By Len Monheit
Happy New Year and welcome to 2008.
We’re less than one business week in and already the environment is shaping up with a US regulatory announcement (a new CFSAN Director) , and a release issued by the International Alliance of Dietary/Food Supplements (IADSA) observing that changing regulations for dietary supplements across the globe has led to increased consumer demand in emerging markets (http://www.npicenter.com/anm/templates/newsATemp.aspx?articleid=20202&zoneid=18). For many, the driving and dominant themes of 2007 will continue to evolve in 2008, so let’s take a look at a few of them.
The connection between regulatory environment and market success hinges upon a key aspect, industry’s relationship with regulators, and in some of the more successful supplement marketplaces, a close relationship and a collaborative approach to regulation development seem to be prerequisites. As personnel continue to change in the US FDA, and as the stress and pressure do not abate, it remains to be seen whether it is even remotely possible whether industry can develop any long-term relationship (or even dialogue) with regulators in the United States. One of the key deliverables of this relationship would be an enhanced understanding of the unique characteristics of supplements, the intellectual property issue, a comprehension of sourcing and processing environments, all leading to appropriate implementation of several rules, including supplement GMPs. Absent a basic comprehension, one must be at least a little wary of what the regulatory implementation strategy of FDA will mean for us in ’08 and beyond.
Obviously, the regulatory context is one of the headline items, both as we analyze 2007, but also as we anticipate 2008. With US GMPs and SAER legislation to be implemented and health claims under review, we’ve got the same marketplace in potential transition as we do in much of the EU where similar issues (specifically health claim evaluation) are creating a huge amount of market uncertainty.
In several months of 2007, product quality was a headline item. In January of last year, Consumerlab.com released a multivitamin test result, observing that only “ten met claims and other quality standards”. The issue of quality, standards and certification would continue to be a dominant theme for 2007 and we expect no less in 2008. In fact, we expect the discussion to dial up a notch as companies dig deeper into product and ingredient quality issues, and several new certification programs and players emerge onto the scene, many focusing on the international manufacturing and sourcing environment. Other related news in this category included AHPA issuing tools for ensuring the identity of Hoodia gordonia products, and an Indena study commenting on the quality of bilberry products.
In the business world, the Whole Foods / Wild Oats deal was a headline grabber, but a bit back in the value chain, and certainly indicative of further globalization of our industry was the acquisition of Renaissance Herbs by Avesthagen, Israel’s Gadot Biochemicals taking over Pharmline and then later in the year, of Natrol by India’s Plethico Pharmaceuticals, Canada’s Pizzey’s Milling by Ireland-based Glanbia and Canada’s Cevena Bioproducts by Spain’s Natraceutical.
2007 marked the year where certain product categories began to finally realize growth potential as infrastructure commitment, science and marketing began to align. The Global Organization for EPA and DHA Omega-3s (GOED) passed 40 and then 50 members all committed to building a viable category, with the association then founding the Omega-3 Learning Consortium, based at PurdueUniversity. At the same time, the category was making news with continued scientific credibility for cognitive as well as cardiovascular health.
Another category that had singularly underperformed in North America relative to the rest of the world (and its presumed potential) was ‘probiotics’. 2007, though, indicated that perhaps North American consumers too were ready to buy-in to gut and digestive health, while Vitamins D and K both received trade and consumer headlines.
On the subject of investment Enzymotec began construction of an R & D center in Israel, the UK’s Tate and Lyle, in a continued move towards ‘healthier’, announced that is was establishing a Wellness and NutritionCenter in Lille, France, and in the next month, Cargill announced that it too had entered the omega-3 food ingredient business.
This validation of a couple key categories further justified food and beverage industry interest in the potential of functional foods and beverages, indicating that maybe, just maybe, the market was finally ready. That readiness took a major blow though in November when the US FDA issued a notice of proposed rulemaking prohibiting nutrient content claims on products with EPA and DHA omega-3 fatty acids, causing food companies to rethink and possibly shelve immediate launch plans in the wake of the uncertainty created. Presumably product launches will still be forthcoming, perhaps focused on general health rather than the benefits of omega-3s specifically.
2008 promises to be an interesting year.
The status of health claims and implementation of rules and regulations will be the defining ground of an increasingly globally connected sector. External factors such as currency issues and trading block politics will continue to dramatically impact business operations in all sectors, including ours. Expect more and more companies to continue education and outreach to differentiate themselves on a higher level, focusing on their internal operations and uniqueness, relating to production, quality control and assurance, sourcing, dosing etc. And as the Beijing Olympics approach, the world will continue to focus on China and the voice of the sports community will once again become louder and the chasm between it and our industry become a subject of scrutiny.