Business Forum

Euro Trade: Supplements Sales Are a Mixed Bag

by Scott C. Yates

To the casual observer in the United States, Europe seems to be hurtling toward becoming one big country, separated only by a few quaint customs and native tongues. After all, the Euro is now a common currency used by 15 nations' banks and governments. An actual set of bank notes for the populace debuts soon. And while people do speak many different languages, most schoolchildren learn English.

But Americans tend to hear only about commonalities, and these can be deceiving, especially when considering an industry as complicated as natural products. Varying traditions and regulations mean there is no easy way to capture a single picture of European supplements use. There are, however, a few themes that emerge. Germany, for instance, has the reputation as leader in supplements development and use.

Although economic disparities persist between the former East and West Germanys, one thing uniting the country today is widespread supplements use. By some estimates, no less than 80 percent of all Germans take some supplement or another. Germany is, after all, the country whose government studied hundreds of botanical supplements and published the Commission E Monographs. This reference is considered by many to be the most authoritative source of information—including therapeutic uses, doses and contraindications—about botanicals.

To be sure, 80 percent is a much larger percentage of supplements users than elsewhere in Europe, not to mention in America, and sales are still climbing, says Joerg Gruenwald, Ph.D., president of Phytopharm Consulting in Berlin.

"Most supplements trends come from Germany," Gruenwald says, adding that in his country botanicals are sold both in pharmacies and elsewhere. He says St. John's wort (Hypericum perforatum) is the hottest-selling botanical, a theme echoed by several sources—not the least of which is the U.S. market.

If the United States is to look to Germany for trends, then perhaps the next popular seller will be melissengeiste, which is the German name for a category of herbal combinations designed to relieve cough and cold symptoms. Although this category's sales are slipping throughout Europe, they are still selling strongly in Germany. The decline of melissengeiste's popularity is attributed to a prevention trend seen in other countries, illustrated by the rising popularity of herbal products such as echinacea (Echinacea spp.). Since Americans tend to seek a cure rather than preventative, they will likely follow the German lead.

Thematic Variations
Indeed most of the dietary supplements that sell well in Europe also sell well in the United States. For instance, according to Elizabeth Sloan, Ph.D., of Sloan Trends & Solutions of Palm Beach Gardens, Fla., a consultant to the international dietary supplements industry, St. John's wort and various ginkgo (Ginkgo biloba) products as well as pre- and probiotics are popular in Europe, just as they are here. She adds that people in Europe are interested in ginkgo supplements for the same reasons they are popular in America, such as improved concentration.

Sloan says while the level of consumer sophistication is high all across Europe, the markets are still open for growth, especially in the emerging economies of eastern Europe. In those countries, for example, the popularity of American-style fast food plus a decrease in the number of people who do physical work for a living has increased the obesity rates.

"Forty percent of all women in the former Eastern Bloc nations are overweight," Sloan says. "Who knows more about fat than Americans?" She adds there is a huge, pent-up demand for products that can help people lose weight.

According to Sloan, products that promote gut health are also doing well. Companies such as Nestle and Dannon are competing to help people improve digestion. The companies aren't just focusing on prebiotics and probiotics in pill or powder form, but also in functional foods. One popular example is yogurt enhanced with a variety of enzymes to aid digestion.

Overall, though, Sloan says watching trends must be a long-term project when it comes to Europe, because many food and supplements trends are so ingrained.

"They don't tend to be fickle," Sloan says. "They grew up taking particular products and it's a lot harder to buck the trend there."

GMO Concerns
England was—and is—the epicenter of consumer concerns about genetically modified organisms (GMOs). That country saw dozens of people die of bovine spongiform encephalopathy, or mad cow disease, after government assurances that English meat was safe. Since then, the country has been a hotbed of activity for those not willing to trust government assurances about GMO safety. Even people friendly with the government, including Prince Charles, have worked to stop GMOs from making it to market. Meanwhile, Monsanto of St. Louis and Novartis of Basel, Switzerland, are trying to increase the prevalence of GM crops. The most common application is a soybean variety genetically modified to resist potent herbicides.

