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Natural Foods Merchandiser

Food industry change-makers take the lead on climate

Dr. Bronner's Dr. Bronner's solar panels

In November, 13 federal agencies released an expansive scientific report that firmly pins global warming on human activity. Ten days later, 15,000 scientists from more than 184 countries issued a dire warning to humanity, saying, “we are jeopardizing our future” by not addressing humanity’s intense consumption, rapid population growth and rising greenhouse gases.

Yet the political climate isn’t changing. Perhaps now more than ever, U.S. government officials have made it clear they don’t plan to do anything to combat climate change.

And that’s why the natural products industry is stepping in to lead the way on reversing climate change, just as the industry has pioneered in other areas.

“The industry is so well poised to do that; they’ve already led on animal welfare and GMOs and fair trade,” says Erin Callahan, director of The Climate Collaborative, a project of OSC2 and SFTA founded to leverage the power of the natural products industry to reverse climate change.

Since launching in March 2017, 134 companies have made 526 commitments in the organization’s nine focus areas: agriculture, energy efficiency, renewable energy, forests, food waste, transportation, packaging, policy and short-lived climate pollutants.

The Climate Collaborative’s goal was to get 100 companies to make 300 commitments in its first year, and “we had reached that before six months had passed,” Callahan says. “The first step is getting the companies inspired to take action, and the second step is helping to connect them and providing them with tools to act and really come together as an industry.”

Natural product companies are already paving the way—and promising to do more.

Yerba mate brand Guayakí is buying Chevy Volts so its entire distribution fleet is electric, Callahan says. The Hanover Co-op store in New Hampshire earned top recognition from the Environmental Protection Agency for its work in reducing refrigerant emissions. Others are installing solar panels, improving efficiency, buying organic farmland and more. Here’s a look.

Glen’s Garden Market

Environmental attorney Danielle Vogel spent a decade on Capitol Hill trying to pass environmental policy and create a cap on emissions. That didn’t happen, but Vogel needed to keep making a difference.

“I had to find a way to continue making progress without Congress; that was the reason why I started Glen’s Garden Market,” she says. Vogel’s two D.C. stores, which opened in 2013 and 2015, are both “designed in every way to be a climate change agent,” she says.

The stores are 100 percent solar-powered. They don’t offer paper or plastic bags; only reusable ones. The kitchens operate under a no-waste mandate, “so today’s floppy kale is tomorrow’s vegan pesto,” she says.

Nearly every item they sell is sourced from the Chesapeake Bay watershed, which includes six states and the District. Glen’s also partners only with vendors “who share our values and treat their land, their animals, their ingredients with respect,” Vogel says.

But Vogel takes it a few steps further. She helps launch brands she believes in by investing in new companies, giving them shelf space and prime slotting, doing in-store promotions, providing social media support, and helping with contract review, strategic decision making and even hiring. “We’re talking about people who probably quit a day job to pursue a dream,” Vogel says.

In less than five years, Glen’s has helped to launch 74 local food businesses, including Misfit Juicery, which makes juices using only misshapen or “ugly” produce that would have been thrown away. Glen’s gave the company—started by two college students in 2015—shelf placement, invested in its first round of fundraising, advised on package redesign and hosted the founders for the stores’ first “Launched at Glen’s” pop-up program.

“We’re an incubator and an accelerator and a community center,” Vogel says.

Her advice for other companies? “It doesn’t need to be 100 percent of your operating mission, but really, every little bit counts,” she says. “At Glen’s, we call it making progress one bite at a time.”


GrandyOats was bursting at the seams of the romantic, old dairy barn in rural western Maine where the granola company had been doing business for 14 years. Co-founders Nat Peirce and Aaron Anker knew they needed to move.

They wanted to stay in the area for their workers and for the local economy, but they also “didn’t want to steamroll a bunch of trees to build a new facility,” says Anker, GrandyOats’ chief granola officer.

In 2015, when they found an abandoned elementary school that came with 8.5 acres, “the ideas just started to hatch,” Anker says. They could repurpose and revitalize an existing building and use the former ball fields for solar panels. With solar, they could make the entire site electric: electric ovens, electric forklifts, electric heating and cooling.

“We said ‘Let’s make this building all electric and remove all fossil fuels from the premises,’” Anker says.

But financing was an issue. There are plenty of options for $25,000 residential solar systems but not for a 288-panel, $285,000 solar array. Anker got the local bank and the solar contractor, ReVision Energy, in the same room.

ReVision agreed to collateralize the panels—saying they would take them back if GrandyOats could no longer pay for them—which allowed the bank to finance the system.

In the two years since the array was installed, “I’ve had countless conversations with other business owners, both in our industry and others, about how they can do it,” Anker says. And that’s key to how the natural products industry is making strides where the government isn’t: by working together, he says. The industry has a collegial, open atmosphere that’s conducive to sharing best practices, so they can all do better. 

