Eight dietary supplement manufacturers and marketers were named in a California lawsuit filed on March 2 that alleges some fish oil supplements have been sold containing illegally undisclosed and unnecessarily high levels of contamination with polychlorinated biphenyl (PCB) compounds. The eight companies named in the lawsuit are: CVS Pharmacy Inc., General Nutrition Corp. (GNC), Now Health Group Inc., Omega Protein Inc., Pharmavite LLC, Rite Aid Corp., Solgar Inc., and TwinLab Corp. The lawsuit alleges that the companies sold fish oil, shark oil, fish liver oil and shark liver oil supplements that have PCB contamination above the so-called “safe harbor” limits set for human PCB consumption under California’s Proposition 65. That law requires companies to warn consumers about contaminant exposures. Proposition 65, passed as a ballot initiative in 1986, was passed to force consumer products to eliminate toxic chemical ingredients or reduce them below published safe harbor limits in the past.

U.S. consumers spent $739 million on fish and animal oil supplements in 2008, making it the eighth most popular dietary supplement on Nutrition Business Journal’s list of the top 100 selling supplements in the United States. Many within the industry are wondering what the potential implications this lawsuit could have on the fish oil supplement market. NBJ reached out to two industry trade associations, as well as to legal experts with the Goodwin Procter law firm to determine what effect this might have on the industry; their responses are included below along with a statement from one of the defendants, TwinLab Corp.

• Forrest Hainline, attorney at the San Francisco office of Goodwin Procter: This threatened lawsuit highlights an essential problem in applying Proposition 65 to foods or supplements. The evidence is uncontroverted that omega-3 fatty acids are not only beneficial but essential for health. The evidence is overwhelming that Americans in general do not eat enough fish to obtain the appropriate amounts of omega-3 fatty acids. This might be due in part to the campaign to frighten people away from eating fish for fear of methyl mercury.

As the California Supreme Court recognized in Dowhal v. SmithKline Beecham Consumer Healthcare, 32 Cal.4th 910 (2004), “even if scientific evidence supports the existence of a risk, a warning is not necessarily appropriate: The problems of over warning are exacerbated if warnings must be given even as to very remote risks.” This is particularly true where the benefit of the product folks would be warned against outweigh the potential harm. This was true in the Tuna Case, which I tried and won. The benefits of eating fish (because of omega-3 fatty acids, among other benefits) far outweighed the remote and even theoretical risk of exposure to the minute amounts of methyl mercury.

The Food and Drug Administration (FDA), not a bounty hunter law firm under Proposition 65, should determine whether warnings on foods or supplements are appropriate, and what form they should take.

Note: Hainline also obtained a judgment for restaurants that Proposition 65 warnings concerning grilled chicken were preempted by federal law.

Joanne Gray, attorney at the New York City office of Goodwin Procter: I have provided legal advice to a number of dietary supplement companies over the years and have been continually disappointed at the number of frivolous lawsuits that have been filed against the industry, including Proposition 65 claims, consumer class actions claims and products liability lawsuits. It is important to mount a strong defense to these actions right from the start.

It is unfortunate that dietary supplement companies and retailers have faced Proposition 65 lawsuits, even when minute amount of substances hold no real risk of harm to the consumer. These lawsuits are a real threat to the survival of the smaller companies in the industry, and they also increase costs to consumers.

• Council for Responsible Nutrition (CRN): CRN believes the suit was filed in California in order to take advantage of a state law, Prop 65, which has conservative standards that are not law in the rest of the nation. Further, the information disclosed during the press conference danced around the details, offering a lack of specificity to the general public about the levels of polychlorinated biphenyl (PCB) compounds found in the fish oil products that were tested. Though the lawyers suggest that the levels of PCBs found in these products far exceed what is acceptable by Prop 65 standards, the actual levels of PCBs found in the majority of these products do not appear to exceed the Prop 65 limit (90 ng/day). Furthermore, they fail to mention that the Food and Drug Administration’s (FDA) tolerance level for PCBs in fish (2,000 parts per billion) far exceeds the levels of PCBs found in fish oil…

