learning the family business in Spain, eventually making the decision to establish Danone in France in 1929.

Several years later, during World War II, Daniel Carasso immigrated to the U.S. where he founded the first American yogurt company, Dannon Milk Products, Inc., Bronx, NY-he purposely changed the name Danone to Dannon to make the brand sound more American.

The U.S. market has never been easy on product introductions, but it was particularly hard for Dannon in the beginning because few Americans had ever tried yogurt, which was a staple in many European countries. As a result, distribution was very limited at first, confined only to the local New York area.

Dannon finally got its break in 1947 when it introduced yogurt with strawberry fruit on the bottom. This innovation appealed to Americans who found the sweetness of the fruit to be the perfect complement for the tart taste of yogurt. Blueberry and raspberry fruit, as well as orange and lemon flavors, were quickly added to the product line. The company continued to grow rapidly from this point forward, building new facilities and expanding sales territories in the Northeastern U.S.

During this time, Daniel Carasso decided to return to Paris to manage the family's businesses in France and Spain. He turned over the reigns to his business colleague Joe Metzger (helped by his son Juan) with the objective of looking for an eventual buyer for Dannon. In time the company was sold to Beatrice Foods in 1959.

Throughout the next several decades, Danone accelerated its diversification and world expansion. It even bought The Dannon Company back from Beatrice, reuniting the American business with its heritage in Europe. By 1994, Danone was considered a leader among multinational companies. As a result, it decided to adopt the name Groupe Danone.

A little over 20 years ago, Dannon moved its headquarters to White Plains, NY, where it created and introduced products, such as Dannon Light & Fit, Danimals and Frusion. "Each of these products was geared toward a new consumer segment that the company predicted would enjoy the delicious taste and benefits of cultured dairy products," Mr. Dalto said. These products are still alive and well on store shelves today.

Currently Dannon possesses the #2-selling yogurt brand in the U.S., which is why it has decided to be a bit more up front with customers about the health benefits of its products. Leveraging the science behind the health benefits of probiotics has enabled the company to launch new yogurt varieties that provide benefits beyond basic nutrition, in addition to great taste. "These 'high-health' products have clinically-proven functional benefits beyond that of traditional yogurt, most often based on proprietary probiotic cultures found only in Dannon products," Mr. Dalto offered.

Adapting some of the global innovations of Groupe Danone, in 2004 Dannon introduced in natural food stores and test markets the first probiotic cultured fresh dairy drink, DanActive, which is clinically proven to "help strengthen the body's defenses."

Last year, Dannon introduced its first probiotic yogurt, Activia, in supermarkets nationwide. Activia is clinically proven to naturally regulate the digestive system by helping with slow intestinal transit. "During its first year of availability, Activia generated more than $100 million in sales, and since the product's introduction in the U.S., Americans have enjoyed more than 500 million cups of Activia," Mr. Dalto commented. "The consumer interest in Activia exceeded even our most ambitious forecast, demonstrating to us that Americans are indeed interested in the relationship between food with proprietary benefits and well-being."

In early 2007, Dannon continued its push into probiotics with the national launch of DanActive, as well as the reformulation of Danimals smoothies for kids to include Lactobacillus GG (LGG), an extensively researched probiotic among children, which has been clinically proven to have positive effects on gastrointestinal function, the function of the immune system and the maintenance of oral health.

Each of the new Dannon probiotic products contains an exclusive strain with unique benefits that are supported by peer-reviewed, published clinical research.

One of the great challenges Dannon faces in the yogurt category in general is the relatively low frequency of consumption, which it is aiming to change with probiotic products like Activia, DanActive and now Danimals with LGG. "In order to enjoy the benefit of these products, beyond their great taste, these products must be consumed regularly," Mr. Dalto said. "This is because the probiotic cultures in each of these products do not take up permanent residence in the GI tract and must be replenished in order to continue providing the clinically-proven benefit."

The functional foods category has been an elusive one for many companies over the years, with only a handful getting the formula right and experiencing market success. One thing the functional food successes have in common is great taste, strong science supporting specific claims, and a targeted, well-communicated benefit.

"We took a risk launching Activia in a market that knew very little about probiotics, but we were successful because rather than focus on 'probiotics' we focused communication on the product's clinically proven benefit, which is very meaningful to people who have slow intestinal transit," Mr. Dalto explained. "Other companies interested in marketing probiotics must be very well prepared to state their product claims clearly and have well-documented scientific evidence to substantiate any and all claims linked to a specific probiotic culture."

Offering his view of Dannon and where it fits in the global marketplace, Mr. Dalto commented, "Dannon in the U.S. is a relatively small food company compared to companies like General Mills and Kraft. However, we do have a global parent company, Group Danone, on which we rely for investment needs, technical knowledge and many of the innovations that we have brought to the U.S. market. We benefit from being flexible and nimble as a mid-sized company with many of the resources, global reach and experience of a big company."