“It’s not just one individual or one business that’s going to improve and change this world,” he says. “It’s by setting examples for each other, and the leaders teaching other companies how to lead.”

Turnip Truck

John Dyke grew up on a working family farm in Greenville, Tennessee, so he has a special place in his heart for both fresh produce and independent farmers—and he committed to both when he opened the first Turnip Truck store in East Nashville in 2001.

He opened a second location in 2010 and then built a new flagship store in 2015. “East 2.0” was constructed on an old parking lot just down the street from the original location, expanding it from 3,500 square feet to 18,500 with dining, a bakery department, a full-service meat counter and more.

The building was designed with sustainable standards in mind, from permeable pavers on the grounds to beehives on the roof. The addition of a full-service food bar helps reduce food waste by using not-pretty produce in food production, which also helps reduce costs, says COO Kim Totzke.

The store’s mission is to provide quality and responsibly sourced produce, and its sourcing standards include a commitment to local farmers growing organic produce.

You can’t get much more local than on site. The East 2.0 building was designed to eventually hold a greenhouse on the roof—part of future plans that also call for solar panels in the parking lot, Totzke says.

Dyke is the driving force behind the store’s standards. “He pushes us to keep learning and not to get comfortable,” she says. “It’s the constant ‘what’s next.’”

The biggest challenge for companies trying to make a difference is to stay on track, not get overwhelmed and make sure to do “the right thing at every point that you can,” Totzke says.

Dr. Bronner’s

“Treat the Earth like home” is one of Dr. Bronner’s six guiding “Cosmic Principles.” To embody that, “we primarily think about it in terms of our supply chains,” says CEO David Bronner. “We think that companies need to take responsibility not just for their main manufacturing operations, but trace the origin of materials back to the farms and farmers that are growing them and consider how that impacts the environment.”

Dr. Bronner’s has created or partnered with fair trade and organic projects all over the world to source oil, alcohol, sugar and other ingredients. But the company also does all it can in its own manufacturing operations.

In September, Dr. Bronner’s completed a solar array at its factory headquarters in Vista, California, that will generate 572,000 kilowatt hours of electricity, powering about half of the factory’s annual energy needs. The company uses only 100 percent post-consumer recycled materials for packaging, both its bottles and corrugate cardboard shipping boxes, and participates in bottle-to-bottle recycling. 

Dr. Bronner’s next big thing is working with Rodale, Patagonia and Compassion in World Farming to develop the “Regenerative Organic Certification” standard that takes organic as the baseline then implements next-level soil health criteria as well as animal welfare and fair-trade practices into a single standard, he says.

The industry is poised to lead on these initiatives, and “our top-line growth speaks to the fact that consumers are interested and looking for sustainable products that share their sustainable values,” Bronner says.

He added, “There may be some additional cost, but as long as your efforts are communicated effectively, you’ll be rewarded.”

Nature’s Path

Arran Stephens’ grandfather, who pioneered organic farming techniques on Vancouver Island, told him to “always leave the earth better than you found it.” Stephens brought that philosophy with him when he founded Nature’s Path in 1985. What started primarily with the company’s support of organic farming has grown over the years to include every aspect of the business, says Jyoti Stephens, VP of people, mission and culture. She says, quoting the late, great conservationist David Brower, “There’s no business to be done on a dead planet.”

Since 2008, the company has purchased four organic farms—three in Saskatchewan and one in Montana—totaling more than 11,000 acres. In Montana, Nature’s Path partners with Vilicus Farms to farm the land and support their organic-farmer training institute, which allows younger grain farmers to learn the trade. Nature’s Path also supports research into organic agriculture at the University of British Columbia.

All three of Nature’s Path’s production facilities have received TRUE Zero Waste certification since 2016, meaning they divert more than 90 percent of waste from each facility.

The company also started using rail to ship more of its raw supplies and final products, increasing rail from 32 percent of transport in 2013 to 52 percent in 2016.

“If you can build in the lead time, shipping by rail has much lower carbon emissions and a positive financial impact as well,” Stephens says.

Nature’s Path also offers grants to help employees buy bicycles or energy-efficient cars, and its “Green My Ride” program encourages team members to cycle, carpool or take public transit to work.

The organic industry has a particular advantage in helping to reverse climate change because “the consumer expects that of us,” she says. “Businesses have a responsibility to ensure that we’re designing our business and operations to reduce our environmental impact.”

Join us for Climate Day at Natural Products Expo West.
When: 9:30 a.m.-8 p.m. Wednesday, March 7, 2018
Where: Marriott, Marquis Ballroom South/Central
Learn more.

