With a proliferation of negative press, the full long-term impact on business and consumer confidence remains in doubt. Ultimately though, people have a sizeable appetite for natural products and supplements that align with their wellness goals.
The industry has been challenged to deliver on its promises of better health for consumers and must be united in taking appropriate and responsible steps to insulate itself from critics. Making tough decisions today to ensure consumer trust tomorrow is just smart business.
For example, actions need to be taken to truly isolate and eliminate companies that adulterate products with pharmaceuticals and sell unapproved new drugs masquerading as supplements. Supply chain integrity needs to be top of mind. Quality, safety, efficacy, sustainability and transparency are all critical elements to future success; they can’t just be marketing buzzwords.
In the end, this industry is about wellness, and it needs to be part of the solution to public health problems. Sometimes it’s hard to see where the bend in the road up ahead will lead you, especially when faced with day-to-day business decisions that will impact your bottom line. However, if you’re not on the right track, you better watch out for the oncoming train.
But don’t take my word for it, listen to the experts that follow ...
—Sean Moloughney, Editor, Nutraceuticals World
The industry of tomorrow, however, must collectively invest in those same areas if it is to succeed. It’s time to accept the mantle of responsibility as a mature and growing alternative—that provides real, science-backed answers—to the disease-based medical establishment and the rabbit hole of rising costs and the declining quality of life that comes with addressing only the symptoms instead of the sources of those health challenges.
If our mission is to truly help our customers achieve optimum health and well-being, we owe them no less than our selfless and best-considered decisions when we decide which road to take into the future.
—Loren Israelsen, President, and Frank Lampe, VP of Communications & Industry Relations, United Natural Products Alliance
The implementation of DNA barcode identification technology to identify genetic material consistent with source botanicals is an excellent tool, and is good for identity verification under specific circumstances and inappropriate for ID profiling in refined (extracted) botanicals ingredients. DNA analysis is an appropriate identification test and will have a proper place in the Botanical Identification Analysis toolbox.
Meanwhile, the classification of herbal ingredients, based on how they are identified, is defined by a set of standards that should originate from the implementation of accurate and acceptable industry guidance protocols. Regulatory authorities will then be in a better position to appropriately regulate finished products when the botanical industry issues proper disclosure of products profiles, starting with the accurate listing of ingredients and how they are used in the production of botanical products.
—Steven Dentali, PhD, Research Fellow, Botanical Development, Herbalife
On a positive note, GOED and the Omega-3 Coalition completed a successful consumer education campaign, increasing year-over-year monthly sales by 5%. While the campaign was underfunded and did not return the market to positive growth, we saw the impact of positive messaging around omega-3s and we go into 2016 with new energy and ideas to spread the word about the benefits of omega-3s.
—Ellen Schutt, Communications Director, GOED
—Nancy Childs, PhD, Professor of Food Marketing and Gerald E. Peck Fellow, Saint Joseph’s University, Erivan K. Haub School of Business
In the supplement arena, consumers are increasingly equating clean label to higher quality—for which they are willing to pay a premium. In fact, clean-label products are achieving a 26% price premium as consumers look for value—a balance between quality and price.
These consumers are checking for labels like “natural,” “organic,” “unprocessed” and “raw” to help determine a product’s attractiveness. Millennials, ages 15 to 35, have clamored the most loudly for these signature markers; their recent growing interest in non-GMO (54% of supplement users), Kosher (35%) and Vegetarian (60%) certifications are increasingly driving their purchase intent.
The industry has responded to this trend. Fifty-nine percent of supplements introduced in the U.S. in 2014 carried a clean-label claim, while 35% of supplements launched in Western Europe between 2009 and 2014 had a clean-label claim. Clean-label vegetarian supplements, in particular, are desired by 38% of U.S. users whereas such supplements grew 118% in 2013 in Europe. To meet this burgeoning demand, Capsugel recently announced a $25 million investment to bolster its worldwide production capacity of its vegetarian capsules. Capsugel’s robust system of sourcing raw materials is also helping customers support the clean-label claims that consumers want.
Dosage forms are being specialized to satisfy consumers’ increasing appetite for something new. Lipid multi-particulate (LMP) technology, a pharmaceutical expertise transferred into nutraceuticals and proprietary to Capsugel, mixes lipid-based formulations to deliver spherical pellets dosed within a capsule, or added to products like drink mixes directly. It can mask bitter tastes (e.g., teacrine), modulate release over time (e.g., caffeine), or enhance bioavailability of poorly soluble ingredients (e.g., curcumin) depending on customer needs.
Consumers will continue to demand that companies bring to market high-quality products, based on sound science and engineering, needed to earn their trust and drive regular consumption.