For the future, Mr. Dalto is confident that foods with functional benefits will be around for a long time simply because the scientific pipeline of food and food components with functional benefits remains very robust. Also, and perhaps more concretely, he said, "We believe that consumers will always enjoy eating, so we are more bullish on foods with added benefits than non-foods."

-Special thanks to Michael Neuwirth, senior director of public relations at The Dannon Company, for helping craft this article.

Next Pharmaceuticals: Dedicated to Discovery

Next Pharmaceuticals (NP), Salinas, CA was founded by Charles Kosmont, a successful manager of start-up, rapid growth and turnaround companies in the food and healthy living industries, along with Bob Garrison, Jr., a licensed pharmacist who wrote and published sixteen books, including co-writing The Pharmacist's Guide to Over the Counter Medicine and Natural Remedies.

The company develops new, patented, natural ingredients for healthy living that are sold through the dietary supplement, food and beverage markets. Since its inception in 1997, NP has developed six patented or proprietary plant extracts in an effort to expand the choices for self-care products, while providing consumer brands with powerful differentiation.

"The first few years were spent extensively researching ingredients that were being used by other cultures and yet had little recognition here in the U.S. This meant developing a 'think tank' of scientific advisors to guide us through the process," Mr. Kosmont explained. "There were two major objectives that followed in our development-setting high standards with quality control and providing hard science through laboratory research, animal and human clinical trials. We also published studies to lend credence to our results."

While the company maintains one foot in the natural products industry, it has its foot partially in the pharmaceutical sector as well. The company's rigorous research and quality control is modeled after the pharmaceutical industry, yet it only deals with natural ingredients-researching and developing for those who prefer a less toxic, alternative approach. The founders pioneered a unique niche in developing new, patented ingredients they consider to be "pre-pharmaceutical."

"We are at the interface of pharmaceuticals and dietary supplements," said Mr. Kosmont. "The company starts with botanicals that have been used as traditional medicine in some countries and then we apply pharmaceutical technologies such as fractionation, pharmacology and toxicology, eventually moving into human clinical trials."

To understand the scientific lengths the company goes to in order to substantiate its products, it helps to look at a product that has undergone recent investigation. The University of Texas just completed research on NP's product Nexrutine, a proprietary plant extract developed from the phellodendron tree (Phellodendron amurense). The laboratory study funded by the National Institutes on Health, and conducted by University of Texas, San Antonio, Department of Urology, clearly demonstrated Nexrutine's ability to kill prostate cancer cells, according to the company. This study was published in the journal Neoplasia.

Subsequently, the results of the animal trial conducted at the University of Texas supported the laboratory findings, and was published in the May 2007 edition of Clinical Cancer Research, a peer-reviewed journal. "This is just one of the compelling company stories to follow this upcoming year," Mr. Kosmont said. "We also has a product for anxiety, Relora; one for sleep, Seditol; as well as a new pipeline of products addressing cardiovascular disease, diabetes and osteoarthritis."

Speaking of new products, Flavoxine reflects the company's latest development in the realm of heart health. In fact, it was recently hailed as the most promising ingredient for lowering cholesterol by Frost and Sullivan (January 2007) among all the other natural cholesterol-reducing formulations. Further, Frost and Sullivan stated that Flavoxine would soon "storm the market." NP claims that this proprietary blend of ingredients was shown in a clinical trial to not only lower bad cholesterol (LDL), but also raise good cholesterol (HDL). In addition, it was shown to significantly reduce both C-reactive protein (CRP) and blood pressure.

Citrofen is the company's newest offering in the osteoarthritis arena. In a clinical trial of 80 subjects with osteoarthritis of the knee, Citrofen reduced stiffness caused by pain and swelling by almost 50%, according to the company. NP says these results are far better than what is being seen from those taking glucosamine.

Chromulin is another new creation from the company. This product is available for functional foods, beverages and dietary supplements, targeting heart health, diabetes, anti-aging and weight management. The company claims it is a safer, more stable, better absorbed, water-soluble form of chromium.

With its product portfolio bursting with new additions, NP is looking forward to an exciting future in the nutraceuticals market. "Consumers are looking for preventative ways to deal with chronic conditions and the Baby Boomer market is the driving force for this market," Mr. Kosmont said. "They are seeking preventative information and products that can help them maintain a better quality of life and live longer."

Along with the excitement, however, there are some issues to consider. "The regulatory environment is a challenging aspect. There should be a regulatory arena for products that fall between dietary supplements and drugs," said Mr. Kosmont. "This used to be labeled over-the-counter (OTC), but that changed in the early 1960s. Now the only place to function is under dietary supplement laws and regulations."

He went on to say that the food and beverage industries also hold enormous promise for nutraceutical ingredients. "If we can add functionality to food and beverages (to the extent that legislation allows), these delivery forms will work best," he said.

