Should suppliers sell finished products?

Should suppliers sell finished products?

Ingredient supplier ChromaDex announced Monday that it will sell its BluScience consumer product line to NeutriSci International for $6 million in cash, debt and equity. BluScience, a line of condition-specific dietary supplements that features ChromaDex's pTeroPure pterostilbene ingredient, has grown quickly since its launch a few years ago. But running a successful supplement brand takes a lot of work, begging the question: Is it worthwile for suppliers to sell consumer products, or is it too much of a distraction?

According to Frank Jaksch, ChromaDex's founder and CEO, "The primary function when we launched that brand was to build awareness around the ingredient." BluScience, with nationwide distribution at Walgreens, was the flagship for creating interest in pterostilbene. But running an ingredient company and running a finished product company are two entirely different beasts.

"We never expected it to take off the way it did," said Jaksch. "In the past year and a half, it ended up becoming the tail that wagged the dog. From a time, monetary resources and human resources standpoint, it really became more than we wanted to bite off." Ingredient supply is a cutthroat market, and it doesn't pay to lose speed by playing outside your core competency. A few suppliers have succeeded in the consumer space via acquisition when there are delicious synergies to be reaped (see Glanbia's purchases of BSN and Optimum Nutrition), but even fewer succeed by building brands from the ground up.

But perhaps there is a space for consumer brand incubation among suppliers. Jaksch thinks so: "One thing I think our team is good at is knowing what a brand would look like built around the science underlying an ingredient. What we're going to do in the future is to be more of a think-tank for coming up with a brand like we did with BluScience or a concept and find a partner who believes in that strategy."

It'll interesting to see what they come up with down the road.

The funny part, though, is that while it took ChromaDex the time, money and effort to build a brand from scratch to create buzz around pterostilbene, it took Dr. Oz a mere two minutes of air time to achieve the same result. 

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