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Archive of the Ingredient Supply Category

Cognis Q1 Sales Volume Down 18% as Customers Destock Inventory

Cognis, one of the largest raw material and ingredient supply companies serving the nutrition industry, saw its sales volume decline 18% during the first quarter of 2009 compared to the same period last year, as falling consumer demand and a subsequent customer destocking effect negatively impacted company performance, Cognis reported May 27. When excluding the impact of foreign currency and company acquisitions, net sales were down 13.9% for the quarter on a year-over-year basis.

The company’s three main divisions all turned in poor results for the quarter, with the largest decline coming from the functional products division, which was down 16.9% and which services a number of industries, including the automotive, housing and engineering sectors. The company’s nutrition & health division saw its sales decrease 8.3% to 84 million euros for the quarter, as poor consumer demand contributed to weaker sales. The care chemicals division reported a sales decline of 13.8% to 370 million euros.

As rough as the first quarter was for Cognis, total sales volume for the quarter increased 5% over the fourth quarter of 2008—a period which may prove to be the trough in the consumer spending recession. The nutrition & health division was up 4% compared to Q4 of 2008. “We are starting to see a few positive signs, with the rate of volume decline slowing appreciably in March,” Cognis CEO Antonio Trius said in a prepared statement. “Our goal is to further strengthen the leading position we enjoy in growth markets driven by the wellness and sustainability trends.” Trius said Cognis remains cautiously optimistic that performance will improve in 2009. “We expect our cost-saving measures to counteract lower sales. Most of the initiatives will materialize from April onwards,” he said. “Together with our efforts on optimizing our costs, we will also stay focused on maintaining our healthy cash position.” The company also expressed hope that its strategy of investing in global wellness and sustainability trends will help the company better withstand the recession.

Cognis recorded sales of about 3 billion euros in 2008. The company is owned by private equity funds advised by Permira, GS Capital Partners and SV Life Sciences. Cognis appears to be well positioned for success within the nutrition industry as the company has made a number of strategic acquisitions in recent years, including the purchase of WILD Flavors Inc. and InterMed Discovery GmbH. However, only about 10%-15% of Cognis’s total business is devoted to the nutrition & health division, thus, the company is reliant on other sectors to improve total business performance. NBJ expects the nutrition & health division to turn in progressively more favorable results as the year progresses and the company’s cost savings measures have had a chance to take hold.


Related Links:

Cognis Achieves NSF International GMP Registration for Natural Vitamin E, Phytosterols and CLA – Complies with New FDA Regulations

Cognis Nutrition & Health Increases North America Prices

2007 Proved Lucrative for Ingredient Suppliers. Will 2008 and 2009 Offer More of the Same?

Network Marketers Increase Recruiting Efforts to Offset Slowing Sales

Network-marketing companies doing business in the nutrition industry have seen an increase in the recruitment of new distributors, though many of the top companies are reporting downward sales trends for 2008 and the first part of 2009. Companies have capitalized on people looking for new ways to save money or supplement their income in a down economy, but the distributor increases have not translated to higher sales numbers.

Herbalife, one of the largest network-marketing companies in the industry, reported a net sales decrease of 13.7% for the first quarter of 2009, citing unfavorable impact of currency fluctuations. Nu Skin would have posted a 4% revenue gain for the first quarter, but when factoring in foreign currency fluctuations, the company reported a 1% decline. USANA Health Sciences was no different, reporting a 4% decline in revenues for the first quarter and pointing to a strong U.S. dollar that negatively impacted the business. Scott Van Winkle, managing director of equity research with Canaccord Adams, noted that a large exposure to international markets has been particularly challenging for network marketers in the nutrition industry. “They have simply been walloped by the strength in the U.S. dollar. That has impaired earnings and sales right across the group. That’s been one of the most significant themes in the direct selling industry,” he told NBJ.