The bottom line is that consumers, whether they live in California or elsewhere, should continue to feel confident in the safety and efficacy of their fish oil supplements. This lawsuit does nothing to change the strong science supporting the many health benefits of fish oil, which range from cardiovascular health to cognitive development of infants and young children, and the very low thresholds of PCBs which apparently trigger a labeling requirement in California cannot be extrapolated to demonstrate any actual risks at those levels. The health benefits for fish oil far outweigh any suggested, and unsupported, risks.” Read the entire statement here.

• Global Organization for EPA and DHA Omega-3 (GOED): In response to a lawsuit being filed against eight dietary supplement brands and retailers, the Global Organization for EPA and DHA Omega-3s (GOED) is reassuring the industry and consumers that fish oils manufactured by its members, and the market in general, meet the highest quality standards available. “We have complete confidence in the safety of the fish oil supplement market, which has been validated through multiple third-party reviews by industry watchdogs on thousands of products,” said Adam Ismail, Executive Director of GOED. “In fact, this industry is among the highest quality and most transparent of all consumer products,” he added.

There are multiple resources in the public domain where consumers can get more information on the quality of their products, including the International Fish Oil Standards program (www.ifosprogram.com). Furthermore, a recent report by Frost & Sullivan found that 93% of the refined fish oils on the market in the United States are produced from anchovy and sardine oils. However, the plaintiffs unfortunately only tested one of these types of oils, which actually had PCB content well within the Safe Harbor provisions of Proposition 65. “While the plaintiffs raise an important issue,” said Ismail, “it is unfortunate that they are implying that most fish oils are unsafe and that the industry is hiding information on such vital nutrients.” Read the entire statement here.

• Greg Grochoski, Twinlab’s chief science officer: “Twinlab’s fish oil products are all molecularly distilled and quality tested for purity. These processes are especially effective for reducing impurities such as PCBs found in oceans, lakes, rivers and streams and common to fish and fish-­‐based products.” Twinlab’s statement went on to say that the company cannot comment on the validity or accuracy of the tests referenced by the plantiffs, though its products were reported as having among the lowest level of impurities.

Related NBJ Links:

Tuna’s Prop 65 Win Could Help Supplement Firms in Their Own Lawsuits

Elite Athletes Eschew Dietary Supplements Over Fears of Contamination

Vitamin D and Omega-3 Fish Oil to be the Focus of New $20 Million Study

In a little over a week, nutrition industry executives from all over the world will be gathering in Anaheim, California, for the 2010 Nutracon Conference and Natural Products Expo West tradeshow. The Nutrition Business Journal team will be there to meet with industry participants, peruse the massive tradeshow floor, and bone up on the latest issues and trends shaping the global nutrition industry during the Nutracon and Expo West education sessions. We’ll also be presenting our annual NBJ State of the Industry session, during which we will share some of NBJ’s proprietary market data and get down to the “nitty gritty” with a panel of experts about some of the key strategic issues affecting dietary supplements, natural & organic products, and functional foods and beverages. Details about the session are below. We hope to see you there!

NBJ State of the Industry

10:30 a.m. – 12:00 p.m., Friday, March 12, Room 204AB

We’re changing things up a bit for this year’s NBJ State of the Industry presentation, which has become a must-attend education session for many industry executives at Expo West. NBJ Publisher and Editorial Director Patrick Rea will open the presentation with an analysis of how sales of dietary supplements, natural & organic products, and functional foods and beverages fared in 2009 and what we are expecting for 2010. Then, I and Nancy Coulter-Parker, editor in chief of Delicious Living magazine, will interview a panel of industry experts about key issues affecting supplements, natural & organic, and functional products.