One Culture Foods brings healthy diversity to American plates

One Culture Foods Hansen Shieh, founder of One Culture Foods

Growing up in the San Gabriel Valley of Los Angeles, Hansen Shieh enjoyed a variety of delicious regional Asian cuisines, from those his grandmother made to what local restaurateurs offered in non-descript strip malls and other holes-in-the-wall nearby. After a short, unfulfilling and soul-sucking career in finance, the 32-year-old realized that his passion for food and the exciting times in the food industry could combine for a new career.

In 2015, Hansen started One Culture Foods with three flavors of sauté and marinades. He is adding a line of four noodle bowls—Vietnamese beef pho, Taiwanese beef noodles, Chinese chicken noodle and Japanese spicy ramen—all made with bone broth reduction. We recently caught up with him by email to learn how his background and his passion inspired his quest to share Asian cultures through natural foods.

What inspired you to become a natural foods entrepreneur?

Hansen Shieh: I have always had an affinity for big, bold, in-your-face flavors and I wanted to create something that would allow me to share some of those flavors and foods with as many people as possible. I didn’t know how lucky I was until after living in different parts of the country and realizing that most people don’t know what real Chinese or Korean or Thai or Vietnamese food really is.

What does “one culture” mean to you? How do you share that meaning through food?

HS: To me it means the inclusiveness of some universal languages—food being a major one. We hope to be a small reminder that we are all more similar than we are different. As a brand, we aren’t afraid to push the boundaries in terms of complementary flavors sometimes, but everything we do is rooted in heritage. It is inspired by a food memory or a flavor or ingredient that deserves broader appeal—Chinese fermented black bean being the prime example.

What was your first product, and what prompted you to take it to market?

HS: Black bean sauce. I’ve always loved it and couldn’t believe there wasn’t a delicious, natural black bean sauce already on the market. I obsessed over delivering something that was respectful to the hero ingredient that let it shine but also delivered on the other notes as well—sweet, acid, bitter, etc. It’s by far our best-seller.

Why did you decide to enter the natural foods market instead of conventional foods?

HS: Growing up and watching my grandma cook with whole foods, going to [University of California,] Berkeley for college and learning about Alice Waters and the Slow Food Movement, and living in New York during the peak (for now) health and wellness craze. It’s pretty incontrovertible that eating as naturally as is available is good for you. First and foremost, food needs to be delicious, period—not “pretty good considering it doesn’t have XYZ”—and if delicious food can be attained while making it less unhealthy or less harmful to the environment, then we should strive to do what we can to deliver on that.

How are your products different than conventional products in your category?

HS: Our ambition separates us: pushing the boundaries on flavors and culinary delivery, while keeping things natural and convenient. We never bring to market something that someone else is already doing unless we feel like we can push the envelope and provide value to the consumer.

What was the first store to sell your product? How did you get that store to carry your brand?

HS: It was a tiny corner store in Brooklyn called Bed-Stuy Fresh and Local, run by this dude named Dylan. It was my first stop of my very first sales run. I knew the sauces delivered, so my whole approach was don’t [mess] it up and get them to at least try it. Once they try them, the pitch becomes much easier.

When did you begin selling online? How do your e-commerce sales compare to your brick-and-mortar sales?

HS: We set up an Amazon store and online store on our website early. As a millennial consumer, I knew that retail was moving online and that it would be a matter of time for grocery to follow suit. Online sales are still a small percentage of wholesale sales, but it allows us to have a direct relationship with our customers and get our products to people in parts of the country where we don’t have wholesale distribution yet.

What prompted your new design and packaging?

HS: The branding evolution of One Culture is a tangible manifestation of my personal evolution of what I want One Culture to be and say. We are young, bold and ambitious while, at the same time, drawing inspiration and having the ultimate respect for heritage and tradition. I think the current branding helps us say that.

You recently introduced bone broth noodle cups. What’s next for One Culture Foods?

HS: We have a lot of ideas in the pipeline, but we need to establish ourselves with what we have now. The early success of the sauces helped us establish the ground game and has allowed us to gain the pulse of the industry and spot an opportunity with the noodle cups. We are extremely bullish on the noodle cup line’s potential to make big gains and take us to the next level.

What trends do you see coming in your category?

HS: We’ll continue to see all categories move up the convenience spectrum. You’ll continue to see the adoption and embrace of unique, “exotic” flavors and foods. The rest of the world is a treasure trove of amazing food, techniques and ideas and creative food entrepreneurs will continue to find ways to deliver them in ways that fit American consumers’ preferences and lifestyles.

Sonoma Brands closes $60 million fund

Sonoma Brands logo

Sonoma Brands announces today the closing of its second fund, a $60 million fund aimed at continuing the company's strategy of investing in game-changing, high-growth consumer brands as well as incubating new concepts. With the closing of the new fund, the firm will shift its focus from incubation to outside minority deals, seeking to partner with visionary and imaginative entrepreneurs to usher in a new wave of bold, breakthrough products and to establish the Sonoma region as a focal point for CPG entrepreneurship. Sonoma Brands’ proven success in brand building is further cemented as the company announces today that its incubated brand, Smashmallow, is now an independent company and has welcomed industry veteran David Lacy as CEO.

