The Nutrition Business Journal Blog

Hain Sees Improving Consumer Trends

Marc Brush — Fri, 27 Aug 2010 22:15:30 +0000

Hain Celestial Group reported fourth-quarter earnings this week, with net sales of $222.8 million and net income of $6.7 million. For the full fiscal year ended June 30, Hain earned $28.6 million on $917 million in sales. Irwin Simon, Hain’s President and CEO, attributed the company’s strong performance to sales momentum in North America and Europe, and improving consumption trends for healthy foods overall. According to company statements, Hain generated $18 million in sales from new products at Hain Celestial U.S., and recent acquisitions (Sensible Portions, Greek Gods Yogurt) position the company in high-growth categories with natural products complementary to core product offerings.

Wall Street responded favorably to the news, sending Hain’s stock up about 4%. Analysts also responded favorably to improved guidance from Hain for FY2011 by raising their estimates for sales and earnings per share. Hain upped its revenue guidance for FY2011 to $1.025-$1.05 billion, and earnings per share guidance to $1.24-$1.31.

NBJ spoke to Simon a few weeks ago in reporting our current issue on the finance & investment climate for nutrition companies. When asked about his company’s strategic response to the economic downturn, Simon said: “When the turndown hit a year and a half ago, we saw the consumer trading down and buying private label, so we knew we had to take our products to other classes of trade. Our model shifted to go out to more and more of the mass market. At the same time, we continued to work closely with Whole Foods on innovation, new products, and pricing to make sure there was value there. Whole Foods is our biggest retail customer today, so that was clearly important. There’s good growth among the mass market, good growth among club stores, and we are absolutely seeing growth come back in certain retail supermarkets.”

Two industry analysts would concur with this optimistic outlook. Scott Van Winkle of Canaccord Genuity sees reaccelerating growth for Hain. “I’m expecting much better sales and earnings performance over the next 12 months,” said Van Winkle. Andy Wolf of BB&T Capital Markets thinks the company’s recent moves in the U.K. will turn that business around to at least break-even status. “Hain is really well positioned to have a good turnaround in the next couple of years,” said Wolf. “The stock performance has lagged, but we think it could play catchup.”

Wolf also sees the investment in Hain by Carl Icahn—Icahn owns about 5.65 million shares representing about 14% of the company—as a way to bring more financial acumen to an already well-run company. We asked Simon about that investment from Icahn. “I think Carl Icahn is a smart guy,” said Simon. “He likes what we’re doing and likes our brands. I look at him as an opportunistic investor. This is one of his first forays into this category. I think he walked around Whole Foods, saw our presence there, and that’s what got him excited.”

NBJ tackles consumer research in our next issue, slated for publication in September. We’ll focus our critical eye on the modern wellness consumer, and strategies to best utilize research to meet a complex array of global consumer demands.

Related NBJ links:

The Hain Celestial Group’s Irwin Simon Talks Acquisitions with NBJ

2010 Healthy Foods Report

2010 Nutrition Industry Overview Archived Web Seminar

Metagenics Buys Bariatric Advantage in Win-Win Deal

Carlotta Mast — Tue, 24 Aug 2010 17:58:29 +0000

Catalina Lifesciences Inc. is a practitioner supplement firm that I’ve had my eye on this year—and apparently, I am not the only one impressed with the innovative business model behind the company’s brand Bariatric Advantage, a nutritional supplement line designed specifically for weight-loss surgery patients. On August 20, the leading practitioner supplement company Metagenics Inc. announced it was purchasing Catalina Lifesciences for an undisclosed amount.

Helping meet the unique nutritional needs of the 230,000 Americans who undergo weight-loss surgery each year was the impetus behind the creation of Bariatric Advantage in 2002. “After undergoing bariatric surgery, a patient requires special nutritional attention for the remainder of his or her life,” Thomas Kinder, president and CEO of Catalina Lifesciences, told Nutrition Business Journal earlier this year. Once a weight-loss surgeon introduces his or her patient to the Bariatric Advantage line of products, that person could ostensibly be a customer for decades, Kinder added. “The average age for [bariatric] surgery is 40, so it’s a relationship that we could maintain for many, many years.”

