Although my opinion could be considered biased, the NBJ Summit team—led by Patrick Rea and Tom Aarts—outdid itself again with this year’s annual gathering of nutrition industry leaders. Held July 21-23 at the St. Regis Resort in Dana Point, California, the sold-out 2010 NBJ Summit brought together more than 300 CEOs, presidents and other executives for what proved to be an inspiring, instructive and thought-provoking three days of education and networking.

Below are several of the key messages that emerged from this year’s NBJ Summit:

• Innovate your way out of a downturn: The recession took a big bite out of the nutrition industry’s product development activity in 2009, as many companies focused on survival rather than creating their next breakthrough product. But, as Sterling Rice Group Managing Partner John Grubb demonstrated in his keynote titled “The Imperative to Innovate: Disrupting the Competitive Context,” downturns are the exact wrong time to put the brakes on new product innovation. As Grubb noted, with higher risk comes greater reward, making game-changing innovations the key to thriving during tough times and claiming more than your fair share of a market opportunity. Also, product line extensions tend to make up most of a company’s revenues, but new products drive the greatest profit growth.

• Fail fast: True innovation isn’t possible without the risk of failure—and, as Grubb told NBJ Summit attendees, most of what you do will be wrong at first, so prepare to fail quickly and use the lessons from your missteps to move your innovations forward. Because failure is a natural part of innovation, the innovators in a company must be given the time to learn from their mistakes, Grubb added. Of course, creating a forward-thinking ecosystem of innovation can be more easily accomplished at private companies, which are typically not held hostage to quarterly results the way public companies can be.

• Prepare to be scrutinized: Whether it’s coming from the U.S Food and Drug Administration (FDA), the Federal Trade Commission (FTC) or the “bounty hunter” law firms looking to get rich off of class-action consumer lawsuits, U.S. nutrition companies must be prepared to have their products, science and claims put under the microscope. Serious future scrutiny could come from FDA’s impending new dietary ingredient (NDI) guidance, which could publish later this year. If the guidance becomes stricter, an estimated 40%-60% of the current dietary supplement market could be adversely affected.

• Make the world your oyster: As Christine Holgate, CEO of Australia’s largest dietary supplement company, Blackmores, told a packed Summit audience: Even those companies with successful, fast-growing businesses in their home markets should consider global expansion. Under Holgate’s leadership, Blackmores is now in seven markets and is considering launching into others. According to Nutrition Business Journal estimates, total global nutrition industry sales grew 6.6% to $288 billion in 2009. This growth was somewhat higher than the 4.4% growth the $108 billion U.S. nutrition industry experienced last year.

• Choose your global partners carefully: As NOW Health Group President and CEO Al Powers told Summit participants, moving into a new market without carefully vetting your in-country partners or fully understanding the business culture can be expensive mistakes. Powers candidly told the audience that he learned this lesson the first time NOW entered the Chinese market a decade ago and the company’s Chinese partner stole NOW’s product and then marketed other counterfeit supplements under the NOW brand. The experience didn’t scare NOW away from the promising Chinese market, however: Under Power’s guidance, NOW is once again building its business in China—this time with much more success.

• Don’t be afraid of big pharma: Former GlaxoSmithKline (GSK) executive Stephen Stefano spent his NBJ Summit keynote address attempting to convince the audience that pharmaceutical companies—like GSK—can be good partners for the nutraceutical industry. As Stefano explained, blockbuster drugs are becoming fewer and far between and the margins for pharmaceuticals continue to shrink. This is making it more important than ever for drug companies to diversify their product offerings. “The climate is ripe for pharmaceutical companies to get involved in nutraceuticals in a productive way,” Stefano said. He used GSK’s prescription fish oil product, Lovaza, as an example of a “nice fit between pharma and supplements.” Global sales of Lovaza have now topped $1 billion, leading many Summit participants to wonder: What will be the next blockbuster supplement-based drug?

• Never forget Rule No. 6: One of the most inspirational moments during the 2010 NBJ Summit came from Benjamin Zander during his keynote address. In what was (correctly) billed as a life-transforming talk, the Boston Philharmonic Orchestra conductor coached attendees to live their lives and lead their organizations from the viewpoint of possibility rather than from fear, anger or complacency. My favorite part came when Zander presented what he calls Rule No. 6: “Don’t take yourself so damned seriously.” Duly noted!

