Well, I promised an analysis of 2008. And there’s really no excuse as I’ve now had several weeks to think about it. So here goes….
2008 probably will go into industry books as a less than stellar year from a product innovation standpoint, presumably though, the year of category definition for areas like probiotics, and a year where from a science perspective, more companies broadened their scientific portfolio on existing ingredients, rather than investing heavily in science involving novel ingredients and concepts. Last year this time I believe I was commenting on a lack of true finished product innovation, rather a multiplying of sku’s of existing products, and to a large extent, 2008 brought more of the same.
After filtering through product quality issues such as melamine contamination and the ongoing saga of adulteration (especially in sexual health products), one cannot help but notice the fact that 2008 will ultimately go down in history as the year that stevia arrived and the weight loss category evolved…..
As described in the June issue of Functional Ingredients, it was “Sweet Success for Stevia…finally. On the ingredients side, Cargill and Wisdom Natural Brands went through GRAS processes to prove safety for food applications for their stevia products, and at the end of the year, both Coke and Pepsi sported ‘no further questions’ letters from FDA from their notification procedures for rebaudioside A-derived non-nutritive sweeteners.
The FDA communication was undertaken, even as a Citizen’s Petition continues to challenge the use of stevia for food products under Section 912 of the US Food and Drug Administration Amendments Act of 2007, claiming that it should be prohibited from such use as it is the subject of substantial clinical investigation. Although it’s obvious the petition will fail, it’s yet another indication of the hot interest in this product. And since not all stevia products are considered equal (by FDA as well as by clients), it will be interesting to watch the ongoing race to GRAS (self and FDA-affirmed) – or not, of ingredient companies swooping in to take market share. Will food and beverage companies ask the right questions, look for the right notifications, seek the right relationships? Will ingredient companies take high roads or will we see a flooding of markets with attempted knock-off and leveraging of the efforts of those companies that have spent years in product development and regulatory compliance? If past industry behavior is any guide, I fear the worst and a likely outcome is yet another confused and cluttered marketplace.
Following in the wake of the Omega-3 working group of the Council for Responsible Nutrition (CRN) which ultimately evolved into GOED (Global Organization for EPA and DHA Omega-3’s) and aligned those companies involved in this category by establishing quality standards and other activities designed to support overall category growth, the probiotic community showed its maturation as a category with a step up of activities by the International Probiotics Association including the establishment of Product guidelines. Alongside this development, came new entries on the company side, supportive science, and a slew of new products incorporating probiotics, especially for dairy-related applications.
The end of the year 2008 was dominated by neutral studies challenging the ability of dietary supplements including vitamin E to prevent diseases such as cancer. With the conventional clinical trial design (including not accounting for nutritive intakes) and traditional disease endpoint espoused by the mainstream medical community (and understood best by the mainstream media), the study results showed no benefit, and at least in this case, little if any enhanced risk. While these results by themselves will likely not dramatically hit supplement sales, combined with a flagging economy forcing consumers to make more critical choices and a relative lack of new supportive science, they will almost certainly impede category growth in the next 12 to 24 months.
On the flip side, Vitamin D continues to be the darling of both the scientific community and the media. While not significant in and of itself, a position statement issued by the American Academy of Dermatology in December indicates just how far this product has come in being universally accepted, especially in supplement form.
With the GSK/ADA weight loss petition asking that weight loss claims be considered drug claims still pending evaluation, industry remains vulnerable to a certain extent, in perhaps its biggest category. On the weight loss stage, new science (and a new ingredient – Phosphlean™) was presented by Chemi Nutra, while AHD International introduced LuraLean®, with DSM noting commercial success of its Fabuless™ satiety product as these three and others all tried to actively compete in this lucrative category. The regulators also kept the pressure on, especially the US FTC with its examination and actions regarding false and misleading claims. From both a food and supplements perspective, one can still argue that the field is wide open with a commercial successor to ephedra yet to be found. This and more controversy is set to be debated at the 2009 Nutracon educational conference in Anaheim March 4-5 (in the weight management and obesity two-day track.
In other regulatory activity, in October, FDA ruled on the Bayer combination products targeted at Women’s and Heart health. The launch of the products containing supplement and OTC ingredients had caused quite a stir since previous FDA positions seemed to indicate the agency felt that these products were illegal. The audacity of the launch combined with FDA failing to act immediately had many ingredient companies evaluating new business opportunities and finished product companies contemplating new SKUs as well as new competition. FTC activity also targeted other categories and companies, including the makers of Airborne.