Jon Sebastiani, founder and creative force behind the acclaimed artisanal jerky brand Krave, launched Sonoma Brands in 2016 as his next endeavor following the successful acquisition of Krave by The Hershey Co. In the first fund, Sonoma Brands made an outside minority investment in Dang Foods, maker of the leading all-natural coconut chips, and was instrumental in the company's rebranding and expanded distribution. Sonoma Brands also skillfully brought to market Smashmallow premium snackable marshmallows and Züpa Noma ready-to-sip chilled superfood soups under the company's incubator arm. Utilizing the team's vast expertise in the CPG space to create, develop and design products that deeply resonate with consumers, Sonoma Brands offers entrepreneurs a seasoned team of brand builders, along with capital, to advise emerging brands that are ready to disrupt stale categories with creativity and originality.

Utilizing the capital of Sonoma Brands' second fund, in partnership with VMG Partners, Smashmallow has closed a $10 million funding round, allowing the company to continue its growth trajectory as an independent entity. Along with this fundraising announcement, David Lacy also joins Smashmallow as CEO, effective January 2018. Lacy joins Smashmallow with rich experience within the food industry, including previous positions as vice president of finance at Plum Inc., chief financial officer at Krave Pure Foods, and most recently as chief financial officer at Habit Inc. Lacy and the growing Smashmallow team are prepped to continue the fast-growing success of the brand, including nationwide distribution in all Target stores, beginning February 2018.

“The founding of Sonoma Brands stemmed from my passion for this region that yields vast culinary expertise. Our first fund served as a proof of concept for our team's strategy and entrepreneurial background that differentiates us as investors and brand builders,” said Jon Sebastiani, CEO and founder of Sonoma Brands. “With our first fund, we saw incredible, fast-moving growth from our portfolio brands, such as Smashmallow, which has taken the marshmallow far beyond the traditional jet-puffed marshmallow with its overall snackability, simple ingredients and fun flavors. We are thrilled to have such a strong and talented team, led by David's expertise, to steer Smashmallow into the company's next chapter and continued, limitless growth. Our aim with Sonoma Brands' second fund is to continue this momentum to work hand-in-hand with truly groundbreaking brands that will excite consumers and fill gaps within the market.”

“We’re thrilled to continue to support longtime friends to VMG in Jon Sebastiani and his team at Sonoma Brands through our direct investment into Smashmallow to support its rapid growth in an effort to disrupt the confectionary snacking category,” said Wayne Wu, managing director, VMG Partners.

Source: Sonoma Brands

[email protected]: The good and bad (and ugly) of switching to natural ingredients | Hain's sale struggles?

Thinkstock natural colored cereals

Switching to healthy ingredients is riskier for brands than you might think

Dunkin Donuts is the latest large food chain to kick artificial dyes to the curb. While the company calls the move a “milestone,” removing artificial ingredients puts Dunkin—and other big companies that change their formulations to appease consumers seeking cleaner ingredient labels—at risk. While the payoff might be more loyalty from that set of consumers, the risk is potentially high conversion costs, complex sourcing issues and the potential of alienating some loyal customers. “It’s really difficult to find the ingredients that are substitutes for these artificial colors that look the same and taste the same—and cost the same,” says Jenny Zegler, global food and drink analyst at Mintel. Papa Johns, for example, said it spent $100 million to get artificial ingredients out of its products. And General Mills found that many consumers complained about reformulated Trix when the company removed artificial colors from its cereals in 2015. It brought back the classic Trix version last year.  Read more at AdWeek…


A sale or breakup of Hain has always been hard. Here’s why it may finally happen this year

Hain Celestial’s broad portfolio, which includes everything from tea to meat to personal care products, has long been a challenge to its potential sale, analysts say, although certain divisions could make sense for certain large CPG companies. Last week, a New York Post report called the nature of the company's sale prospects “grim.” CEO Irwin Simon told The Post: “This year we are looking at a strategic overview of all of our business, and some things may not fit. Read more at CNBC…


Whole Foods places new limits on suppliers, upsetting some small vendors

Some small vendors are already feeling the effects of Amazon’s acquisition of Whole Foods Market. In one instance, an entrepreneur says she’s allowed less space on the shelf compared to a few years ago, and a sign with her photo and the words “Made Locally” have been removed from her local store. Whole Foods is reportedly also requiring vendors to work with Daymon, a retail strategy firm, on all in-store demos, inventory and displays. According to The Washington Post, the retailer is requiring suppliers that sell more than $300,000 of goods per year to discount their products to fund this new program, and requiring them to pay the consultancy for demos. Read more at The Washington Post…