• Live like Ohno—no regrets: The 2010 NBJ Summit closed on another inspirational high note with the keynote address from eight-time Olympic medalist Apolo Ohno. Ohno, who has launched his own dietary supplement company called 8 Zone, opened himself up to questions about everything, including why he created 8 Zone, what supplements he takes, the music that keeps him going during training and why he respects the South Koreans (who have been some of his greatest competitors on the ice). In explaining how he was able to dedicate four years of rigorous training to prepare for a few minutes of Olympic speed skating competition, Ohno said he learned to remain focused on the journey and live each day with no regrets.

Registration for the 2011 NBJ Summit will open later this year. Sign up early, as this year’s event sold out.

Related NBJ links:

Going Global: Taking Your Business Overseas & Getting it Right the First Time

Leadership Secrets from Top CEOs - Growing Your Business (and your career) in 2011 and Beyond

The Internet was once again the fastest-growing sales channel within the U.S. nutrition industry in 2008, expanding 22% to $1.4 billion last year, according to Nutrition Business Journal estimates. But, unfortunately, throwing time, dollars and other resources at a company’s online marketing and sales initiatives won’t guarantee sales success. In fact, without the right strategies, tactics and mindset, companies can actually lose money in their efforts to harness the Web as a sales and marketing vehicle. This reality seemed well understood by the 50-some nutrition industry executives who gathered today for the NBJ Summit Extension: Internet Marketing & Sales seminar at the 2009 Natural Products Expo East in Boston.

The paid session—which featured Paul Hannam, founder of Bright Green Leadership; Roy Bingham, head of e-commerce at RenewLife Formulas; Devin Ryerson, founder and CEO of PurePrescriptions.com; NBJ Publisher and Editorial Director Patrick Rea; and NBJ Co-founder Tom Aarts—was designed to help CEOs and other top executives learn from the best Internet marketing and sales practices that are currently emerging inside and outside of the nutrition industry.

A long list of actionable advice materialized from the two-hour session, including these highlights:

Be willing to fail: In today’s lightening fast online world, successful Internet marketing and sales requires an action-oriented mindset and willingness to experiment, Hannam said. If a company wants to get it right, it must be willing to get it wrong, he added. “You have to be constantly learning from your mistakes.”

Content remains royalty: Yes, content is still king, in part, because great content is the fastest, most-consistent way to obtain top listings placement within Google and other search engines. Content can build brands, but the goal is to become a trusted thought leader around a problem or issue—such as joint pain or healthy aging—rather than only a product or brand, Hannam noted. Blogs and social networks, including Facebook and Twitter, can help establish a company’s position and credibility around a chosen problem or issue.

Design Websites with users in mind: Consumers have very short attention spans, and they expect certain things when they arrive at a Website, such as a company or Website logo in the upper left corner and an internal search engine in the upper right corner, Ryerson said. They also first use Website navigation to browse for what they are looking for before turning to search and get frustrated when the checkout button isn’t immediately findable. Spend time evaluating well-designed e-commerce and information sites to better understand what works and why, he added.

Videos communicate authenticity: Rather than adorning a Website landing page with a pretty but irrelevant photo or other graphic, consider adding a short video from the company’s CEO or another trust-worthy individual to welcome users to your site and explain what you hope they will accomplish there, Hannam suggested. Videos, he said, build credibility and trust and are proving more powerful than static images. “Be informal in your video messages, as this helps boost authenticity,” Hannam added.

Be persistent: Most people don’t buy until after their sixth contact with a company, so don’t despair or give up if a new e-mail marketing list proves less than fruitful at first, Hannam noted. Use each communication to build relationships, offer people something of value—such as useful information or a purchasing offer—and make someone in your organization accountable for protecting your e-mail marketing lists from being over-used or abused.

Don’t break the rules just to make a buck: Dietary supplement companies that market and sell their products online with no regard to the Dietary Supplement Health and Education Act (DSHEA) might, in some cases, be able to make boatloads of money by duping consumers with illegal cancer cures or fraudulent offers, but they do so at the risk of the entire supplement market, Bingham said. “These companies are trashing our industry,” he said. Remaining DSHEA-compliant with all online marketing content—including meta search tags and online consumer reviews—is increasingly important to staying out of trouble with the FDA and FTC, Bingham and Ryerson noted.

A video replay of The NBJ Summit Extension: Internet Marketing & Sales session will be available for purchase via the NBJ Website for those wanting more advice and insights from this panel of experts.