—Peter Zambetti, Director of Global Business Development, Health and Nutrition, Capsugel
When the Dietary Supplement Health and Education Act (DSHEA) of 1994 was passed it was lauded as providing the strength, autonomy, direction and definition needed by the industry to grow and provide the highest quality products for consumers. Arguably, DSHEA was the defining action that allowed a tremendous evolution and growth of the industry to take place. The industry is not what it was in 1994 and DSHEA is not either. DSHEA allowed room for innovation and entrepreneurship; today’s regulatory landscape, not as much.
Innovation and entrepreneurship in the dietary supplement industry are not dead. However, the robust activity and vitality that emerged from DSHEA in 1994 is decidedly more tepid. The cost of entry or sustainability to the companies in the dietary supplement industry continues to rise with each new regulation, Act of Congress or deleterious judicial outcome. Innovators and entrepreneurs will still exist, but their ideas are either less likely to come to market or have a shorter timeframe of opportunity to survive.
The fear of the inevitable outcome of consolidation and increased regulation relates to a decreased level of innovation and product offering. The positive prognosis is the industry will continue to become stronger with increasingly greater internal and external confidence as a result of the winnowing of the field. No longer is the concern of consolidation a consideration in the dietary supplement industry, only the outcome of consolidation is the concern.
—Scott Steinford, CEO & President, CoQ10 Association & NAXA
I see a tremendous opportunity in new products to fight prediabetes because half of American adults are now either prediabetic or diabetic. Fermentable dietary fibers have great promise for prediabetics, as one of the manufacturers of resistant starch submitted a qualified health claim petition that this particular type of dietary fiber increases insulin sensitivity (through intestinal fermentation and changing microbial composition in the gut) and thus may reduce the risk of type 2 diabetes. In my opinion, this petition has an excellent chance of being approved in early 2016, offering the industry an opportunity with substantial credibility and fresh market appeal.
As the public health authorities (and pharma companies) spend billions of dollars on raising awareness of prediabetes and the need to manage blood sugar levels, there will be great opportunities for the natural products industry to increase new product development in this area. I project that fermentable dietary fibers will eventually become a major category within the natural products industry for their benefits in helping people manage their microbiome and their blood sugar levels.
—Rhonda Witwer, Principal, Witwer Works LLC
The strong U.S. dollar will likely remain that way for 2016 which helps imports and hurts exports, so it’s all about your perspective. The U.S. economy is doing better on a quarter-by-quarter basis, but Canada is suffering along with parts of Asia. Some companies I spoke with during the fall trade shows were not having good a year and looking for better times ahead. I suspect these are the commodity type products where competition is challenging. Companies with specialty products or niche markets were upbeat. Regulation is probably our biggest concern as an industry. Most of us simply wish the authorities would spend a little more time on enforcement of existing rules before making new ones.
—Dan Murray, VP Business Development, Xsto Solutions, LLC
I’m encouraged by the expressions from FDA to collaborate more with industry to improve compliance with GMPs, to crack down on illegal tainted products and address areas of disagreement with NDIs, and label claims. The courts have pushed back on the FTC this year and affirmed a flexible approach to advertising substantiation that includes a variety of robust science, not just RCTs. Even as states are asking more questions about the federal regulation of supplements, they are displaying curiosity to learn more about those regulatory requirements and how states can buttress federal standards. CRN’s recently announced initiative to develop a voluntary dietary supplement registry will help regulators gain more visibility to our products. So while we are headed into a time of increased regulatory attention, I think the industry is poised to respond appropriately and responsible companies will demonstrate their commitment to quality through these examinations.
—Steve Mister, President & CEO, Council for Responsible Nutrition (CRN)
Like any industry that enjoys increasing consumer popularity, the nutraceutical industry continued to draw the attention of the media and regulators, most notably state attorneys general. Because bad news sells, regulators and the media often inflate risks and issues associated with nutraceutical products in order to alarm the public. While negative publicity (especially when it is inaccurate) is unwelcomed by the industry, it is unlikely to subside while the industry continues to grow so rapidly. The industry will continue to refute critics who spread misinformation and address any real safety issues as they arise, but it is also important to note that increasing scrutiny comes with growth and industry critics are unlikely to halt their attacks as long as the industry’s popularity continues.
The good news is that all these attacks don’t seem to impact most consumers’ opinions. They continue to trust their brands and to benefit from the industry’s products. The negative publicity in 2015 also created more demand for high-quality products that consumers can trust, and many companies were able to capitalize on this opportunity. Looking forward, the industry should expect this growth, accompanied by additional scrutiny, to continue.
—Michael McGuffin, President, American Herbal Products Association (AHPA)
The most notable change is that there will be a recording system for nutritional supplements such as vitamins, minerals and some other yet-to-be-determined nutrients. China FDA and National Health Commission are currently creating a list of ingredients that will be allowed in supplements.