From Coca-Cola to fish oil, meet the female CEO changing the supplement industry

Melanie Lawson pivoted from a career in advertising to start Bare Biology, a UK-based fish oil company that she says markets fresh, concentrated fish oil products. Its signature Lion Heart liquid contains 3,000 mg of EPA and DHA per teaspoon. Read more at Forbes…


France was the first country to ban supermarkets from throwing away unused food—and the world is taking notice

In 2016, France enacted a law prohibiting supermarkets of a certain size from wasting food. Instead, they must donate it or face a fine. The country also introduced policies to require schools to teach food sustainability and to require companies to report their food waste data. These steps contributed to its top ranking in the 2017 Food Sustainability Index. Read more at Business Insider… 

What food shoppers want in 2018

food trends for 2018

Label Insight, a product transparency company, released the results from a national consumer survey of 1,023 Americans conducted by Wakefield Research on eating habits in 2018. The survey found that most (67 percent) Americans will be prioritizing healthy or socially conscious food purchases in 2018. Their primary point of emphasis is cutting back on sugars, with nearly half of consumers (47 percent) planning to eat less sugar or buy more "no sugar added" products this year.

The next most prominent purchase factors are: emphasizing natural ingredient purchases, such as those with "no artificial colors or flavors" (37 percent) and shopping for more sustainable products and ingredients (22 percent).

While everyone is eager to get a better line of sight into the food they eat, millennials and Baby Boomers are in two different aisles when it comes to what they most want from brands and retailers in 2018. Baby Boomers (33 percent) are more than twice as likely as millennials (15 percent) to prioritize wanting product labels that provided information they can better understand as the top priority, while millennials (17 percent) are nearly twice as likely as Baby Boomers (9 percent) to point to more organic food and product options as the most important change brands and retailers could make.

This online survey of 1,023 nationally representative U.S. adults, ages 18+, was conducted by Wakefield Research in December 2017. Here are four big things changing the way consumers shop for food.

Shaking the sugar habit

Baby Boomers and women are by far the most likely to simmer down the sweetness, with 53 percent of Boomers planning to cut down on sugary foods compared to only 40 percent of millennials. More than half (52 percent) of women will be looking to reduce their sugar intake, while only 41 percent of men feel the same.

Shopping sustainably

When it comes to shopping with a social consciousness in 2018, men are particularly keen on knowing that the food they chose is sustainable, with 26 percent spotlighting sustainability in their food choices compared to only 19 percent of women. Millennials are also emphasizing sustainability more than older generations, 26 percent compared to 17 percent of Gen Xers.

Deciding diets

For many Americans, maintaining healthy or socially conscious eating habits will mean choosing a gluten-free, vegan, ketogenic or Paleo diet to serve as a guide, but these methods are not equally appreciated among the generations. In fact, 1 in 5 (20 percent) millennials report they are likely to follow one of these diets in 2018, while only slightly more than 1 in 10 (11 percent) of Baby Boomers expect to do likewise. While Baby Boomers lead the pack when it comes to cutting out sugar, they may be less eager to follow the stricter rules of these popular diets.

Seeking label transparency

To help them better understand what's in the products they use and consume, Americans want better-defined and more transparent food labels. Indeed, the primary change consumers want to see from food brands and retailers is product labels that provide information they can better understand in 2018 (25 percent). The next most pressing need is greater transparency into ingredients (14 percent) and easier-to-identify "clean" or minimally processed products (14 percent).

"It is no surprise that the majority of consumers are asking brands and retailers to provide more insight and clarity about their products," said Patrick Moorhead, chief marketing officer at Label Insight. "With so many Americans seeking healthy and socially-conscious food, knowing what is in it and how it is processed is a more important selling point now than ever. The fact is brands and retailers who want to retain or gain market share will need to comply with these consumer demands or risk being left behind."

Source: Label Insight

[email protected]: Demand for eggs sends prices up | Snack CEO's secret to success: humbleness

Thinkstock/ThitareeSarmkasat egg prices rise

You’ll be shelling out more money for eggs in 2018

Although prices for beef, pork, lamb, chicken and turkey are expected to drop in 2018, egg prices are likely to jump more than 35 percent, according to the U.S. Department of Agriculture, as domestic and international demand rises. Per capita egg consumption in the U.S. is at its highest in nearly four decades (274!) and is expected to keep climbing. Read more at NPR…


Snack maker’s motto? ‘Never believe your own hype’

Nicole Bernard Dawes, the CEO of Late July Snacks, helped out in her mother’s natural food store in the 1970s and later became director of marketing at Cape Cod Potato Chips. In the early 2000s, her pregnancy cravings gave her the idea to start an organic snack company. Today, the Late July snacks are sold in 50,000 stores and bring in $100 million a year. Dawes says one of the keys to her success has been not getting to carried away it. “When you start to become successful, don’t get caught up in it,” she says. “The more comfortable you become, the more you may let things slide and a younger, hungrier competitor will recognize this.” Read more at BizWomen…