As companies work to offset the negative impact of currency fluctuations, many have rolled out new promotional programs to attract more distributors in an attempt to increase sales. Mannatech unveiled a program called the Economic Stimulus Plan (ESP) in February 2009, which created a compensation plan that allowed for a shortened selling curve and entry into the business without the accumulation of excess product. The company’s distributor base of approximately 530,000 increased as a result, according to CEO Wayne Badovinus.

Even after network-marketing companies bring in more distributors, it can often take between three and four months before they have any noticeable impact on the business. Dr. Tim Wood, vice president of research and development for USANA Health Sciences, noted the difficulty of trying to turn more distributors into more sales. “While our base of customers is growing, there is pressure to purchase fewer products every month. It’s a wallet-share deal. People feel the pinch and are going to spend a little less on supplements,” he explained.

Van Winkle told NBJ that the big dilemma network marketers are dealing with in this recession is: “Are there enough new distributors to offset lower sales per existing distributor?” Right now, the answer appears to be no. However, the outlook for direct selling may be more favorable than some retail environments. “The fact that there are more distributors is a counterbalancing effect, so the good news is that [the direct selling industry] is not counter cyclical, but it is less cyclical than other segments, assuming you’re selling the right products,” said Van Winkle. As it stands now, the decline in consumer spending has outpaced the ability of network-marketing companies to offset those declines with production from new distributors. However, nearly all network marketers are seeing an increase in interest from potential distributors, so it will be interesting to see if the influx of new sellers has a measurable effect on the sales growth of the major network-marketing companies in Q2 and Q3.

NBJ’s May issue, Direct Selling in the Nutrition Industry IX, will feature a complete breakdown of the MLM market in 2008, including supplement sales estimates and a feature story on raw material and ingredient supply to network marketers. The issue will also include market quantification and detailed analysis of all 2008 U.S. direct-to-consumer sales in the nutrition industry.


Related Links:

Herbalife Experiencing Stellar Sales Despite Slumping Economy

Mannatech Cuts U.S. Workforce by 15%

Stronger Dollar Weakens USANA’s Fourth-Quarter Sales

Special Registration Discount Code to Nutracon Now Available

For a limited time, NBJ has access to a special Nutracon 2009 registration discount code. If you are interested using this code and receiving $200 off a 2-day registration or $100 off a 1-day registration to Nutracon, email me at prea@nutritionbusiness.com.


Nutracon is the premier event for ingredient and technology innovation in the health and nutrition industry that occurs in conjunction with Natural Products Expo West. The conference goal is to help companies develop new science-supported products in the supplements, functional foods and beverages, and nutricosmetics sectors.


If you’re looking for invaluable insight on current, impactful, science and business information on selected themes, then you should attend Nutracon. As an attendee you’ll get a sense of the practical and operational opportunities – as well as the challenges – in your growing business.


In addition, NBJ will be presenting a special State of the Industry presentation at Nutracon on Wednesday. Presenters that will join me will include Carlotta Mast, NBJ’s Editor and Bob Burke of Natural Products Consulting.


I hope to see you there!

-Patrick

What to expect from the nutrition industry’s ingredient supply segment in 2009?

2008 was a year of bad debt and tighter access to capital and credit for nutrition industry suppliers. Firms were still dealing with the blows that rising fuel prices and currency fluctuations delivered in 2007 and the first half of 2008 which left many supply companies uncertain of how the economic downturn would affect the U.S. nutrition industry and what would be in store for 2009.


On January 14th, 2009 NBJ’s Carlotta Mast and Thomas Aarts will join me to present a strategic analysis and review of the U.S. nutritional raw material & ingredient supply industry. You are invited to register for this online seminar that will begin at 11am MT.


For $495, each registered company will be allowed up to six participant access points to the live online seminar.