The Bariatric Advantage business is a “perfect fit” with Metegenics’ mission of using therapeutic nutrition to combat chronic illness, said Metagenics CEO Fred Howard. “Working together, Metagenics and Bariatric Advantage will shape the market in the rapidly growing bariatric nutrition field,” said Howard (who took over as CEO on August 16, when Metagenics Founder and CEO Jeff Katke became the company’s chairman). “We will continue to invest in scientific validation, new product development and distribution to support these programs.”

Both Metagenics and Bariatric Advantage have successfully sold conventional medical doctors on the benefits of nutritional supplementation—which I believe will play a key role in growing and strengthening the legitimacy of the dietary supplement market moving forward. In the case of Bariatric Advantage, Catalina Lifesciences has relied on practitioner education to bring the majority of bariatric surgeons operating in the United States on board with its supplement products.

“Even though they are doing these invasive procedures that can cause nutritional problems, bariatric surgeons don’t receive nutritional training or generally know much about nutrition,” said Jacqueline Jacques, ND, chief of scientific affairs for Bariatric Advantage. “The more we increase what we do with education and support services, the better our [surgeon] retention is and the more we continue to experience accelerated growth, even in a down economy.”

Bariatric Advantage also uses the Internet to support its surgeons’ sales. According to Kinder, the company has built e-stores for more than 500 of its bariatric surgeon customers, who typically sell Bariatric Advantage supplements as a value-added service for their patients. “Obviously, the e-commerce component helps with sales, but it also enables patients to stay in contact with their doctor and learn about changes to the nutrition protocol for this category,” Kinder told NBJ. Thanks to help from the Internet and customers who require specific nutritional supplements for the rest of their lives, nearly 60% of Bariatric Advantage’s sales are generated via auto-ship programs set up on the web, Kinder said.

Under the Metagenics’ umbrella, Bariatric Advantage will retain its branding and continue to be run by Kinder and his leadership team. Said Kinder, “The additional resources provided by Metagenics’ research, business systems and global presence will expand our ability to bring the advantages of our products to a much broader audience of bariatric patients and healthcare professionals worldwide.”

For more on recent M&A transactions within the nutrition industry, check out NBJ’s Finance and Investment issue (which is hitting subscriber mailboxes now).

Taking Stock of Nutrition

Marc Brush — Tue, 17 Aug 2010 17:23:42 +0000

NBJ tackles the complex topic of finance & investment in the nutrition industry with our next issue, now on its way to the printer. As we digest all of the research and trending that surfaced in the reporting of that issue, expect some discussion in the coming weeks on the blog about such topics as holistic investing, moving upstream through the murky waters of deal flow, and the modern challenges of being a nutrition entrepreneur. Today, though, let’s talk about the equity markets.

I spoke to Scott Van Winkle of Canaccord Genuity and, on a separate call, Andy Wolf of BB&T Capital Markets to gain some visibility into smart money’s opinion of the road ahead for nutrition stocks. Excerpts from those conversations follow below.

NBJ: Let’s look at the major industry categories in nutrition and talk about year-to-date performance. How about natural & organic foods?

Scott Van Winkle: In general, healthy-living stocks have outperformed the market this year. Natural & organic has the best sector performance, up about 12%. These stocks didn’t start to come back until later in the cycle, but now they are beginning to reflect improved growth in the category.

Andy Wolf: Natural & organic is about 80-90% recovered, in terms of underlying growth trends. It’s really come back as a category. You can see it in the industry numbers and in the company numbers. There’s been a little bit of channel play, and you can still see some slack in demand at conventional stores, but that too is starting to show a rebound. The demand never went away for natural & organic, but in the recession, even dedicated users were worried about finances. Now most of them have made the budget allocation and returned to the category.

NBJ: And supplements?

SVW: Supplements are down about 12%, but the 40% move in NBTY improves that number dramatically. Supplements performed well last year with strong industry trends, and those trends persist, but investors lack faith. Strong category growth brings increased competition, and as we anniversary the jump in sales from swine flu, people expect a slow down. Vitamins were up 18% in October/November 2009. That kind of growth was obviously driven by the cold and flu season, in turn driven by swine flu.

