High-quality value brand NOW Foods sees double-digit growth, year after year

High-quality value brand NOW Foods sees double-digit growth, year after year

NBJ Award winner for Growth: Large Company

Typically the fastest-growing companies are start-ups or flash-in-the-pans. For large-sized companies to register double-digit growth year after year it must mean they have some foundational element they are doing right. Innovation? Quality? Distribution? Retail relationships? Media attention?

Maybe it’s never one thing. Maybe it’s everything done right every day. That’s what appears to be working for NOW Foods. A  combination of effort and result earns the Chicago-based company the 2015 NBJ Award for Large Company Growth.

NOW Foods has been making and marketing health products for more than 45 years, a true legacy brand in the supplements space. Today, the company makes 1,400 products and ships to 60 countries, with an error rate of less than 0.2 percent. Everything comes from its primary facility in Bloomingdale, Illinois, or a secondary plant in Sparks, Nevada.

Also of note is that NOW Foods co-founder and CEO Al Powers retired from the company in 2014. In the first full fiscal year under new CEO Jim Emme the company has continued its path of high-volume growth, suggesting—among other things—that the company has a strong foundation. High-quality and value brand are twin notions that are often at odds with one another, but NOW makes it work. 

It also helps that Emme is already a 20-year veteran of the company.

“For us as a privately owned company, we’ve been able to stay true to our origins, and be very successful,” Emme says.

According to NBJ estimates, NOW Foods supplement wholesale revenues were $234 million in 2013 and $250 million in 2014, representing 7 percent growth. That may understate the reality, though. NOW, as a private company does not release numbers, but claims growth in the double digits each of the past five years.

Categories driving growth lately include essential oils/personal care, which experienced growth north of 40 percent in 2015 over the year prior. Emme told NBJ that NOW is the top-selling brand for amino acids and body oils, according to SPINS data.

Quality is spelled N-O-W

The company is renowned for its deep commitment to quality, testing and validation—the company employs close to 150 people in quality control efforts, establishes standards and makes these published standards available to the the industry. It might take a year or two to establish standards, but once that’s done, rapid screening tests make it relatively quick and easy for others to follow. Third-party testing labs use similar methods, making NOW Foods fairly unique in operating its own testing lab while making products under the NOW label products and for private-label brands (though contract manufacturing represents only a small part of the company’s overall business). It was one of the first supplement companies to be GMP-certified, in 2000.

“Since the company was founded in 1968, NOW has always striven to provide quality products at affordable prices, as is stated in our mission statement,” says Emme. “It takes a lot of people to monitor and document the elements of the process that make up our GMP compliance and quality assurance. Our in-house testing labs are among the most sophisticated and comprehensive in the industry. We’ve done a lot of work and invested a lot of resources to get here, but I believe that today NOW has the best quality in the industry.”

Its attention to detail and commitment to excellence has ramifications far beyond its facility walls. Because NOW is such a large player in the supplements world, its quality ethos goes both up and down the value chain, from ingredient suppliers to retailers.

“Steady supply chains are not just important to meeting revenue goals, but also to getting orders to customers promptly,” said Emme. “Because we do such high volume, our suppliers are pretty cooperative, even though we are a tough customer in terms of vetting ingredient quality.”

None of that has escaped notice. The quality control at NOW is considered a model for how more companies should operate. “NOW is known throughout the industry for their exceptional commitment to quality,” said Elan Sudberg, CEO of Alkemist Labs, a testing company based in California. “Their testing equipment and apparatus and standard-setting initiatives lead the industry. At a time when there are voices in the mass market questioning the integrity of ingredients and finished products, it is good to know that NOW is here.” 

Quality goes beyond just making sure every product’s ingredients match label claim. In 2010 the company received the presidential E Star Award for exporters. As an example of its low-impact ethic, the company’s 263,000-square-foot facility boasts solar panels on the roof and uses only one dumpster a week even though it has doubled its capacity over the last 14 years. And unlike most other companies that print expiration dates on bottles, NOW prints a “Best By” date on every bottle—a shorter time horizon than a typical expiration date because it guarantees the product is as potent as the day it was packed to that date. That’s reassuring to retailers.

Commitment to indies

NOW got its start with independent health-food stores and has scarcely wavered from that approach over the years, dabbling a bit in online retail. The main reason is a sense of shared values—quality health products and education follow-through in order to improve the lives of consumers the world over.

“We are in this together to make a difference in peoples’ health and their lives,” said Emme. “It’s the natural retailer who stands in the aisles and educates their customers, and where a lot of products that eventually go mainstream first take hold. Retailers know that our commitment to them is authentic. When they do well, we do well.”

Retailers can’t help but notice a NOW supplement label re-brand that started last year. Of the company’s nearly 1,000 supplement SKUs, about three-quarters of them have new labels, with the remainder expected to be completed by mid-year. The company’s signature orange-and-white labels remain, but uniformity among supplement sectors and additional botanical photos now also grace the labels.

“It’s too early to tell how the redesign will affect sales, but response has been very positive from both customers and consumers,” said Emme. “NOW’s awareness and usage continues to increase, and we think the new supplement label has contributed to that.”

Also expected to be completed by mid-year is a new facility expansion that includes a relocation of the company’s order fulfillment and distribution operations, which will allow NOW’s receiving operations, warehouse and manufacturing operations to expand in the existing Illinois facility.

In 2014, the company rolled out its Ellyndale food business. The focus thus far has been on expanding distribution, says Emme, in particular with its gourmet cooking oils such as avocado, almond and virgin pumpkin seed. But 2016 will herald the launch of a number of new product innovations, including Coconut Infusions flavored coconut oils and Sugarless Sugar packets with monk fruit and stevia.

Clearly, NOW is continuing to execute a plan that is about growing the brand while planting the flag of quality throughout the industry. Expanding facilities, a tight attention to quality, and on-point innovation are signals of success. Concerns about supplement quality dogged the industry in 2015, and in such situations laggards have been known to suffer while consumers begin a flight to quality brands. NOW’s quality and value ethos are meeting the moment at a most opportune time.

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