Product quality also was in the news and throughout the year, many industries waited for the passage of food safety legislation. The trigger was melamine contamination, initially among pet food products, ultimately among many dairy-based products originating in China. Ultimately FDA would set a melamine specification, labs would begin touting this service, but even as late in the year as October, as indicated at a survey conducted at a UNPA GMP training seminar, as many as 80 percent of supplement companies were not testing for melamine, even those involved in the higher risk protein products.
This last issue makes for a nice natural segue into supplement GMPs. June of 2009 will mark the date by which mid-size supplement companies must be compliant. Although there was no overt ripple at the June 2008 date for large companies, rumor and speculation in the industry suggests that at least one inspection went, shall we say, a bit confrontational. Judging by the questions asked at the aforesaid UNPA training session, as well as by the self-admitted level of readiness expressed by some organizations, this June and the days following will be quite interesting.
One can argue that 2008 actually did see one organization succumb to the high cost of quality. In June, it was announced that NBTY would acquire the assets of Leiner Health Products, marking the demise of Leiner in a domino path that began with record-keeping issues at its OTC manufacturing operations. Its quite ironic to note that when questioned in the press briefing following the original 483, the company explained that despite record keeping discrepancies at its OTC division, since supplement activities were under a separate regulatory environment, these operations would not be affected. One can only imagine the naïveté that led to such a statement and sincerely hope that the view was not shared by other industry executives.
In Canada, industry headlines screamed as federal regulators tried to bring into law Bill C-51 to amend the Food and Drugs Act. A first draft of the bill terrified industry, gave significant powers to the minister, yet failed to address Standing committee recommendations suggesting that any amendments contemplated to the Act consider Natural Health Products specially and distinctly from food and drugs. The legislation, with significant industry feedback, went into redraft mode and was beginning to look more promising when Canada went into an election cycle which halted pending legislation. Experts suggest a new version of the bill will likely resurface.
Negative marketing has picked up steam. No, it’s not about conveying a negative message, it’s about trumpeting the absence of an undesired component in a product. We’ve seen carbs and fats in the past benefit from this positioning and now the realm has expanded to salt and in an explosive sense, to gluten. Lest you think that this is just a food phenomenon, Country Life in May presented a Gluten free certified vitamin line.
On the subject of certification, discussions continue as to whether the FDA will ‘support’ third party certifiers and for just which product categories. Obviously, how this discussion evolves is of signal importance to the supplements industry. And certifications continue to proliferate with gluten free and natural personal care being two of the latest categories. In October, the Natural Products Association would announce that products from Aubrey Organics, Burt’s Bees and J.R. Watkins Apothecary were among the first products certified under the association’s Natural Seal and Standard program. Earlier in the year, certifier NSF International had announced that its Draft Standard 305: Organic Personal Care Products was available for comment. The subject of natural and organic personal care products continued to appear in headlines throughout the year, even as the sector, at least from an ingredient up standpoint, struggles to identify and define itself.
As existing legislation took effect, FDA announced the first formal results from Adverse Event reporting as mandated by the AER regulation that took effect in December 2007. In response to FDA data presentation which was picked up by mainstream media without context (ie. without a comparison to expected numbers or OTC AERs) the Natural Products Association was able to report, to industry at least, that “FDA Reports Lower Supplement AERs Than Expected”.
Also in the News:
Fiber and fiber sources began taking on a whole new dimension in 2008. With many playing an active role in weight management and other health conditions such as digestion, companies were and are faced with the twin challenges of education and differentiation. From Cargill, Lonza, Roquette, Tate & Lyle, Natraceutical and AHD International, to Standard Process and Trace Minerals, many companies have a stake in this sector and I would expect the rhetoric to heat up on this subject by itself, and also in how it relates to prebiotic activity.
The above is not meant to be all-encompassing, merely some of the dominant themes I’ve observed over the past 12 months, with perhaps a bit of context wrapped around them. I’m sure others would add other milestones and signal events and these additions, as always are more than welcome.
Stay tuned as these issues and a few others will be markers by which industry success and opportunity in 2009 and beyond is measured.