By Len Monheit
Heading into this week’s SupplySide West, it seems appropriate to take a quick step back from day to day operational crises and urgencies and to take stock of where our industry world stands amidst EU harmonization, six months after a US supplement GMP rule, a magnifying glass on ingredients, inputs and quality standards, and fundamentally a continuing over-arching drive towards health management in the personal choices consumers are making in foods, beverages and lifestyle decisions.
Food Ingredients Europe Musings
I’ve recently returned from Food Ingredients Europe in London, my first foray to that particular event, and heading in, I must confess I really didn’t know what to expect.
I, along with several thousands of industry colleagues appeared on the platform of the Canning Town DLR stop (Docklands Light Railway) and managed to, by a few minutes, avoid being queued at the bottom of the steps with thousands of other later arrivals as the masses converged on the Excel Conference Centre. The conference centre was wonderful – getting there was the job and a half. Those that left it too long undoubtedly missed first meetings, if they even made it during the morning at all.
On to the show itself – a respectable business environment with booths/stands that obviously were major investments, and predictably, across the entire show floor, a resounding message about health, not least and perhaps most significantly by the world’s (and EU’s) largest sugar companies, repositioning from sweetener organizations to fiber, probiotic and value-add offerers, capable of delivering turnkey nutritional solutions.
The event itself was co-located with a Natural Ingredients show floor, one that made one think of ‘have’ versus ‘have-not’, in that for the most part, these booths were cheaper, less trafficked, the companies were obviously smaller, and their show presence was more speculative than business continuing.
From an operational/organizational standpoint, one moment which comes to mind to perhaps summarize my observations is that the opening night Awards ceremony was so poorly publicized that an end of show day announcement was required to get attendees (especially press) upstairs for the presentation. Once there, guests were treated to an excellent venue with beverages and canapés, but again, getting there was most of the battle.
Towards a Health Fronting Propositon
There are two announcements of note that occurred at the event last week, both indicative of evolution in the ingredients world. The first involved Südzucker AG, Europe’s largest sugar producer and a leading German food group, which announced the creation of a new functional food group – BENEO, under which all three units previously operating in the health arena, Orafti, Remy and Palatinit, would continue to operate, but as BENEO-Orafti, BENEO-Remy and BENEO-Palatinit. According to the companies, the renaming is more of an outward thrust recognizing what has been going on for some time internally as the three units have all collaborated for years on research and product development in the functional and health-oriented space. That being said, the overt thrust into a health agenda is certainly noteworthy. (http://www.npicenter.com/anm/templates/newsATemp.aspx?articleid=19779&zoneid=78)
The second announcement involved Canada’s Ocean Nutrition and US-based ingredient distributor PL Thomas, who have announced a venture to combine the former’s MEG-3® brand Omega-3 EPA/DHA product with the latter’s MenaQ7 Natural Vitamin K2 offering as a combination heart health ingredient. (http://www.npicenter.com/anm/templates/newsATemp.aspx?articleid=19820&zoneid=129) In this case, we see a strategic alliance involving two ingredients of promise targeted at a specific health condition, including a result that the science in each is presented and leveraged with enhanced communication and sales focus.
This leads me to my next point – the world of functional ingredients.
What goes in…..
With concerns still present about the quality of ingredients and effective management of an essentially global supply chain, it will be very interesting to continue to watch the evolution of all value chain relationships in upcoming years. Already we are seeing numerous ingredient companies critically examine what they can do to position well as top tier input providers and to convince their clients that a long term, secure, non-commodity based relationship is in their best interests. Some time ago, we saw an alliance between Cognis and Wild Flavors to be able to offer turnkey solutions for functional food and beverage applications in a collapsed time frame as a route to differentiation and value-add as an input supplier. We can expect to see many more of these tandem operations and the relationship between Ocean Nutrition and PL Thomas, in some ways, is another manifestation of this opportunity to differentiate and take on an additional role as value chain partner. With US GMPs and more scrutiny of ingredient company operations, look for more alliances and strategic partnerships in the near future.
Turning towards the North American marketplace more specifically, even though not specifically governed by US GMPs, ingredient companies are feeling the heat of expectation and some are getting ready to assume additional responsibilities on behalf of supplement clients. In reality, this evolution makes sense, coming as it does in an environment when ingredient quality issues are encouraging customers to ask more questions of their suppliers – in food, beverage, supplement and personal care environments. To reiterate from previous columns, the how of production is becoming more important rather than what and even where. In many cases, the ‘how’ also refers to business practices such as sustainability and carbon footprint.
In closing (and I’m sure there will be more on this by next week) the details in the implementation of US GMPs for supplements are now starting to be on the radar, fueled in part of by a satellite call held by the FDA on the subject a week or so ago. Expect to hear a lot more about a variety of issues such as FDA’s proposed mechanism to calculate the headcount of an operation to determine whether it qualifies as small medium or large and therefore has three, two or one year for GMP compliance.
On a related subject, industry problems with and opposition to the Interim Final Rule: Petition to Request an Exemption from 100 Percent Identity Testing of dietary Ingredients, seems to be consolidating. The Council for Responsible Nutrition (CRN) has submitted a letter of opposition to the premise itself (October 24, 2007), stating that it “weakens the overall system of process controls otherwise required for dietary supplements and potentially undermines a key safeguard to the assurance of product quality.” In the letter, CRN questions the economics involved in justifying the process, and the fundamental premise that ingredient identity testing (at the very least) should ever be at less than 100 percent. The Natural Products Association has also commented on the exemption, noting that “Submitting a petition to request an exemption from 100 percent identity testing of a dietary ingredient is not something that should be taken lightly, nor should such exemption be granted without exhaustive demonstration of both the supplier’s or vendor’s and manufacturer’s quality system.”
While we here at NPIcenter obviously spend a lot of time and attention on it, it’s becoming increasingly clear that ingredients and inputs are becoming more and more important, globally, as an enabler of good practice in the nutritional products industry. The next several months will certainly be interesting.