During the seminar, we will present new NBJ market figures and discuss the following topics:


• Snapshot of 2008 business issues, preview of 2009

• Review of over the counter (OTC) & Supp Combo Products and their regulatory potential

• A category overview of pricing and supply trends for vitamins, minerals, herbs & botanicals and specialty ingredients including fish oil, probiotics, whey protein and COQ-10

• Major factors affecting growth in supplement and functional food supply markets

• New steps vitamin manufactures and suppliers need to undertake to maintain market credibility

• Discussion of how the economy is impacting the ingredient supply segment of the U.S. nutrition industry


I encourage you to register here. If you have any questions, please feel free to call me at 303.998.9229


Patrick D. Rea

Publisher & Editorial Director, Nutrition Business Journal

Co-Chair, The NBJ Summit

NBJ & Supplement Industry Associations Respond to JAMA Ginkgo Biloba Study

Yesterday, The Journal of the American Medical Association published a study titled: Ginkgo biloba for Prevention of Dementia: A Randomized Controlled Trial.


NBJ received countless calls from writers, editors and publishers who are covering this story for Reuters, USA Today and the LA Times asking for clarity on a sentence published in the study which reads:


“In the United States, worldwide sales of Gbiloba exceed $249 million annually.”


Obviously, there is something very wrong with this statement…actually, there are two things wrong. First, it is unclear whether or not the authors are referring to U.S. or worldwide sales. Second, the $249 million figure for sales is incorrect.

The sentence should read: “In the United States, sales of the dietary supplement Ginkgo biloba to consumers totaled $107 million in 2007.”


And for your further reference, I’ve included responses from the American Herbal Products Association, the American Botanical Council and the Natural Products Association to the study below.


NEW JAMA STUDY ON GINKGO BILOBA AND ALZHEIMER’S “MISSES THE BOAT ENTIRELY”


Study Too Limited and Ignores Critical Risk Factors,

Says Natural Products Association


WASHINGTON, DC – A new study questioning the benefits of Ginkgo biloba on preventing dementia and Alzheimer’s disease (AD) late in life “misses the boat entirely” because the universe of people studied is too limited to make broad statements about the benefits of the popular dietary supplement, said the Natural Products Association. The study’s conclusions are also in direct contrast to other peer-reviewed studies that show benefits, and will almost certainly be questioned, the association said.


“This study is not irrelevant, but it can not be used to make broad conclusions about Ginkgo biloba and the general population. In fact, it misses the boat entirely in two critical areas. One, it looks exclusively at people almost 80 years old who are far more likely to have Alzheimer’s, while ignoring those in middle ages, where the risk for developing the disease rises quickly and prevention could best be analyzed. Two, it excludes completely any consideration of the strong and established role that family history plays with Alzheimer’s. You can’t do a study on the weather without looking at wind and rain,” said Daniel Fabricant, Ph.D., vice president for scientific and regulatory affairs at the Natural Products Association.


“This study is also in direct contrast to other research. Unfortunately, there is still no proven treatment to prevent Alzheimer’s, but reputable research has shown that Ginkgo biloba can play a constructive role in improving the symptoms related to this debilitating disease and possibly delaying its onset,” said Fabricant.


BACKGROUND:


• According to the National Institute on Aging, age is the most important known risk factor for AD. The risk of developing the disease doubles every 5 years over age 65. Several studies estimate that up to half the people older than 85 have AD. These facts are significant because of the growing number of people 65 and older. More than 34 million Americans are now 65 or older. Even more significant, the group with the highest risk of AD—those older than 85—is the fastest growing population group in the country.


• A 1997 study in the U.S. suggested that a Ginkgo extract may be of some help in treating the symptoms of AD and multi-infarct dementia, but no evidence exists that Ginkgo biloba will prevent AD.


• Research shows that risk for the disease becomes significant in middle age for most of the population, yet this study ignores that completely.


The Natural Products Association (www.naturalproductsassoc.org), founded in 1936 and headquartered in Washington, D.C., is the largest and oldest non-profit U.S. trade organization dedicated to the natural products industry. Currently, the association represents nearly 10,000 retailers, manufacturers, wholesalers and distributors of dietary supplements, food and health and beauty aids.