Just as awareness and opposition to GMOs has slowly moved from England to mainland Europe and around the world, so too has it also moved from produce to packaged foods and, ultimately, to supplements.

In part because of regulations in England that require labels on all genetically modified food, including supplements, consumers now know that many dietary supplements contain GMOs. Although the actual amount of modified material is often small—in many cases soy is used in the capsules that hold a supplement—it is enough to cause concern among some consumers.

Genetically modified ingredients are the main reason experts cite for the sharp drop in supplements sales in England. According to the London-based Scrip magazine's December 1999 story about supplements, "Consumers and the medical community want guarantees about the efficacy, safety and quality of supplements." As manufacturers source more GMO-free products, sales are expected to rebound. According to Scrip, the sales growth should climb back up to about 6 percent (for more on GMOs, see "GMOs: Down on the Pharm").

The Hot Zone
The United States has the largest, most homogeneous market in the world, yet regional variations exist. For instance, in warmer climes such as Florida, Georgia, Texas and southern California, weight loss supplements sell better than in states such as Vermont, Illinois and Wisconsin. Perhaps this is because people in warmer climates spend much more time on the beach and less time in parkas. The same is true, it appears, in Europe. Although there's not much call for anti-cellulite products in Scandinavia, they're popular in Italy.

A product popular in Italy but not yet as well received in Germany is SAM-e, or S-adenosylmethionine, a natural substance found in all living cells. Its chemical name and structure come, respectively, from methionine, a sulfur-containing amino acid, and adenosine triphosphate, the body's primary energy molecule.

Companies that market the product claim it fights depression, arthritis and lesser ailments. In Italy, where most of the SAM-e research was done, it is one of the most widely prescribed anti-depressants. Before it was approved for sale in the United States, consumers who wanted the supplement had to get it from Italy. Some marketers are hoping that if it catches on in the United States, the popularity could boost sales in other European countries.

Although some generalizations can be made about cultural and climatic influences on supplements use, Spain is an exception. The combination of government regulation and long-established food traditions keeps the supplements market small. Spain spends less per capita on supplements than the United Kingdom, Italy, Germany or France. This could be attributed to a government that allows almost no claims on supplements packaging or in advertising.

In spite of that, Spaniards are increasingly interested in the omega-6 fatty acid in evening primrose oil. This supplement is most often recommended by gynecologists for premenstrual syndrome. Another product surging in Spain, as well as Italy, is lecithin. It's seen not only as an aid to mental acuity but as a heart supplement, because lecithin is derived from soy.

Questions Remain
Differences in consumer pReferences make up a big part of the differences in sales between various European countries, but widely divergent regulations also play a role. There's been talk about pan-European deregulation in a style similar to the U.S. Dietary Supplements Health and Education Act of 1994. There's also been talk of a European equivalent to the Food and Drug Administration, but so far, it's all been talk.

Those who follow the issue closely say it will be at least three to five years before any rules change, and even that may be optimistic. The German government believes it has a great system, and indeed, most Germans seem happy, as illustrated by the high percentage of supplements users. But other countries, and most manufacturers, would likely balk at the extensive regulation and government control in a German-style system. Likewise, Germany would likely balk at a massive deregulation, so a stalemate appears likely even before trade talks begin.

There's no question that government involvement plays a key role in the popularity, or lack thereof, of many supplements. For instance, the French government reimburses taxpayers for the cost of magnesium and calcium supplements. Not surprisingly, the sales of these two minerals are better in France than elsewhere, although that could change if rumors of a new, tougher scientific review of supplements reimbursement are true.

The medical establishment also carries a lot of weight. Only about one-third of the ginkgo purchased in France is sold over the counter. The rest is prescribed by physicians, primarily for varicose veins. When doctors prescribe, sales soar.

The bottom line is, Europe is a large and complicated market, but it's one with a customer base that isn't as averse to dietary supplements, particularly herbs, as the U.S. market. As Sloan points out, "They have much deeper roots using herbal products."

Scott C. Yates is news editor for Natural Foods Merchandiser.

Photo Illustration: © Nancy McLaughlin