Gen. George Patton once advised: “Accept the challenges so that you can feel the exhilaration of victory.”
 
This rallying cry seems apropos to the dietary supplement industry as it seeks not only to remain solvent, but also continue growth patterns in 2012 and beyond. A landmark “victory” for the industry, the 1994 passage of the Dietary Supplement Health and Education Act (DSHEA), really galvanized the legitimacy of the industry, as well as research, relationships, marketing and consumer desire for more diversity of products.
 
Sales History: Reaching Newer Heights
 
Within four years of DSHEA, sales of dietary supplements burgeoned from approximately $4 billion to $12 billion. And the milestones kept on coming. 
 
Consider the following survey results reported on NPR March 1, 1999, titled, “NPR/Kaiser Family Foundation/Kennedy School of Government Survey of Americans and Dietary Supplements.” Results to a question about familiarity with dietary supplements showed that: 16% were “very familiar,” 39% were “somewhat familiar,” 22% were “not too familiar” and another 22% were “not at all familiar.” When queried about self-usage of dietary supplements, 18% responded they used them “regularly,” 15% said “sometimes,” 16% admitted “hardly ever” and 50% declared “never.”
 
In 2004, supplement sales eclipsed $20 billion; in 10 years, the industry quadrupled itself. In a report for the Office of Dietary Supplements National Institutes of Health (ODS/NIH) titled, “Who is Using Dietary Supplements and What Are They Using?” Mary Frances Picciano, PhD, presented National Health and Nutrition Examination Surveys (NHANES) data for 2004. Among adults 20 years of age and older, 52% responded that they used “any” supplements. Further, the most common users were already in pretty good shape; they had a body mass index (BMI) less than 25 and engaged in greater physical activity, reported their health status as “very good” or “excellent,” were never or former smokers and primarily drank wine as their libation of choice.
 
In April 2011, the National Center for Health Statistics (NCHS) Data Brief by Jaime Gahche, MPH, et al, titled, “Dietary Supplement Use Among U.S. Adults Has Increased since NHANES III (1988-1994)” yielded further nuggets of consumption (CDC.gov/nchs/data/databriefs/db61.htm). Among them, “Dietary supplement use is widespread among U.S. adults aged 20 and over. The percentage of the U.S. population who used at least one dietary supplement increased from 42% in 1988–1994 to 53% in 2003–2006.”
 
According to a recent Mintel report titled, “Vitamins and Minerals - US - December 2011,” which focused on usage and trends in the highest-velocity category of multivitamins, vitamins and minerals between 2006 and 2011, this market segment grew by 28% to reach $12 billion. “The struggling economy has worked to drive sales within the market, as Americans seek out lower-cost alternatives to doctor visits amid an environment of higher co-pays and rising healthcare premiums. The market exceeded 7% growth in dollar sales in 2008 and 2009, the highest of the 2006-11 review period, as the economic recession hit its peak.”
 
Sales of herbal dietary supplements increased from $4.2 billion in 2000 to more than $5.1 billion in 2010, according to the American Botanical Council, Austin, TX, an independent, non-profit research and education organization. Citing this data, Mintel noted in its report “a growing source of competition for the vitamins and minerals market as herbal products are often marketed as preventing/treating the same ailments as many vitamins and minerals.”
 
According to estimates from Nutrition Business Journal (NBJ), Boulder, CO, U.S. consumer sales of dietary supplements reached $28.1 billion in 2010 on 4.4% growth over 2009 sales. “Growth was slower in 2010 than it has been the last couple of years,” observed Marc Brush, editor in chief, NBJ. “In 2008 and 2009, growth was 6.4% and 6%, respectively. As the economic recession hit, consumers turned to supplements as a cheap way to stay healthy. And in 2009, concerns over bird flu also drove sales growth. From 1997-2007, supplement sales growth averaged 5.5%.
 