Ginkgo’s Benefits for Treatment of Symptoms of Cognitive Decline and Other Uses Are Supported by Scientific Research


Austin, TX (Nov 18, 2008). A vast body of research supports numerous health benefits for ginkgo extracts, particularly for treatingvarious symptoms and conditions associated with declining cognitive performance and poor circulation, says the American Botanical Council, an independent nonprofit research and education organization.

A new six-year clinical trial will be published Wednesday, November 19, in the Journal of the American Medical Association.[1] In the Ginkgo Evaluation of Memory (GEM) trial, a leading ginkgo extract was not effective in preventing the development of dementia in older adults. The ginkgo failed to reduce the overall incidence rate of dementia in a total of 3069 elderly individuals (minimum 75 years; average age 79) with normal cognition or those with mild cognitive impairment (MCI).


Researchers used the world’s most tested ginkgo extract (EGb 761®; made by W. Schwabe of Karlsruhe, Germany). The dosage used by 1545 subjects was 240 mg per day (120 mg twice daily) of the ginkgo tablets or a matching placebo (for 1524 people).


Described as a randomized, double-blind, placebo-controlled trial conducted from 2000 to 2008, [1,2] Steven T. DeKosky, M.D., currently dean of the University of Virginia School of Medicine (at the University of Pittsburgh, PA during the time of the study) and colleagues evaluated 2587 cognitively intact adults plus 482 adults with MCI. They were assessed every 6 months for dementia in 5 academic centers for 6.1 years.


The authors acknowledge that one of possible shortcomings of this trial is “because the delay from initial brain changes to clinical dementia is known to be long, it is possible that an effect of G. biloba, positive or negative, may take many more years to manifest.” [1]


In an accompanying editorial, Lon S. Schneider MD of the University of Southern California, Los Angeles, “Despite 2 decades of research with standardized extracts of Ginkgo biloba, considerable uncertainty about its pharmacology and clinical effects remains.” [3]


ABC’s Response to the GEM trial


“There is an significant body of scientific and clinical evidence supporting the safety and efficacy of ginkgo extract for both cognitive function and improved circulation,” said Mark Blumenthal, the founder and executive director of ABC.


In addition to the issue of a longer duration raised by the authors, ABC noted that another potential weakness of this trial is the lack of an active control, i.e., a potential third arm of the trial in which patients would have used a pharmaceutical medication with known efficacy, to determine to what extent the particular population being tested would respond. This was not possible for this trial since no conventional pharmaceutical drug has ever demonstrated the ability to prevent the onset of dementia or diminish its progression.


Further, the trial notes that that only about 60% of the patients were in compliance with their use of the ginkgo or placebo by the end of the trial. It is unclear whether the poor adherence to the assigned treatment might have had a negative effect on the trial’s results.


According to ABC’s Blumenthal, “Ginkgo’s benefits must be viewed in the context of the entirety of the published clinical data,” a reference to numerous controlled clinical trials that support the use of ginkgo extract for treating symptoms of MCI and even early stage Alzheimer’s disease, as well as the circulatory benefit of increasing the ability of older people to walk distances with less leg pain (a condition known as peripheral arterial occlusive disease or intermittent claudication).