On the panel will be:

• Julie Smolyansky, CEO of Lifeway Foods

• Todd Norton, chief operating officer at A.M. Todd Botanical Therapeutics

• Laura Batcha, chief of policy and external relations at the Organic Trade Association

• Mark Fergusson, CEO and chief financial officer at Down to Earth, Hawaii’s only vegetarian natural & organic food store chain

The questions we will be posing to our panelists (and the audience) include:

• Since the election of Barack Obama, the FDA and FTC have stepped up their enforcement of the label claims being used by food and beverage companies. Is this ultimately a good thing for the functional food and beverage industry? What are you expecting in 2010?

• If passed, what ramifications would McCain’s Dietary Supplement Safety Act of 2010 bring about for the industry and consumers? Would the bill do what is needed to weed out the bad players?

• In a statement defending his bill, McCain Dietary Supplement has said that, despite what opponents of his proposed legislation are claiming, “If you take a vitamin now, this bill will in no way restrict your ability to take that vitamin.” Is this true?

• McCain’s bill would require retailers to obtain written evidence from supplement manufacturers documenting that products are registered and adhere to all new FDA requirements. Would such a rule affect a retailer’s ability to offer a wide variety of legitimate supplements?

• The functional food and beverage industry continues to grow at a healthy pace, with new food and beverage products being launched every week. The problem is, however, that some companies will put just a small amount of a functional ingredient into a product just so that they can charge a price premium and promote the ingredient on the product’s packaging and label. How big of a problem is this for the functional food and beverage industry? Is “pixie dust” dosing a common practice? What are the ramifications for the functional food and beverage industry? What’s the solution?

• What really happened to organic during the recession? How did organic sales fare compared to natural sales in 2009, and what is expected for 2010? In what ways were consumers able to save money and still buy organic?

• In 2009, several organic companies introduced a “natural” product or dropped their organic content all together. Do you believe there was a large scale shift from organic to natural, or were these isolated examples?

• Even if only a few companies moved from organic to natural, how do these actions impact consumer perception of the value of organic compared to natural? Some organic companies I’ve spoken with have said consumers are so confused that they believe, in some instances, that natural is actually superior to organic. What are your thoughts on this?

• Does having multiple standards and certifications for natural & organic personal care result in too much consumer confusion?

Is there a question or issue you would like to hear NBJ and our panel of experts address during the State of the Industry presentation? If so, e-mail the question to cmast@nutritionbusiness.com.

Related NBJ links:

Global Supplement & Nutrition Industry Report 2010

February 2010: Functional Food and Beverage Issue

Organic Is Not Immune to Recessionary Woes

The Vitamin Shoppe’s better-than-expected initial public offering (IPO) on October 27 demonstrated that the public markets, which have been generally turned off by retail plays in recent years, see lots of opportunity in the dietary supplement and nutrition sector. The IPO was the first for a retail-based company in almost two years, and it raised about $150 million for the 434-store supplement chain. A week before The Vitamin Shoppe’s better-than-expected opening day, a group of 20 smaller nutrition-related companies convened in San Francisco for the fifth meeting of the Nutrition Capital Network (NCN). The purpose of the gathering was to network with private-equity and strategic investors and hopefully wow them with their 10-minute business pitches. Just as The Vitamin Shoppe’s successful opening day showed that the overall IPO market is beginning to thaw, the NCN meeting proved that innovation within the nutrition industry remains strong and that investors continue to see opportunities in the growing health and wellness market.

Chaired by Grant Ferrier and Thomas Aarts (who founded Nutrition Business Journal in 1996), NCN was created to help grease the financing wheels for entrepreneurs and introduce investors to the next generation of successful brands in the nutrition, natural and organic, and green product industries. More than 80 companies applied to present at NCN V. Ranging in scale from startups to a $100 million brand, the 20 chosen represented successful and growing businesses in the food and beverage, food service, supplements and nutrition, and skincare categories. “The level of sophistication in early-stage companies continues to grow, but the passion and drive of the individuals behind them has not subsided,” said Ferrier, who is NCN’s CEO and co-chairman. “We saw that in the 20 companies that presented last week but also in the 80-odd that applied during this cycle.”

