The rapidly growing Private Label supplements category is changing, with the focus beginning to shift from the traditional low end ”me too” offerings PL always implied to high quality, innovative products. We don’t often hear from these manufacturers, as their role is typically behind the scenes, and yet they represent a significant category. Reliance Vitamins is an interesting case study in that their focus on products with branded ingredients and on product innovation is starting to impact the entire category. Additionally, Reliance is unusual in the level of their involvement in industry advocacy vis a vis the size of the company. We recently sat down with co-owner Phil Vigeant to take a look at this category in general and Reliance Vitamins in particular.
1) I know you grew up in your parents’ health food store, but how did Reliance Vitamins get started?
My parents wanted to bring a private label supplement line into their health food store. After introducing it into their store, my father started selling for that company (Kohler Vitamins) and introduced it to other retail stores in NJ and PA. He then had an opportunity to buy part of the company in 1993 and changed the name to Reliance Vitamin Co. Ten years ago my brother and I bought the company from our parents, and we own and run the company together.
2) How has the private label biz changed in the last decade? What trends do you see?
Private label business has grown dramatically in the last decade in every consumer category. All statistics indicate that this will continue. The major trend in private labeling is that many businesses are now using their private label as a premium or high quality brand versus the old image as a lower price driven product. Evidence of this can be seen in gourmet, higher end supermarkets all over the country that feature their own brand in a variety of products.
3) What hurdles and challenges do private label companies face and how do you think they compare to those of national brands? Are there myths you have to overcome?
A major hurdle that all private label companies face is maintaining efficiencies while packaging in very small quantities. From a marketing perspective, another challenge is the myth that private label products are of a lower quality than their national brand equivalent. I can’t speak about other private label companies but I know that we offer a product that is at least equal to and very often better than the national brands. The evidence of this is in the ingredients we use and the testing we perform on our products. We consistently test our products with independent labs. We provide a complete book of the results to our customers to provide the confidence they need to recommend their line of products.
4) Until recently private label has indeed been perceived as the lower priced brand in a store. What was your strategy in bucking the trend by using branded ingredients all along?
Going back to my parents having a health food store, we always felt it imperative to recommend our private label line as the #1 quality brand in the store. We never wanted it to be limited to the customer that was just looking for the lowest price. The single best way to ensure quality is to use scientifically tested and proven ingredients. Very often this includes branded ingredients, which proliferate our line of products. Using these ingredients enables our retail customers to feel proud of having their name on the label and recommending these products.
5) Regarding the passage of the AER bill, how will this affect retailers selling private label products?
The only way in which the AER bill will affect retailers is that they will have to make sure to call in all customer complaints about a product to their private label supplier. Most retailers are already doing this; they will just have to train their staff to ensure consistency with it. The manufacturer will be asking all the relevant questions to ensure any adverse events are reported correctly.
6) Is there a role for differentiation or innovation by private label companies?
There is a role for private label companies to differentiate and facilitate innovation. We do it by staying abreast of the most up to date science on ingredients and the availability of those ingredients. Then it is up to us to determine in which products or a combination of products would the consumer be best served by using these ingredients. More and more stores feature their private label as the premier lines in their store. This means that if we introduce an innovative product it will sell well, regardless of what the national brands sell or what is popular in the marketplace. We experienced this in the last few years with innovative allergy, fiber, probiotic and condition specific products.
7) What value do you find in being part of industry quality standards programs?
Being a part of industry quality standard programs has a lot of benefits. It helps, in short, to ensure value. It helps keep us abreast of the best science in the industry and helps us network with some of the most conscientious and innovative minds in the industry. It allows us to work with members from all parts of the industry including raw material suppliers, manufacturers, researchers and retailers. Each group brings a different expertise and perspective that we learn a lot from. Specifically we often learn about safety issues, new research and challenges that other companies are facing that help make all participants more aware and eventually enable us to provide a better product.
8) You are very politically active, such as attending lobby days, and contributing to Congressional champions’ campaigns. Why do you think this is important?
I think being active politically is important regardless of the industry you’re involved in. In the effort to pass DSHEA I experienced the impact of meeting one on one with members of Congress. By meeting in person with members of Congress or their aids, they can hear directly from you all the benefits the industry has to offer. Unfortunately if they don’t hear it from industry leaders, they may get their information from the media, which is often misinformation. Why do you think so few companies do it? I don’t think a lot of members of the industry realize what impact members of Congress can have on legislation that affects their industry. In some cases, people will just assume other members of the industry will take care of it for them.
9) I understand that you are a board member of the Coalition to Preserve DSHEA, which is very unusual for a medium sized company. Why?
We are a board member of the Coalition because its number one focus is lobbying members of Congress. There are many valuable places within the industry to provide support, however I feel the greatest impact is made when Congressional members hear directly from us about all the positive products and services that the industry offers. And on a larger scale the industry can positively affect healthcare in America. The investment to be a board member is very large relative to the size of our company; but we feel it is where we can have the greatest impact. Very often I hear people say that the pharmaceutical companies are our biggest enemies. I generally disagree. Our biggest enemies are a small but vigilant group of politicians that would only allow many of our products to be sold with a prescription. I believe lobbying is the most effective way to combat this group.
10) Given that education plays an important role in selling supplements, how much education of retailers do you do?
We try to have all of our sales reps focus on education more than anything else they do in the store. To a large degree the retailers are the gate keepers of industry information and can have the largest impact in informing consumers about the great benefits our industry and products have to offer. Additionally, so many of our products include the most scientifically proven ingredients in their categories and require a lot of education, particularly to demonstrate their superiority over other products in their category.
11) What could the contract manufacturing and private label companies as a group do better?
We can educate and inform our customers on the differences in ingredients and the sources of those ingredients. This is important since very often they rely on us for the development, differentiation and marketing support of their products.
12) Reliance gives a disproportionate amount of money and your time to industry issues and charity. How do you decide what to support and how much? What return do you get on that investment?
We are passionate about the industry and what it has to offer to both consumers and healthcare in general. As a member of the industry if we don’t allocate our resources and get our message out, who will? In general we try spending our resources where we think we can have a direct effect on either the industry or those that are less fortunate. It’s impossible to measure the return on investment and we don’t even look at it that way. We just know that if we’re to be successful as a company and as an industry we have to reinvest in our community, our company and our industry.
13) If you had a stage at an industry trade show, what message would you deliver, particularly to fellow executives?
Get more involved by giving time and financial resources, in supporting the lobbying and political activities that support the industry. This is more important than ever since in the 110th Congress some of our biggest Congressional opponents will have a lot of power. Specifically some of our biggest opponents will hold high ranking seats on a number of critical committees. Additionally some of our biggest supporters like senators Hatch and Harkin may be approaching the end of their careers and we need to find and support other Congressional members who can carry the torch. For example, I am not sure that most members of the industry know how close we were to losing DHEA over the last year. Without the support of a few key members we would have. We may not always be so lucky.