Women in business Q&A: Bethany McDaniel, founder, Primally Pure

Her family’s journey to starting and operating an organic livestock farm inspired Bethany McDaniel to start using personal care products with real, natural ingredients. Before long, she began selling them on the farm’s website and eventually formed a company of her own. Her advice for other natural beauty entrepreneurs? “You have to really want to help people and disrupt the current status quo in order to succeed," she says. "It’s incredibly difficult to source and work with natural ingredients. If your heart is in the right place and you believe in your mission, success is possible, but the path is anything but easy.” Read more at Huffington Post…


How to fix the American diet, according to the man who coined the term ‘junk food’

Michael Jacobson retired from the Center for Science in the Public Interest in September, but his legacy continues. Throughout his career, he helped get trans fat banned, nutrition label standardized and dangerous ingredients exposed. What does he think needs to be done next in the way of nutrition policy? Getting sodium and sugar consumption down and banning junk food advertising. Read more at The Washington Post…


Going Publix

The beloved grocery chain did $34.1 billion in sales in 2016. But it's not so worried about competition. “The best thing about competition is that at the end of the day, the customer is going to win, because it forces everyone to be on their best game,” says spokesman Brian West. This year, it’s expanding its partnership with health care firm Baycare to put self-serve kiosks in stores. Read more at Business Observer… 

The Analyst's Take: Supplements sales in China

Claire Morton

As Chinese consumers become increasingly focused on health, supplements sales growth is outpacing GDP growth in the country. The Chinese supplements industry reached $17.2 billion in 2016, with 9.3 percent annual growth, as compared to global supplements sales growth of 5.7 percent. The strongest growth comes from e-commerce in China, though direct selling through MLM/network marketing remains a driver of growth.

The strongest growth in China is in sports, meal, homeopathic and specialty supplements (compared to slower growth in vitamins, minerals, herbs and botanicals) largely driven by increasing consumer demand for quality sports nutrition products. Multiple supplements companies in China, including By-Health, launched products in the sports nutrition category in 2015 to 2017. Vitamins and minerals remains strong, driven by interest in prenatal and children’s supplements as Chinese parents prioritize child health. This focus on children’s supplements has also spilled over into condition-specific supplements in areas such as cognitive health and immunity.

See more in NBJ's 2017 Global Supplement Business Report



Innovating on sustainability and whole foods in omegas

Thinkstock Cod fishing

By the looks of it, the khaki-colored paste emerging from the extruder could be salted caramel ice cream. In fact, the substance is frozen cod livers, augur pulverized as the first step in oil extraction. This new Alaskan facility is the first cod liver oil operation in North America—surprising, as millions of tons of cod have come through this port and others each year for decades, with a substantial volume of livers discarded.

“I saw a fantastic opportunity in Dutch Harbor,” says Jeffrey Bland, Ph.D., a founding partner in Bering Select, who stumbled on the opportunity upon meeting an owner of Clipper Seafoods, the largest Bering Sea cod processor, at a cocktail party.

The opportunity Bland saw was to make a minimally processed, whole-food cod liver oil from the clean MSC-certified waters of the Bering Sea. At first glance, the oil is old school: pure and simple, significantly differentiated from the highly processed fish oils dominating the market. But it’s more than that. By introducing immediate on-vessel freezing to ensure freshness and to stabilize the metabolic dynamism of the livers, the resulting oil comprises a full spectrum of nutrients not yet seen in a cod liver oil—not presently and not over the centuries the oil has been harvested, largely in Norway, for its nutritive value.

The market-dominating concentrated oils certainly have their benefits. They are winterized, saponified and distilled, initially to eliminate toxins in the oil but also to boost concentrations of EPA and DHA. The oils are also deodorized, resulting in a nearly flavorless product. The marketability of these oils speaks for itself.

But Bland and his new partner, Clipper, saw a different path to market. The downside of the heavy processing, he says, is that it removes a great deal of other compounds. Vitamins A and D, for instance, are virtually eliminated, with synthetics typically added back into the oil later. Bering’s processing compromises the oil very little, presenting a whole and nutrient-balanced oil. (As they approach market readiness, they’ve included two other partners in the enterprise: local native organization Siu Alaska Corporation and international oil supplier Marine Ingredients, which will be handling the distribution of the oil.)

Such distinguishing qualities are key drivers of innovation in today’s omega market, says Adam Ismail, executive director of GOED, the Global Organization for EPA and DHA Omega-3s. Ismail lists notable innovations in the category, such as oils with high lipid mediator content for their role in mediating inflammation, krill’s move toward high phospholipid concentrates (and fish oils following this lead), extreme concentrates, algal oils and other back-to-basics fresh oils like Biocare’s Norwegian farmed salmon oil.

“On the fish oil side there’s a lot going on with companies trying to differentiate,” says Ismail. “I would include the Dutch Harbor project in that.”