Each company that presented represented an innovative technology or tapped into a growing trend within the overall nutrition industry. Below are a few highlights:

Cambridge Theranostics: Based in the United Kingdom, Cambridge Theranostics sells a lycopene-based supplement called Ateronon that is backed by a wealth of compelling research showing its ability to inhibit the oxidation of LDL (bad) cholesterol (oxidized LDL is what triggers heart attacks and other cardiac events). Ateronon is currently sold in 75% of all UK retail pharmacies, and the company is looking for capital to fund its expansion into the United States, the Middle East and China. Cambridge Theranostics is focused on educating practitioners and pharmacists on the benefits of Ateronon so that they will recommend it for their patients and customers.

Dale and Thomas Popcorn: What was interesting about this company is how successful it has been with both its retail brand (Popcorn, Indiana) and its direct-to-consumer brand (Dale and Thomas) without having made any real investment in advertising. Popcorn, Indiana is now the No. 2 popcorn behind Smart Food, and its better-for-you popcorn is selling well in alternative retail chains such as Bed Bath & Beyond and Best Buy.

Freshology: This Burbank, California-based company sells fresh, gourmet, portion-controlled meals directly to consumers, with the goal of taking on companies such as Nutrisystem and Jenny Craig. Freshology is also launching a line of frozen foods next year, and its business model taps into the growing consumer demand for healthy, customized meal solutions. With a production facility at the Burbank Airport, Freshology is able to send its fresh meals all over the country, and I see potential for the company partnering with gyms, wellness clubs and weight-loss clinics to offer fresh, portion-controlled meal solutions to their members.

Froozer: This Lake Mary, Florida-based company’s pitch was certainly the wackiest—and the best tasting. Froozer President Arnold Zweben wheeled in this machine that looked like a frozen yogurt maker. Into the machine went a bunch of frozen fruits and vegetables and out came this cold puree that looked and tasted a lot like soft serve ice cream—only it contained no added sugar, dairy or other ingredients. The machine is called a Transmogrification Unit, and it transforms frozen fruits and vegetables into a whole food frozen confection in seconds. The company said it has done a bunch of focus group research with kids, who like the product because it tastes and looks like soft serve ice cream. Froozer has developed a production system that is able to produce push up pops or other frozen confections made entirely of whole fruits and vegetables. The one I tasted was made with strawberries, bananas, turnips, tomatoes and cucumbers. It was really good and was something my two young boys would have loved.

Herbs of Mexico: Founded in 1948, Herbs of Mexico operates one health and wellness retail store dedicated to the Hispanic community in East Los Angeles, with a second store opening soon. The company wants to open more stores for the growing Hispanic population, which tends to be heavy users of herbal products and other complementary and alternative (CAM) therapies. In fact, Martin Lopez, Herbs of Mexico’s managing owner, said 80% of Hispanics use herbal products and 60% view herbs as medicine. The company also has an e-commerce model and is focused on first expanding its retail locations throughout the Southwest, where it hopes to open 35 to 40 stores in the next five to seven years.

Heritage Foods: Heritage Foods was founded by Patrick Martins, who founded Slow Food USA (he’s sort of a celebrity in the slow foods movement). Through a successful Internet/mail-order catalog model, Heritage Foods sells ethically raised heritage meats (such as Berkshire pork and Bourbon Red turkeys). With all of the recent meat safety scares and the backlash against factory farms, Heritage Foods could represent the future of meat production in the United States—at least for the growing segment of consumers who care about where their meat comes from and how it was raised. The company doesn’t appear to be going after the organic label, but in some ways what it is doing could do more to influence consumer purchasing habits.

Related links:

The Missing Link: NCN Connects Firms, Investors in Nutrition Industry

With Sales Thriving, Vitamin Shoppe Parent Files for IPO

M&A and Investment Activity Slows for U.S. Nutrition Industry

The 2009 Natural Products Expo East starts tomorrow, September 23, in Boston, and Nutrition Business Journal is hosting two educational events at this year’s show.