Veteran Maryland psychopharmacologist Jerry Cott, PhD, a member of the ABC Advisory Board,stated in an e-mail to CNN that due to the extreme difficulty and expense in generating useful life-style type clinical research data he often places more value in the basic science, i.e., “the pharmacology, rather than controlled clinical trials. The science for ginkgo says that it has physiological and biochemical effects in human and animal tissues that would surely be beneficial for many chronic illnesses, especially those that have a vascular component.” [4]


ABC also emphasized that the GEM trial is only one of about 5 clinical trials that are being conducted to try to determine if ginkgo extract can have a preventive effect on elderly adults and lessen the potential progression to dementia. Another large trial is currently underway with the results not expected for at least one year. [5]


ABC emphasized that ginkgo extract has been shown to be effective in treating symptoms of dementia in numerous controlled clinical trials as well as in population-based (epidemiological) studies. For example, 2 epidemiological studies conducted in France (known as the EPIDOS & PAQUID studies) have demonstrated a positive effect of the Schwabe EGb 761® ginkgo extract on the onset of Alzheimer’s dementia [6] and the length of patients’ survival. [7]These trials suggest that this ginkgo extract may be beneficial and appropriate therapy for elderly adults.


Further, an NIH sponsored study in the United States in 2008 demonstrated a beneficial effect of a standardized ginkgo extract on the risk of developing dementia in only the trial subjects taking the ginkgo on a regular basis. [8]


In addition to being tested for cognitive impairment, at least 16 controlled clinical trials have demonstrated benefits of various ginkgo extracts for healthy, non-cognitively impaired adults. A comprehensive review has shown that in 11 of these trials, the ginkgo increased short-term memory, concentration and time to process mental tasks. [9]


ABC also noted that ginkgo extract has been shown to be effective in controlled clinical for treating patients with peripheral arterial occlusive disease (PAOD), a condition on older people characterized by pain in the legs while walking due to inadequate circulation. A systematic review of 9 controlled clinical trials found that in at least 7 trials the ginkgo extract exhibited safe and effective benefits compared to placebo. [10]


About Ginkgo Extract


Ginkgo (Ginkgo biloba) is the world’s oldest living tree, dating back about 250 million years. Ginkgo leaves have been used in traditional Chinese medicine for about 500 years. For about the past 30 years the leaves of ginkgo have been made into a highly concentrated (50:1) extract, chemically standardized to compounds unique to ginkgo (ginkgolides and bilobalide) as well as other compounds. The leading German ginkgo extract has been subjected to a vast range of clinical trials documenting its ability to improve peripheral circulation and cognitive function, particularly in patients with early stages of mild cognitive impairment, senile dementia, Alzheimer’s disease, and memory loss. Clinical trials also support the use of ginkgo extract in assisting elderly patients in walking longer distances without leg pain (PAOD, also known as intermittent claudication). Standardized ginkgo extracts are approved for use as medicines in Germany and numerous other countries.


About the American Botanical Council


Founded in 1988 the American Botanical Council is a leading international nonprofit organization addressing research and educational issues regarding herbs and medicinal plants. ABC’s members include academic researchers and educators, universities and libraries, health professionals and medical institutions, botanical gardens and arboreta, government agencies, members of the herb, dietary supplement, cosmetic, and pharmaceutical industries, journalists, consumers, and other interested parties from over 70 countries. The organization occupies a historic 2.5-acre site in Austin, Texas where it publishes the quarterly journal HerbalGram, the monthly e-publication HerbalEGram, HerbClips (summaries of scientific and clinical publications), reference books, and other educational materials. ABC also hosts HerbMedPro, a powerful herbal database, covering scientific and clinical publications on 220 herbs. A clinical monograph on ginkgo, published in The ABC Clinical Guide to Herbs, ABC’s reference book accredited for continuing education for all major conventional health professions, can be accessed here.


ABC is tax-exempt under section 501(c)(3) of the IRS Code. Information: Contact ABC at P.O. Box 144345, Austin, TX 78714-4345, Phone: 512-926-4900. Website: http://www.herbalgram.org/.


References


1. DeKosky ST, Williamson J, Fitzpatrick A, Kronmal RA, Ives DG, Saxton J, Lopez O, Burke G, Carlson M, Fried L, Kuller LH, Robbins J, Tracy RP, Woolard NF, Dunn L, Snitz BE, Nahin RL, Furberg CD for the GEM Study Investigators. Ginkgo biloba for primary prevention of dementia: Results of the Ginkgo Evaluation of Memory (GEM) Study. JAMA Nov 19, 2008;300(19):2253-2262.