Related NBJ links:

E-commerce Is Now a Must for Nutrition Firms

E-marketing: A Recession Essential for Every Company

Good Search Engine Marketing Key to Selling Supplements Online

Tips for Evaluating an E-marketing Campaign in the Nutrition Industry

The 2009 NBJ Summit is now over, and the three-day event at the St. Regis Resort in Dana Point, California proved to be an energizing and eye-opening event for many of the more than 300 executives in attendance this year. The gathering spurred some positive news about the continued resilience and vitality of the nutrition industry, particularly of dietary supplement companies, as well as some somber discussion of the regulatory and quality challenges facing the industry and what is needed moving forward to protect what could be a golden future for dietary supplements.

Below are several of the key messages that emerged from the education sessions at this year’s NBJ Summit:

• Strong supplement sales are a silver lining of the bad economy. One message delivered time and time again by NBJ Summit presenters and attendees was that dietary supplement sales are benefiting from the recession and people’s increased focus on self-care and sickness prevention. “Instead of massive obstacles, the economy is offering up a huge platter of opportunity,” Vitamin Shoppe CEO Tom Tolworthy told NBJ Summit attendees. Vitamin Shoppe, Tolworthy explained, recently experienced its 14th consecutive quarter of comp store sales growth and has seen a 20% rise in new customers. As NBJ Publisher and Editorial Director Patrick Rea noted during his state of the industry presentation, dietary supplement sales growth was stronger in 2008 than it has been since the late 1990s. NBJ expects supplement sales to continue growing in 2009 but at a slightly slower pace than in 2008.

• DSHEA is under threat. During a video address to Summit attendees, Orrin Hatch, the Republican senator from Utah who is one of the most vocal and active supporters of the Dietary Supplement Health and Education Act (DSHEA) in Congress, pulled no punches when explaining what currently faces the dietary supplement industry in Washington, D.C. “Your industry has a very difficult road ahead on Capitol Hill,” he said. “DSHEA is a war still being waged in Congress.” One change that could potentially be coming to the regulation of dietary supplements is the addition of a pre-market approval requirement for all supplement products—which, as Sen. Hatch noted, could spell the end for many responsible supplement companies.

• Industry involvement is crucial to preserving DSHEA. “Your industry must take a more active role in preventing the rollback of DSHEA,” said Sen. Hatch, who noted that he plans to continue fighting for the industry and for DSHEA. “But,” he added, “I need your unwavering support and strongly encourage your involvement in the legislative process.” He advised supplement executives to visit their congress members, educate them about the important role supplements play in health and wellness, and invite them to tour their GMP-compliant facilities to see what responsible companies are doing to safeguard product quality and safety. GNC CEO Joseph Fortunato urged companies to join and support the Coalition to Preserve DSHEA, the non-profit industry group created in 2004. “Everyone should be concerned about the sea change we are seeing in Washington,” Fortunato told NBJ Summit attendees.

• Preserving individual access to health should be industry’s message. As United Natural Products Alliance Executive Director Loren Israelsen pointed out during his dinner speech (which was aptly titled, “Industry Turbulence—Buckle Up”), at the same time DSHEA is coming “under assault,” a growing number of Americans are going bankrupt because they simply can’t pay for their healthcare expenses. People can’t afford to get sick, and this is why many are turning to dietary supplements and other less-expensive health products. So, Israelsen explained, rather than position its defense of DSHEA around the notion of “saving our vitamins,” the industry should beat the drum of preserving “the fundamental access of individuals to the kind of healthcare they want.” After all, natural self-care is not just about being able to ward off illness with a handful of supplements, it’s about “living as well as you can for as long as you can”—and this is what the industry should stand for, Israelsen said.

• How well is the supplement industry delivering on the “product promise”? This question, posed to Summit attendees by NBJ’s Rea, points to the many challenges the industry as a whole continues to face in the areas of product quality and substantiation. As Rea asked attendees, is what’s on your product label actually in the pill at the point of purchase, is it absorbed efficiently and effectively into the body, and is the product safe? If your answer is, ‘No, not always’—or even, ‘I’m not sure,’—your company has important work to do.

• Healthcare reform is coming. While it might not get done this year, healthcare reform will happen—and the dietary supplement industry must act quickly if it wants to have its voice heard and become a stakeholder in the process. The good news is that with the Obama administration and the public increasingly focused on disease prevention, the perceived importance of dietary supplements by consumers and legislators could greatly improve.

• Supplement AERs tell a positive story—one that the industry should be promoting. As Tolworthy pointed out, the supplement industry experienced 596 Serious Adverse Event Reports (SAERs) between December 2007 and October 2008—this compares to the tens of thousands of SAERs that come in annually for pharmaceutical drugs. “Our industry has a clean record on safety,” Tolworthy said. “We need to tell this story.” But as Israelsen told Summit attendees, the industry also needs to learn how to do AERS well or potentially suffer the fate of Hydroxycut and Zicam, which were both pulled off the market after AERs reporting pointed to potential safety problems.