The NBJ Summit Extension: Internet Sales & Marketing

8 a.m.-10 a.m., Thursday, September 24, in room 254A

Every nutrition industry company knows it must harness the Internet to position, promote and, in many cases, sell its products, but not many companies know how to turn this idea into reality and effectively use the Web to maximize revenues and profits. In fact, best practices in Web marketing and e-commerce for dietary supplement, natural & organic and other nutrition-related companies are only now just emerging. NBJ will explore these best practices during the 2009 NBJ Summit Extension: Internet Marketing & Sales seminar, which will be held from 8 a.m. to 10 a.m. Eastern time on Thursday, September 24, in room 254A of the Boston Convention & Exhibition Center.

As the name implies, this seminar will serve as an extension of the content presented during the 2009 NBJ Summit, which featured a panel titled Successfully Navigating the New Online Media World. Feedback on this session from the more than 300 CEOs and other nutrition industry executives in attendance at the 2009 NBJ Summit was so positive that NBJ decided to offer a similar session for those who could not attend the Summit.

Five nutrition industry and Internet marketing and sales leaders will present during the NBJ Summit Extension: Paul Hanamm, founder of Bright Green Marketing; Roy Bingham, head of e-commerce at RenewLife Formulas; Devin Ryerson, founder and CEO of PurePrescriptions.com; Patrick Rea, NBJ publisher and editorial director; and Tom Aarts, NBJ co-founder and editorial advisory board chairman. Among the questions they will answer are:

• How can the Web be used to complement and strengthen your existing sales and marketing programs?

• What resources are required to grow your online sales?

• Should you outsource online sales and marketing or build these capabilities in-house?

• How do you protect and grow your brand equity online?

• Where should you direct your investment in the social media space?

• What are the rules of engagement with online consumers?

• When is the best time to invest in online sales and marketing?

• What resources exist that can help you get up to speed?

• How can you best track your online sales and marketing investments, and what ROI should you expect?

Session attendees will also receive a review of their company’s online marketing and sales strategies and tactics. Cost of the session is $295 per attendee. Space is filling up, so register today.

If your nutrition industry company is not already, now is the time to get serious about Internet marketing and sales. According to NBJ estimates, the Internet was once again the fastest-growing sales channel within the U.S. nutrition industry in 2008. Total U.S. nutrition industry sales via the Web grew 22% to $1.4 billion last year, adding approximately $250 million in new sales.

Gluten and Other Allergies 101: Everything You Need to Know

10:45 a.m. – 12:15 p.m., Friday, September 25, in room 252A

NBJ Editor Carlotta Mast will moderate an education panel focused on one of the fastest-growing product categories in the U.S. nutrition industry: gluten- and allergy-free foods and beverages. The session—which will be held from 10:45 a.m. to 12:15 p.m. on Friday, September 25, in room 252A of the Boston Convention & Exhibition Center—will cover every aspect of the gluten- and allergy-free foods spectrum: from finished product manufacturer to distributor to retailer to consumer.

Experts presenting during the session and available to answer questions are:

MaryJo Marks, UNFI’S natural and organic category specialist: MaryJo Marks brings 28 years of retail experience to her seminars. Before joining UNFI, MaryJo’s career included a variety of positions in both natural & specialty product stores. She has worked in both large and small stores and has been involved in store management, new store openings, purchasing, merchandising, staff education and training and many other aspects of retailing.

Ronnie Alicea, RD: Ronni Alicea is a Registered Dietitian specializing in food allergies, food intolerances and celiac disease. She has a private practice, consults for gluten-free/allergen free food companies and provides clinical services to health care facilities. She writes and speaks nationally on managing specialty diets and how to prepare foods properly. Most recent articles in professional and consumer media address residential care facilities and gluten-free diets.