2. American Medical Association. Ginkgo biloba does not appear to prevent dementia, Alzheimer’s disease [press release]. Chicago, IL: Nov. 13, 2008.


3. Schneider L. Ginkgo biloba extract and preventing Alzheimer’s disease. JAMA Nov 19, 2008; 300(19):2306-2308.


4. Cott J e-mail to Elizabeth Cohen (CNN), Nov. 16, 2008


5. Andrieu S, Ousset PJ, Coley N, Ouzid M, Mathiex-Fortunet H, Vellas B, GuidAge Study Group. GuidAge study: a 5-year double-blind, randomized trial of EGb 761 for the prevention of Alzheimer’s disease in elderly subjects with memory complaints. I Rationale, Design and baseline data. Curr Alz Res 2008;5:406-415.


6. Andrieu S, Gillette S, Amouyal K, Nourhashemi F, Reynish E, Ousset PJ, Albarede JL, Vellas B, Grandjean H. Association of Alzheimer’s disease onset with Ginkgo biloba and other symptomatic cognitive treatments in a population of women aged 75 years and older from the EPIDOS study. J Gerontol Med Sci 2003;58A:372-377.


7. Dartigues JF, Carcaillon L, Helmer C, Lechevallier N, Lafuma A, Khoshnood B. Vasodilators and Nootropics as Predictors of Dementia and Mortality in the PAQUID Cohort. J Am Geriatr Soc 2007; 55:395399.


8. Dodge HH, Zitzelberger T, Oken BS, Howieson D, Kaye J. A randomized placebo-controlled trial of Ginkgo biloba for the prevention of cognitive decline. Neurology 2008;70:1809-1817.


9. Crews W, Harrison DW, Griggin ML, Falwell KD, Crist T, Longest L, Hehemann L, Rey ST. The neuropsychological efficacy of ginkgo preparations in healthy and cognitively intact adults; A comprehensive review. HerbalGram 2005;67:42-62.


10. Horsch S, Walther C. Ginkgo biloba special extract EGb 761 in the treatment of peripheral arterial occlusive disease (PAOD) a review based on randomized, controlled studies. Int J Clin Pharmacol Ther. 2004 Feb;42(2):63-72.


AHPA Responds to JAMA Study on Ginkgo, Dementia Prevention


Nov. 18, 2008 – A study published in the Nov. 19 issue of the Journal of the American Medical Association finds Ginkgo biloba extract ineffective for the primary prevention of dementia. However, as the authors note, “there are no medications approved for primary prevention of dementia.”


The randomized, double-blind Ginkgo Evaluation of Memory (GEM) trial followed 3,069 individuals assigned to either placebo or 120 mg twice-daily ginkgo extract (Schwabe’s EGb 761®). Out of the 1,545 individuals receiving ginkgo, 2,587 were seniors with normal cognition and 482 of the volunteers aged 75 and over had mild cognitive impairment (MCI).


“The study does not in any way undermine what has already been observed with regard to the usefulness of ginkgo extract, and EGb 761 in particular, in providing symptomatic relief in persons who already suffer from dementia or Alzheimer’s disease,” said American Herbal Products Association President Michael McGuffin. “In fact, Ginkgo extract has been shown to work as well as the available approved drugs to slow the progression of Alzheimer’s disease.”


Additional References


Mazza, M. Gingko biloba and donepezil: a comparison in the treatment of Alzheimer’s dementia in a randomized placebo-controlled double blind study. Eur J Neurol. 2006;13(9):981-5


Wettstein, A. Cholinesterase inhibitors and Ginkgo extracts—are they comparable in the treatment of dementia? Comparison of published placebo-controlled efficacy studies of at lease six months’ duration. Phytomedicine. 2000;6(6):393-401