A new oil

In the Dutch Harbor facility, Bering Select’s oil plant manager Todd McMelon describes the processing. Packs of livers come off of the boat at 5 degrees below zero and are immediately run through the “ice cream” phase. Then it is pumped through double wall piping into contherm cookers. “Then we put it into a tricanter, basically solids come out one end, oil and water out the other end,” McMelon says. Next, a vertical centrifuge separates the oil and water, and a vacuum drier gasifies any remaining water. Only the pure oil remains. 

“We have an oil that has never been seen before,” says Bland, “because of the nature of our processing method and the way these fish are caught and processed on board and the fact that they’re taken from these Alaskan waters that have not been subjected to intensive pollution.” The result is not just a cod liver oil, Bland says, "this is a new composition of matter.” The company has named the ingredient NutraSolv3, the “3” representing the primary trio of components in the oil: omega-3s, unadulterated levels of naturally occurring vitamins A and D, and specialized pro-resolving mediators (SPMs), which Bland describes as “substances that orchestrate the immune system.” The latter element, he says, “was a very exciting discovery and, in fact, what we found was that the levels of these found in the oils were comparable to that which you find in mother’s breast milk.”

Pre-clinical trials in recent years have demonstrated that SPMs (albeit, often utilizing stabilized synthetic SPMs) play a role in the resolution of pathological inflammatory responses. The presence of naturally occurring SPMs in synergistic “orchestration” with other nutrients is particularly exciting to Bland. “Livers of fish, like livers of humans, are partly an immune organ as well as a metabolic organ,” he says. “The liver has a lot of immune function [and] is actually involved in protecting the animal against infection and injury and inflammation through its immune system.” Furthermore, he continues, “when we look at the SPM levels in our oil from Alaskan fish, we recognize it’s probably not remarkable that our levels of SPMs are really quite high.”

Here Bland gets philosophical about the nature of natural. “Nature produces things not just at random but in a design sometimes that we don’t really understand,” he says. “And that differentiates from just taking out one or two principals out of a natural mixture and saying, ‘we’ve got the right stuff!’” For Bering’s product, that means vitamin A and vitamin D working with the SPMs to regulate the expression of specific genes associated with modulation of the inflammatory process. “We now know that these nutrients that are found within a complex natural mixture, biologically do, in fact, participate together as a team to regulate our metabolic function. Without a full team you don’t have full benefit.” The natural foods industry story that there’s something uniquely important about preserving the complexity of nature, he says, “is really true when we get down to understanding biological mechanisms and how the body works and responds to complexity in our diet.”

No discussion of sea sourcing—or perhaps any sourcing—can avoid the topic of sustainability. Bering Select feels good about their sourcing. Not only are they harvesting a previously discarded byproduct, but it’s a byproduct from one of the better managed fisheries in the world. The Bering Select oil is MSC certified, and harvested according to strict rationalized fishery quotas established by NOAA Fisheries. Further, Clipper Seafoods lands their catch by line, not trawler. About bottom trawlers, Clipper’s VP of Operations Joel Watson says, “What they do is they need to spread the opening of that net out. This gear is hard on the bottom, it’s rolling over the bottom. Say, if there is coral or any other type of fish down there, they just roll over it. It’s like a scoop shovel.” While very efficient at catching fish, he continues, “I think they can be very devastating.”

Omegas of the desert

Another sustainable view of omega manufacture can be found in a landlocked locale some 3,200 miles southeast of Dutch Harbor. The dry desert terrain around Columbus, New Mexico, is a stark contrast to the verdant mountainous volcanic Aleutian Islands. It’s a flat desert landscape and, notably for the omega-3 business, lacking in ocean or, frankly, water. Here and in Imperial, Texas, Qualitas Health operates giant algae ponds originally developed for biofuels by Sapphire Energy. Qualitas pivoted the 900-acre farm (110 acres of which are currently in production) from biofuels to nutrition.

CEO Miguel Calatayud says the project is about feeding a growing population. “We are going from 7.5 billion people now to 10 billion people in 2050,” he says. “Everybody knows that, but what people don’t realize is that in order to keep the same level of nutrition, we need to produce about 70 percent more nutrients and protein. And the seas are hurting, there’s not enough arable land, there’s not enough water. What are we going to do?” Calatayud believes Qualitas has a solution.

The Nannochloropsis algae they bloom at Qualitas is “nothing extremely fancy,” says Calatayud. But their processing of it produces remarkable results—including protein production that is approximately 300 times more productive than peas, 85 times more productive than beef, 10 times more productive than soy and has an “extremely balanced amino acid chain [that is] the closest to meat I’ve ever seen in a vegetarian source of protein.”

Moreover, by operating in the desert, without a need for fresh water, the operation doesn’t compete for traditional agricultural resources. “We use non-arable land, we use brackish water, we use sunlight as the main source of energy for our production. We are 100 percent sustainable, and this is why we can really transform farming, food and nutrition.”