The top supplement categories, he elaborated, include (with sales estimates for 2010) multivitamins ($4.9 billion), sports nutrition powders and formulas ($2.8 billion), B vitamins ($1.3 billion), calcium ($1.3 billion) and fish/animal oil ($1.1 billion).
 
Hot categories revealing themselves to Mintel’s researchers include: vitamin D, vitamin K, B vitamins and gummy multivitamins. Jeff Hilton, co-founder and chief marketing officer of Integrated Marketing Group (IMG), Salt Lake City, UT, whose company focuses on creating, shaping and stewarding brand personalities, noted that rapidly increased competition for limited shelf (and mind) space—along with changing desires—is fueling product innovation. “We’ve seen the emergence of new and innovative dosage forms to deliver product benefits such as chews, stick packs, gels, shots, gummies, etc. This is fueled by Boomers and their dislike of taking lots of pills and also the products’ added convenience of portability.”
 
Consumers seem to be buying their supplements—brick-and-mortar-wise—from drug stores and supermarkets. Further, 45% of respondents to Mintel’s exclusive survey report purchasing vitamins or minerals at Walmart.
 
While Mintel said it expects the market to continue growing, growth will be slightly slower, at approximately 3% per year from 2012-2016, reflecting the impact the prolonged economic downtown has had on consumer spending.
 
The good news is that all data show continued, and enviable, sturdy growth, unlike other industries that are still flat or sputtering. For example, the National Association of Realtors expects 2012 to be the worst thus far for new home sales. 
 
Trust in the Category
 
Consumers, according to Mintel’s survey, staunchly assert that they prefer natural ingredients as they worry synthetics are less likely to be absorbed healthily. More than one-third of respondents expressed concern about potential negative side effects of taking too many supplements. Mintel said this notion could be quelled if consumers were certain those ingredients are indeed all-natural. “Marketers must ramp up efforts to convince users that their brands are safe and effective, possibly by further emphasizing in ads the science behind their brands.”
 
Another challenge brought forth by Mintel’s survey is that more than four in 10 respondents agreed the number of products on the market is confusing, “suggesting that supplements are not yet trusted overall in terms of efficacy and what products best treat specific health conditions.”
 
Consumer usage by age group creates more opportunities for savvy brand marketers as well as the ingredient suppliers with whom they are partnered. Consumers 18-44 years of age admitted to Mintel’s intelligence squad that they intend to take supplements more frequently even though they often worry about potential side effects and wonder about real efficacy. Their older counterparts, however, don’t seem to have those same concerns, “undoubtedly due to more experience with supplements, which has instilled a sense of trust in supplements, highlighting the importance of consumer communication and education to build a loyal consumer base.”
 
Overall, approximately 60% of respondents said they believe people require more vitamins as they age and that supplements should be taken for long-term health benefits. The younger demographic hasn’t had much experience with supplements, but Mintel is optimistic that aggressive marketing to the 18-24 age group may result in good market share. “The result is that ads could do more to target younger users and increase penetration among this important demographic, possibly by airing ads depicting young people using supplements to help facilitate healthy lifestyles, such as exercising, studying and other activities.”
 
Beyond the scope of Mintel’s research, which focused primarily on the most popular supplements, Mr. Brush of NBJ takes a broader view to elucidate market drivers and sees vibrant interest in getting back to a more wholesome and cleaner mindset. “When we look more broadly at the entire nutrition industry—supplements, functional ingredients, natural and organic food—there is a noticeable uptick in consumer interest for products linked to cleaner, more sustainable methods of production,” he said.
 
“Consumers seem to be moving away from products built on heavy, scientific messages of efficacy and aggressive health claims toward quieter labels and simpler formulations,” he added. “We see clear signs of a reversion underway toward food ingredients that have existed in our diets for centuries and sync up well with our evolution as a species. We see evidence for this across the industry. Dietary supplements based on whole foods are outselling their competitors. Global supplement leaders are introducing and heavily promoting whole food, ‘fruit & veggie’ formulations. Whole food supplements are outperforming in the multi-level marketing channel. Sports nutrition companies are replacing artificial flavors and dyes with natural ones. Organic food, despite the heavy price premium and tenuous global economy, is growing much faster than supplements.”
 