Cross-border E-commerce (CBEC) has become the preferred channel for health products since January 2014. At that time, it became impossible for foreign companies to import supplements as food, which forced companies to register with China’s FDA. That process requires 2-3 years to complete and can cost in excess of $100k.
CBEC sales channel avoids this registration process as these sales are seen as direct-to-consumer purchases similar to if the consumer was visiting the U.S., purchased some supplements and brought them back to China.
There is still a lot of work to accomplish before China’s dietary supplement industry reaches its full potential, but these new regulations look to be a step in the right direction.
—Jeff Crowther, Executive Director, U.S.-China Health Products Association
The bad news is that carriers are sneaking in exclusions and other coverage limitations that are often buried deep in the policy, and not disclosed at the time of purchase. Certainly insurance companies are allowed to craft limitations to their coverage—limitations that are directed squarely at the supplement industry. The issue, however, is transparency, and often the disclosure necessary to make good buying decisions is not evident in the insurance supply chain.
Large retailers continue to slowly but surely raise the liability insurance requirements for their supplement suppliers, as evidenced by KeHe Distributors’ recent move to require a minimum of $5 million of coverage. Supply chain contracts, encouraged by many in the industry, are another challenge, as sometimes they contain insurance provisions that are difficult and occasionally impossible to comply with.
Finally, we have seen the return of DMAA into the sports nutrition arena. After the DMAA dust-up of a few years ago, all of the product liability insurers added DMAA to their excluded ingredients list. If DMAA becomes popular again, its insurability will be tentative at best. The media has so vilified DMAA that even if it is insurable, it’s debatable whether the mass drug and other chains would put it back on their shelves.
—Greg Doherty, Managing Director Dietary Supplement Practice Group, Bolton & Company
Going forward, the substantiation of health benefits will remain a top priority but slowly creeping up in importance will be sustainability. Consumers are asking hard questions about the sources of their ingredients, and this trend is trickling into dietary supplements, particularly those containing marine omega-3s. Aker BioMarine is in an ideal position to answer questions about sustainability, science and traceability. In fact, we look forward to those conversations.
The next 12 months will be very telling in the krill business and I think you will start to see more separation between the central and peripheral players. From science to sustainability, we will continue making some pivotal moves to further secure our future.
—Becky Wright, Marketing Director, Aker BioMarine Antarctic US
—Peter Leighton, Founder, Abunda
Reliability is key to ensuring the industry’s future, so that we can confidently progress into the future.
—Don Stanek, Director of Sales U.S., Linnea
More than 130 clinical studies have been conducted on Pycnogenol French maritime pine bark over the years, with exciting new ones this year that further supported its benefits for cognitive support, women’s health, skin care and the common cold. By continuing to invest research on our brand, we are able to uncover impressive findings that help improve the health of a variety of consumers.
—Sébastien Bornet, Vice President Global Sales and Marketing at Horphag Research (exclusive worldwide supplier of Pycnogenol)
—Michael Bush, Senior Vice President, Ganeden
We welcome the intense public and government scrutiny of supplements as a once-in-a-decade opportunity for the responsible companies in the industry to rise to the challenge and differentiate themselves. PLT is grateful to the leaders of key industry associations who have been identifying, clarifying and uniting the companies who are stepping up to the common cause. Together, we must provide essential input and have an important say in the new paradigm that will define the post-DSHEA rules within which our industry will function.
At PLT, we continue to expand our commitment to providing differentiating solutions. “PLT360—Trust Builds Brands” is PLT’s full-throttle commitment to “Integrity, Quality, Sustainability and Efficacy.” Further, at PLT, we have made new investments to accelerate our product development pipeline to feed our customers’ demand for innovative, best-in-class, branded ingredients that will grow the sales of their consumer products. We continue to seek out and closely coordinate with industry stakeholders—both supply partners and customers—who share our commitment to the relentless pursuit of excellence and who are in it for the long term.
—Paul Flowerman, President and CEO, PLT Health Solutions
This past year has seen the explosion of an emerging health technology in the form of wearables that track activity, sleep, heart rate and more. Mintel estimated nearly 20% of individuals who exercise regularly incorporate a wearable device into their exercise, daily activity or both. The addition of the Apple Watch and the ensuing competitors indicates more people will be paying attention to activity and health. This adoption of technology by health-conscious individuals offers greater incentive to continue the development of more advanced forms of dietary supplement dosing.
Not all new food technology is being embraced with open arms. National Public Radio recently decried GMO as “old hat” with synthetically modified food as the “new frontier” for concern. Vanillin is the demonstrated battleground for the immediate issue, but supplements and foods will be correctly targeted as future opportunities for this technology.
Technology has already demonstrated its power to be a driving force in other industries and continues to do so in the dietary supplement arena as well.
—Charles Brain, President and CEO, 3i Solutions