• Retailers and consumers are hungry for product innovation. “We need a new emphasis on product innovation,” said Vitamin Shoppe’s Tolworthy, who noted that 18% of his company’s revenues are generated by the sale of new products. New products are essential to an industry that has very few big, consumer-driven brands, he added. GNC President and Chief Marketing/Merchandising Officer Beth Kaplan said product innovation is helping to fuel her company’s continued growth. “We thrive on new products,” said Kaplan, who went on to talk about some of the company’s latest GNC-branded offerings, including its new line of nitric oxide-based sports nutrition products for endurance athletes called Pro Performance AMP. “These are the kind of things that fuel growth for specialty retailers,” she added.

• Consumer education is lacking. Doug Degn, Wal-Mart’s retired executive vice president of merchandising, shared some interesting survey results with NBJ Summit attendees that highlighted the need for more consumer education about the many benefits of supplements. According to Degn, when asked why they chose not to make a supplement purchase, 40% of consumers surveyed said it was because they didn’t see a need, while 20% said they already eat a balanced diet so didn’t require supplements and 27% said it was because supplements were too expensive.

• Optimism is growing on the investment front. During his presentation on the first day of the NBJ Summit, Canaccord Adams Managing Director David Thibodeau dished out some much-needed positive market news: Investors, he said, are starting are starting to pay attention to growth markets again and valuations are slowing improving. Public markets are rebounding as well, Thibodeau explained, and many of the public companies in the nutrition industry are performing particularly well. As a case in point, Thibodeau noted that Canaccord Adams’ Healthy Living Index—which includes such companies as NBTY, Herbalife and Green Mountain Coffee—has outperformed the major indices and grown 19.1% over the last six months.

• Adversity can be transformed into opportunity. Many threats and challenges await the nutrition industry, but rather than stick its collective head in the sand the industry should approach these challenges proactively and with the collective goal of weeding out the rotten apples before they spoil the entire crop. “Rather than look at the glass as being half empty, let’s look at our opportunities to refill the glass with fresh water,” said Mark LeDoux, chairman and CEO of Natural Alternatives International Inc. and elected chairman of the Council for Responsible Nutrition

• “Excellence is not cheap.” This message from LeDoux was perhaps the most important statement uttered during the three-day NBJ Summit. As LeDoux noted, ensuring product efficacy, quality and safety requires a hefty investment in proper research, ingredient supply and testing. Product innovation and consumer education also requires substantial time and resources. Cutting corners might save money today, but it will almost certainly short change your company’s—and the industry’s—prospects tomorrow.

• The future could be bright. A key message of Metagenics Chief Scientific Officer Jeffrey Bland’s keynote presentation was one every supplement industry executive should take to heart: The dietary supplement industry is “alive and well,” Bland said, and its “golden years” are coming—provided that the goals and values of responsible, evidence-based supplement companies prevail.

We’ve recently created Nutrition Business Journal and The NBJ Summit Facebook Groups.

If you are on Facebook, search on “Nutrition Business Journal” and “The NBJ Summit” to find us and join up!

We will distribute special offers and update this community regularly.

If you have any questions, call Rachel Dederich, NBJ’s Marketing & Subscriber Coordinator at 303.998.9263

-Patrick

The 2009 NBJ Summit

St. Regis Resort, Dana Point, California

July 22-24, 2009

REGISTRATION IS OPEN

The event will showcase world-class speakers and events that highlight the theme: Transformational Partnering in Challenging Times: Orchestrating a Profitable Future.

At the NBJ Summit, you will see proprietary Nutrition Business Journal data, hear high-level insights on future scenarios and learn about new and powerful opportunities in our industry.

Highlights of this year’s agenda include:

• A Keynote Address by Jeffrey S. Bland, Chief Science Officer of Metagenics and President of MetaProteomics

• Supplements & Drugs: The Best of Both Worlds?

• Retail Insights: A CEO Discussion

• Mastering Internet Marketing and Online Media

Don’t miss an opportunity to network and develop high-level relationships with industry leaders at this special event. Last year, The NBJ Summit reached capacity a month in advance of the event and we expect the same for the 2009 event…so register soon.

To reserve your place at The NBJ Summit, register online, call 1.866.458.4935 (Toll-Free) or 1.303.390.1776 (International).

For more information and the most up-to-date agenda visit www.nbjsummit.com

-Patrick