Further, Mr. Brush reported, the impulses driving sales have shifted. Consumers’ widespread distrust of pharmaceuticals and the concept of preventative self-care have been firmly established and serve as the well-laid foundation for continued purchase. “The market now appears to be more driven by this retraction in the consumer psyche away from the bells and whistles of food science,” he said. “Nutrition is clearly fragmenting. The most interesting fragments for growth tend to fall in some very simple buckets—real, whole foods grown, manufactured and packaged in manners evocative of a pre-industrial age.”
 
The manufacturing engine of the industry has also seen significant shifts, notably due to Good Manufacturing Practices (GMPs). Mark Blumenthal, founder of the American Botanical Council (ABC), said that “since the FDA published its final GMP rule for dietary supplements in 2007, mandating that companies of all sizes  comply with provisions of GMPs, there has been a predictable increase in investment in in-house analytical laboratories, institution of new standard operating procedures, enhanced record-keeping and other aspects of GMP.”
 
All this adds up to significantly increased quality and accountability, which theoretically should translate to increased consumer trust and further willingness to adopt supplements of their choosing into their dedicated lifestyles.
 
A huge factor in achieving consumer trust has been increased muscle from suppliers to power their ingredients with branded personalities and messages, noted IMG’s Mr. Hilton. “A major trend is the increased awareness and visibility of branded raw ingredients as suppliers leapfrog the manufacturer to generate consumer awareness and demand for a specific ingredient with its own IP (intellectual property) and value. This is driven by suppliers’ need to build value into the pricing of their raw materials and manufacturers’ need to set their products apart from competition in terms of performance.”
 
Steve Mister, president and CEO of the Council for Responsible Nutrition (CRN), Washington, D.C., agreed that quality continues to increase across the board. “Implementation of the GMP regulations specific to supplements, along with the growth of various quality seals (NSF, U.S. Pharmacopeial Convention, Natural Product Association’s GMP program, etc.), have nudged companies to increase their focus on delivering quality products,” he said. 
 
In addition, he added, the industry is witnessing the increasing globalization of the market, with more ingredients coming from outside the U.S. and more production facilities located around the globe. 
 
A Regulatory Minefield
 
Governing entities charged with oversight and enforcement are a part of life. To what degree constitutes a distinctly other dissertation/conversation, notably in this Presidential election year. Suffice to say, the agencies that regulate dietary supplements and related consumables (foods and beverages) are trying to flex some muscle.
 
“Regulatory oversight has gotten stronger in recent years with the implementation of adverse event reporting (AER) and good manufacturing practices inspections,” said Jeff Wright, president of the Natural Products Association (NPA), Washington, D.C. “As these laws and regulations have been passed and implemented, we have been seeing more enforcement activity by federal regulators.”
 
The hottest topic for the industry since the summer has been the FDA’s New Dietary Ingredient (NDI) Notification draft guidance, which would require companies to submit safety data on products that contain compounds classified as NDIs. However, what constitutes an NDI remains subject to debate. Meanwhile, some experts believe that, should this guidance be implemented as written, store shelves currently festooned with an appealing variety of products will likely look like the aftermath of a hurricane warning.
 
In her article, “Is the FDA Trying to Take Away Your Vitamins?” appearing December 20, 2011, on foxnews.com, Deirdre Imus, health advocate, founder of dienviro.com, New York Times best-selling author and frequent contributor to FoxNewsHealth.com, aptly described the overarching impact such a move would make. “Even people who are lucky enough to be in good overall health usually supplement their diets with a daily multi-vitamin, or an extra dose of vitamin D, or vitamin C, or fish oil. Pregnant women and new mothers are almost required to make sure there is enough folic acid in their bodies to aid in their baby’s development. Innumerable provisions lining supermarket shelves—things like cereal, milk, protein drinks, yogurts, and so much more—claim to be ‘fortified’ with vitamins—would these be made illegal, too?”
 