Scott Mandell, president and founder of Enjoy Life Foods: As the founder of Enjoy Life, Scott Mandell has become one of the most experienced entrepreneurs in the allergy-friendly / gluten-free food industry. By creating innovative and functional ways to serve food-sensitive consumers, Mr. Mandell has become a thought-leader in the allergy-friendly and gluten-free markets. He is a fixture on allergy-friendly and gluten-free expert panels, and as a keynote speaker has been able to take an informational / educational perspective, while introducing the Enjoy Life™ brand to consumers and the industry. Mr. Mandell serves on the following outside boards: the Gluten Free Certification Organization, the American Celiac Disease Alliance, and Tula Foods Inc.

Susan Welsh, grocery buyer and category manager for Sprouts Farmers Market: Susan Welsh has been in the food industry for most of her life. She graduated Summa Cum Laude from Arizona State University with a degree in Agribusiness and a minor in Organic Food Manufacturing. Her experiences after college included owning a small natural foods market in Cave Creek, Arizona, working at Whole Foods Market in Tempe, Arizona as a Grocery Team Leader and then working as a sales rep for The Hain Celestial Group, covering the Arizona and Utah markets. Currently, Susan is the Grocery Buyer and Category Manager for Sprouts Farmers Market. She has been in her position for four years and sincerely enjoys the fast pace and growth that Sprouts has been experiencing for the last two years. Susan is married and has a 20 year old son who goes to school at UCDavis in Northern California.

What else can you expect to find at the 2009 Natural Products Expo East? More than 1,000 exhibiting companies occupying 1,500 booths and a plethora of educational and networking events. NBJ hopes to see you at the 2009 Natural Products Expo East.

Related NBJ articles:

E-marketing: A Recession Essential for Every Company

E-commerce Is Now a Must for Nutrition Firms

Gluten-Free Foods Continue Reign as Fastest-Growing U.S. Grocery Category

After attending the 20th annual SANA healthy living conference in Bologna, Italy, it is clear that my insatiable desire to eat world-famous Italian foods is matched by the country’s desire to bring them to me. The show featured exhibitors from across Italy who were eager to strengthen the Italian export market with their natural, organic and healthy food offerings. More than 100 international buyers were brought in by the Italian Trade Commission, along with FederBio—the country’s organic unitary body—to get a taste of the dynamic and emerging healthy foods market in Italy. I was able to meet with more than 15 companies and came away feeling that the market is largely untapped by U.S. importers and distributors, which means plenty of opportunities exist for successful partnerships. As one well-known U.S. natural retailer told me of her meetings with Italian producers, the companies she spoke with largely have great products that can compete in the U.S. food market but lack the appropriate partners in the United States to manage distribution and marketing effectively.

Many parallels exist between the U.S. healthy foods market and the comparable Italian market—it, too, is growing at a healthy rate, though it has also been slowed by the global economic recession. Double-digit organic food sales growth in 2008 has been replaced by expansion of 7% to 9% through the first six months of 2009, according to Robert Pinton of Green Planet, a non-profit organization that promotes sustainable business globally. Still, organic food sales in Italy are outpacing conventional food sales and make up about 3% of the overall Italian food market. In the U.S. market, organic foods and beverages also constitute about 3% of the overall food market, according to NBJ estimates.

I plan on detailing my visit more extensively in the coming weeks and talking more specifically about some of the trends I encountered, such as an emerging yeast-free category that seemed to come up often. Nutrition Business Journal will also publish a Global Nutrition Industry market analysis issue in December that will quantify the healthy foods markets in Europe so that subscribers can more easily identify specific areas of opportunity. In the meantime, please feel free to leave a comment or drop me an e-mail with questions you may have about the European markets so that we can tailor our issue to suit your company’s needs.

Related NBJ Links:

2008 Healthy Foods European Summit heralds Davos-style debates

Tapping into the $170 Billion Muslim-American Market with Halal Certification

New Opportunities & Insights into the U.S. Healthy Foods Market PowerPoint Presentation

NBJ’s Healthy Foods Report 2007

Related Natural Foods Merchandiser Magazine Links:

Italy: the new face of Old World organics