Bringing it back to omegas, Calatayud talks about their ingredient AlmegaPL and their consumer brand, iwi (reaching consumers nationally through Vitamin Shoppe), boasting the highest bioavailability on the market. He presents it as simple food chain mathematics. “The reason krill has higher bioavailability than fish is because krill is closer to the source,” he says. “We are the source.”

Theirs is an EPA-only oil with naturally occurring phospholipids and glycolipids that increase absorption. Furthermore, says Calatayud, they can hit a competitive price. “We are able to go to the market with a comparable market price in omega-3,” he says.

This has not been the case, historically, says GOED’s Ismail. Algae is more expensive to produce. “The main value of fish is protein,” he explains. The oil is essentially a byproduct. “It makes it very cheap to make oil products.”

Where is all of this going?

“A lot of companies are shifting their focus to Asia because that’s where a lot of growth is,” Ismail says, transitioning into a market view. While growth has slowed in the United States and Europe, he says, “Asia’s getting to the point where it’s large enough that it’s really interesting for companies.” There’s a downside: “It means companies are turning away from the larger established markets.” Even that has a flipside, however. Some of the innovation, Ismail observes, is being driven by the stagnation. “That’s good, but we’d like the growth to come back.”

The global market’s probably going to grow 4 to 5 percent in the next few years, Ismail estimates. Asia will continue to see strong growth, but North America is difficult to predict, he says. “But,” he says, “there are some things on the horizon that could reinvigorate the market.” He lists four large clinical trials currently working on the hypothesis that fish oil supplementation may reduce cardiovascular risks.

The VITAL study, performed by Brigham and Women’s Hospital, an affiliate of Harvard Medical School, compares vitamin D3 with omega-3s for their ability to reduce the risk of cancer, heart disease and stroke. Amarin’s REDUCE-IT study and AstraZeneca’s STRENGTH study both look at omega-3s' ability to boost the effectiveness of statins, and the ASCEND study, a collaboration between the British Heart Foundation, Bayer and Abbott Products, compares fish oil with aspirin in reducing cardiovascular events in patients with diabetes.

As these studies publish the anticipated positive results, there is likely to be a spike in interest in both pharmaceutical fish oil, and the variety of innovations seen in omega supplements.

Finding innovative, sustainable solutions might benefit more than the omega market. If better health is the goal of the category’s producers, and the health of the planet is part of the equation, innovation could be more important than ever.

Lactalis to acquire Siggi's yogurt brand

Siggis logo

Lactalis has agreed to acquire Siggi's—the U.S.-based maker of Icelandic style skyr yogurts with "simple ingredients, not a lot of sugar"—for an undisclosed price. 

Siggi's was founded by Siggi Hilmarsson who, after moving to the U.S. from his native Iceland, began making yogurt in his kitchen in response to American yogurt, which he found too sweet and full of extra ingredients. The recipe was based on skyr, the Icelandic style yogurt Siggi grew up eating in his native Iceland. With seed investment from his former professor, Siggi started selling his yogurt at an outdoor market in downtown Manhattan in 2006.  It is now the fastest growing yogurt in conventional grocery. Siggi's is a top five selling yogurt brand in many mainstream grocery chains including Stop & Shop, Meijer and Publix and recently became the No. 1 selling yogurt brand overall in Whole Foods.

Siggi's will continue operating out of its New York City office and will remain a standalone company under its current senior leadership team, which includes its founder as CEO, and Bart Adlam as president.

"We're excited to join the Lactalis family which offers the opportunity to further fuel our growth," said Siggi Hilmarsson. "Our core values of clean ingredient label and less sugar will remain 100 percent unchanged. Consumers everywhere are actively trying to reduce sugar in their diets so our offering has a global relevance."

Bart Adlam added, "Siggi's topline grew 50 percent in 2017 and we expect to match this in 2018 as we launch further innovations. We are excited to keep the momentum going with support from the largest dairy player in the world."

"We are delighted to welcome Siggi's to the Lactalis Group, which further expands our yogurt platform in the U.S. with this unique and fast-growing yogurt brand. We look forward to supporting Siggi's as it continues to bring its retail partners exceptional dollar growth in the yogurt category," said Emmanuel Besnier, president of the Lactalis Group.

J.P. Morgan Securities LLC acted as exclusive financial adviser and The Giannuzzi Group acted as legal counsel to Siggi's, and Dentons US LLP acted as legal counsel to the Lactalis Group, on the sale. The acquisition is subject to expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act in the United States.

Lactalis was founded in France over 80 years ago by André Besnier. The Lactalis family group is the world's largest dairy company, employing more than 75,000 people in 85 countries worldwide.  The group's include Président, Galbani, Parmalat, Stonyfield Farm, Bridel, Rachel's Organic and Skånemejerier.

Source: siggis