Mr. Wright said the NPA has raised significant concerns about the proposed draft guidance. The association believes the guidance includes provisions that significantly overstep the authority granted by Congress in DSHEA. Therefore, NPA has called on FDA to rewrite the guidance substantially so that it is consistent with DSHEA. NPA, Mr. Wright said, is concerned that if the draft is not substantially rewritten, it could lead to new costs on the industry while providing no additional safety benefits. “The guidance proposes an NDI process that would result in dampened innovation, more expensive and fewer products, and excessive paperwork, which would rob the industry and the FDA of scarce resources. The overall impact would be felt by customers, retailers and suppliers alike, hitting small businesses especially hard.”
 
Esteemed industry entities, including ABC and NPA have been working to craft a list of Old Dietary Ingredients (ODI), and the United Natural Products Alliance (UNPA), Salt Lake City, UT, consolidated the list, which was reviewed by its NDI Working Group.
 
However, ABC’s Mr. Blumenthal conceded that confusion as to what constitutes an NDI, and an ODI, will continue. “With respect to some dietary ingredients, large and small companies, as well as start-up companies just coming into this market, will continue to have a significant challenge trying to determine to what extent a particular dietary ingredient is an ODI or an NDI, except in cases where it is patently obvious that the ingredient has not ever been sold in the U.S. as a dietary ingredient, or in cases where the ingredient is clearly chemically altered, thereby requiring an NDI notification.”
 
Since the issuance of the NDI draft guidance, spirited and heated debate has continued, with industry insiders proclaiming such a measure may be ruinous, and others declaring it doesn’t go far enough.
 
“It’s too soon to know what FDA will do moving forward with regard to the NDI guidance, and so not having a crystal ball on hand, it is difficult to predict how the guidance will impact us,” CRN’s Mr. Mister noted. “We’ve been clear about the fact that the agency needs to start over. Right now we’re at the wait-and-see point, and we just don’t know how it will pan out.
 
“What we do know is that the statute is clear,” he continued, emphasizing that if a company has an NDI on the market, then it needs to file a notification. If it has a clear NDI, it needs to go through that process. “FDA has been critical of industry for not filing enough of these, and to some degree, FDA is right,” Mr. Mister admitted. “The industry needs to do a better job at notifying the agency. Companies should not wait for a new guidance to comply with the statute’s requirements for ingredients that are unquestionably NDIs.” 
 
Meanwhile, Mr. Wright said the NPA remains “ready, willing and able” to collaborate with FDA on the draft guidance so the ultimate result is that consumers continue to have access to safe and affordable dietary supplements.
 
CRN also has a partnership with the National Advertising Division of the Better Business Bureau dedicated to assessing the truthfulness of dietary supplement advertisements. “We need the law to be policed because if not, it’s essentially the equivalent of having a speed limit on a highway without any cops,” said Mr. Mister.
 
There is indeed a potential minefield in the future of marketing supplements: the FTC vs. Pom Wonderful case, where the former accused the latter of making false and unsubstantiated claims. If the FTC receives favorable ruling, many industry insiders believe this will impose severe restrictions on free speech as it relates to marketing health products.
 
Looking forward to the immediate legacy of the dietary supplement and natural health industry, Mr. Mister said, “While there are certain challenges that the industry faces, we are not an industry that is in danger. We are a strong industry with the potential to get even stronger. Sales should continue to rise, as does consumer confidence in our products.”
 
The dietary supplement industry continues to rise to challenges in all areas to further the goal of helping consumers live their best, healthiest lives. General Patton would, without a doubt, be suitably impressed.