Whatever market the company pursues, Mr. Kosmont said it's important to remember that success is not determined by size-it's about focusing on what you do best. "It's also about making sure we continue to develop products that meet the market needs," he added. "The Baby Boomer market is phenomenal and is driving a lot of market needs (and will be for a long time). We need to pay attention to the demands of this market because it represents unprecedented opportunities."

In the end, Mr. Kosmont firmly believes it's important to have a passion for what you are doing in order to achieve true success in the market. "When we set out, the driving passion was to provide formulations that had hard science behind them," he explained. "This not only created our reputation, but drove the success behind all that we developed."

Unfortunately, the company experienced the unexpected death of Bob Garrison earlier this year. Acknowledging his enormous contribution to Next Pharmaceuticals, Mr. Kosmont offered, "His innovative spirit and passion for excellence is infused into everything we do here at Next and we continue to go forward with many of the endeavors he initiated."

Mr. Kosmont continued, "Bob had a favorite quote that I feel captures the essence of the development of the company. It's by Albert Szent-Gyorgi who discovered Vitamin C in 1937: 'Discovery consists in seeing what everybody else has seen and thinking what nobody else has thought.'"

TSI Health Sciences: Embracing Change

TSI Health Sciences, Missoula, MT, was founded 11 years ago, but as a fairly young company it has made some pretty revolutionary changes in the way it does business.

For years the company has been known for sourcing obscure, valuable raw materials from around the world and bringing them to market in the form of high quality nutraceutical ingredients. A year ago, however, that focus changed, along with its name. "The name TSI Health Sciences is more in line with the services we are providing now, and what we will provide in the future," Larry Kolb, president of U.S. operations said at the time. "When we started the company 10 years ago, we focused on sourcing and testing ingredients. Now TSI has evolved to manufacturing the highest quality ingredients available."

The company decided over a number of years that it was well equipped to make the necessary changes in order to stay relevant to the marketplace. "In the late 1990s, we noticed a demand that started to press our company to not only be a distributor with analytical capability, but also to become part of the manufacturing process," he said. "As customers started to demand more control over the supply chain, we started to invest in factories in late 1990s in the form of joint ventures."

TSI's U.S. operations are based in Missoula, MT, while its offices worldwide include a 60-acre, fully integrated manufacturing, research, quality assurance and quality control campus in Jiangyin, China. Its joint venture production facilities are located in Yangzhou and Zuzhou, China. In addition, the company also maintains a handful of sales offices globally. "We recently opened a sales office in Manchester, U.K. to cater to EU customers," Mr. Kolb said, adding, "We already have offices in Sydney, Australia, Tokyo, Japan, and Seoul, Korea."

The goal for TSI is to meet the highest standards possible, not only from a manufacturing standpoint, but also from a regulatory perspective. Last year, during the company's official change in positioning, Mr. Kolb said, "This change comes at a great time for us. We have quality systems, facilities and resources in place to ensure our ingredients will be at the forefront of quality and regulatory compliance. We're far ahead of our competitors in terms of GMPs and we're thrilled to see what that will bring us over the next 10 years.

"We've always been able to establish a very credible relationship with customers from a quality and integrity standpoint," Mr. Kolb continued. "We've always tried to stay ahead of the curve. Along with a little dash of luck, we've worked really hard to improve our position every step of the way."

Some of the proprietary ingredients the company has become famous for include: Peak ATP, a patented ingredient that delivers intracellular and extracellular ATP levels to support the improvement of circulation, energy and overall well-being; Promilin, an extract of fenugreek that contains a patent-pending complex of bioactive amino acids and helps to enhance insulin sensitivity and improve glucose management; PureFlex, a brand the represents premium grade chondroitin and glucosamine; Ostivone, a brand of ipriflavone that helps maximize bone mineral density and inhibit bone loss; and Ginkgo 24/6/5, a standardized premium ginkgo biloba extract.

In April, the company introduced its newest offering, Goji-plex, which is a shelf-stable goji product that encompasses all the health attributes this super fruit has to offer. "We see a lot of activity coming from the superfruits area," Mr. Kolb said. "Goji-plex is a great product that provides an interesting nutritional profile."

Mr. Kolb believes the environment for most companies in the nutraceuticals space has been very challenging over the last several years. However, he claims TSI is in a different position now. "We are investing in the future," he commented. "Our competitors don't care about standards and without an active regulator this makes our job difficult. Despite this, however, it has been essential for us to ignore this to a degree and plow our profits back into the business."

During the evolution of TSI, Mr. Kolb says he learned some valuable lessons. "You always have to be willing to mend your platform to meet your customers' needs-you are going to have to make tough decisions to meet customer demand," he said. "While it is always difficult to embrace change, it's just something you have to do in order to be successful."NW