By Len Monheit
The flip side to adversity, at least in a business sense, is opportunity. Whenever the chips are down, some company (or companies) takes advantage of the situation with a new product or offering by realizing that a paradigm shift is underway that will ultimately impact behaviors, relationships, and ultimately ‘value’.
It has been this way throughout history, from the industrial revolution right up to the present day. Someone’s loss is inevitably someone else’s gain. Adjusting one’s frame of reference, to not only view the adverse circumstances, but also the opportunity lying hidden underneath, is a hallmark of leading organizations and individuals.
Beginning right from my first moments in this industry, I was aware of a certain frustration, manifest at several places within our industry. First, several industry champions felt that DSHEA had provided such a huge opportunity for this sector, not only in the immediate growth that did follow DSHEA in the time period post-1994, but also in the ultimate opportunity to ‘do it right for dietary supplements’, and build a platform of credible science and an environment of responsibility – yet for some reason this did not happen. Moreover, many took the opportunity to take a real short term view of the business opportunity, focusing on hype and sensationalism, and utilizing ineffective ingredients, purchased at rock-bottom prices.
Another aspect of frustration was the lack of attributed value to proprietary technology and patents, made even worse by a lack of commitment to long-term partnerships between ingredient companies and the finished product manufacturers. There was this feeling inevitably, someone would come in and undercut price, no matter whether by cents or dollars, and the business would be lost, whatever relationship value had been gained over years of doing business.
Over the past several years, these specific frustrations have been evident time and again, certainly contributing to what some describe as the ‘adverse circumstances’ we currently find ourselves in. I remember a conversation at an NNFA show several years ago with a European ingredient manufacturer. “It’s really upsetting. Companies don’t get it. Sure, you can get ‘it’ for $50 a kg, but just what are you getting? “
Are things about to change? Are we entering the ‘Ingredient Age’?
We’ve seen evidence that strong functional ingredients are gaining traction in the food and beverage industry. This traction is led by organizations, first of all, vested within the industry, and secondly, prepared to step in and add value and differentiation – value in the support they offer for their ingredient in compliance, formulation and general expertise.
The current international crisis regarding quality and food safety has created an all new awareness of inputs and the reality of a global supply chain. One might believe that an outcome of this spotlight will be a better understanding of the investment required and value derived from sourcing properly (and the risks inherent in not doing so). One might also believe that once a supportive supply relationship has been established, customers won’t be quite so quick to turn the business over to a competitor. Certainly, they won’t do this without some sort of qualifying exercise, and for many companies, any qualifying exercise that doesn’t rely solely on price will be an improvement.
Now enter programs such as SIDI and the US dietary supplement GMPs and other initiatives that provide ‘opportunity’ for ingredient companies to add value. While not specifically covered under the GMPs, ingredient suppliers have a critical role to play because of their understanding of ingredient behavior and characteristics. Expect to see leading ingredient companies working closely with supplement manufacturers to develop appropriate testing parameters, and for those that take advantage of the offer, possibly reduced identity testing which ultimately will save costs and encourage companies not to flip-flop on sources of supply. Some will argue that the GMPs as written already discourage flip-flop and hence encourage long term, strategic relationships between ingredient suppliers and manufacturers.
With a whole new spotlight on ingredients and inputs, could it be that we have at long last entered the ‘era of ingredients’, an era that promises ingredient suppliers an appropriate return on investment – into science, intellectual property, turnkey, value added solutions, brands and so much more?
One can certainly hope so.