Editorial: View from the Summit - a Look Around the Supplement Sector

I’ve always found the NBJ Summit one of the most interesting experiences of the year, and last week was no exception. The experience is a mix of the needful, such as the state of the industry and a summary of M and A activity, plus a series of presentations that get the industry’s C-level executives out of their operational scramble and pitch them into a strategic setting with numerous other executives. The talk is about the future of the industry, the challenges (internal and external), emerging opportunities for business in general, and this particular year, a stirring Jeff Bland presentation, and (very appropriately) a talk by Dr. Paul Stoltz, CEO of Peak Learning Inc., about Adversity. I first saw Dr. Stoltz speak about the Adversity Advantage at a CRN event a couple years ago, and although the presentation was different, the message was not. How you deal with adversity is an important factor in your own and your business’ success. As this industry faces increasing challenge and yes, adversity, individuals and companies will respond in different ways. Not all ways will have equal impact on our future.

Back to the summit itself.

The list of attendees can be… well… daunting. The numbers keep growing, as does the quality of attendees. Frank and open discussion can be had in an environment second to none – the St. Regis Monarch Beach Resort, and trust me, by the end of three and half days (this year started off with a well-orchestrated Vitamin Angels event Tuesday evening), my head (and dreams) were awhirl with editorial topics (many too tender to print), and theories about industry’s current dilemmas and emerging opportunities. Of note was a stirring noon hour (working lunch) discussion on ingredient quality and scientific substantiation attended by almost all the ingredient suppliers present at the Summit. Participants were outspoken, frustration was evident, especially from those seeking to justify investments in a clinical research program – have we really evolved so poorly in the last few years? And on the issue of paying for quality, the ingredient community remains hugely frustrated that even in this cGMP environment, decisions on cents on the dollar at purchasing level lead repeatedly to the buying of inferior ingredients. Talk about a lethal trap…

Much of the back and front room chatter had to do with the legislative environment for supplements – now and in the near future. I find it ironic (and more than a bit sad) that some of the (large) organizations talking about how good this industry (the good news story) is in its current state may be some of the worst offenders in their buying habits. It’s well known that some organizations buy just enough of a high-grade product to dust up the bulk ingredient they buy elsewhere and so use the data and scientific claim on the higher quality material. Until there’s pain in the market, these practices will likely not change. Apparently, though, there is a light on the horizon and at least a few retailers, taking their position of gatekeeper seriously, are beginning to recognize the cost of quality, and only work with top tier manufacturers. Unfortunately, identifying these manufacturers is often a problem, especially once one gets into the broader supplement world. A further challenge is the fact that in this market, demand for new dollars is so high that companies are thinking with their marketing hats and still not adequately thinking about regulatory implications. In fact, I’ve heard word that a few companies are arguing with reputable analytical labs and that the newest ‘hot’ product is really too good to be true and has no ‘legitimate’ active in it. (coming in a future blog – say tuned.)

Congressman Waxman’s new book, The Waxman Report, makes quite clear some of the dangers and challenges facing industry on the legislative front. In fact, one chapter deals exclusively with supplements. How we deal with this challenge is under debate and you can expect to see some strategies expressed in upcoming weeks. What cannot be denied is that if you’re active in the US supplements industry, as an executive, you need to be actively engaged. Industry is likely as vulnerable as it has been since before the passage of DSHEA, and one horrible adverse incident away from a disastrous spotlight.

In closing, the Summit was a huge success, as measured in both participation as well as topics of dialogue. For many, the dialogue reaffirmed the fact that our marketplace is sound despite challenging economic times, and that consumers increasingly are looking to proactive alternatives as they manage the health of themselves and their families.

To all my friends and colleagues there, it was great to connect. To those not there, maybe next year and I hope to see you some time this fall.

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