AW: Supplements have had a multi-year run as consumers adopt these healthy lifestyle choices. People want to live better and feel better. Supplements also enjoy a countercyclical demand. As unemployment goes up and consumers lose more health-care benefits, more people use supplements as a substitute for doctor visits—which are down, by the way. It’s a prophylactic approach. Demand looks robust to me across all sales channels for supplements.

NBJ: What are you seeing for multi-level marketers (MLM) and ingredient suppliers?

SVW: Ingredients are up about 3% through the end of July. Last year, the farther down the supply chain you were from the consumer, the likelier you were to see your customers deload or reduce inventory. Ingredient suppliers had a tough time in 2009. There weren’t a lot of new product launches, and customers were cleaning out their inventories. There are signs of more aggressive ordering now, so the fundamental businesses are stronger than they were coming out of last year.

As for MLMs, they’re up about 5%. These stocks outperformed early, because their business was stronger on a relative basis. With weak economics, everybody buys less, but there’s more unemployment and more people looking for part-time work. In a weak economic cycle, more new distributors come online, even though their average sales level drops. Net-net, MLMs were less impacted by global economic issues.

NBJ: What about functional foods?

AW: Functional foods have really lagged. Why? Mix. Most functional products are sold through conventional stores, and demand hasn’t picked up as well in the mass market. I don’t see a real recovery for functional foods until the broader economic recovery is more firmly entrenched sometime in 2011.

NBJ: Looking ahead, where do you see the best performance and the biggest challenges?

AW: The big issue for 2011 is converts. For 20 years now, consumers have been moving, in one way or another, from conventional to organic. The demand curve is still there, but all of the core customers have already come back. Whole Foods Market and other retailers are seeing new customers come into the channel, but for that to continue, well, the economy will have something to say about that as well.

SVW: Retailers are in a very good position in general. They are demanding price concessions from suppliers, and suppliers are giving them. Whole Foods Market and Vitamin Shoppe are in good position, thanks to this competitive advantage over suppliers. Over the next six to 12 months, I think the MLM sector is going to perform quite well. Natural foods will perform well. Supplements will tread water due to Wall Street’s impression of decelerating growth.

Related links:

Quick Take on NBTY Acquisition

2010 Healthy Foods Report

2010 Direct-to-Consumer Selling in the Nutrition Industry Report

A Response to Consumer Reports’ Scary Supplements

Marc Brush — Tue, 03 Aug 2010 18:46:58 +0000

There is a very clear takeaway from the cover story in September’s Consumer Reports (CR): Modern media thrives on fear. Modern media thrives on any number of heightened human emotional responses, but fear is one of the biggies. Add in a health scare, and you can (presumably) sell lots of magazines.

In a piece titled, “The 12 Most Dangerous Supplements,” CR profiles several adverse outcomes from consumers of supplements who ingested tainted or overhyped products that sent their bodies into dramatic disarray. One man in Signal Mountain, Tenn. took a general health supplement overloaded with selenium and his fingernails fell off. A woman in Bartlesville, Okla. took colloidal silver to fight Lyme disease and her skin turned blue. A man in Janesville, Wis. took Hydroxycut to lose five pounds and developed acute hepatitis. These are tragic outcomes, worthy of spotlight, and certainly worthy of a healthy dose of fearmongering to prevent repeat occurrences.

What seems less worthy is the prominence of this coverage, and the sure-to-become-viral nature of its impact. My father just emailed me a link to the story this morning, and the issue has barely hit the stands. Watch the nightly news this week, and you’ll have to fight back an impulse to clear out your medicine cabinet.

From my perspective, what’s most newsworthy about the news from CR is the immateriality of the supplements in question, a so-called “dirty dozen.” Colloidal silver? Kava? Coltsfoot? These are not mainstream supplement products. This is, yet again, a bright spotlight choosing to shine on the dark alleys and niche markets of the industry.

Here at NBJ, we thrive on research and quantitative results to fundamentally drive our colorful, insightful and qualitative commentary. In fact, CR cites our sizing of the overall supplement market ($26+ billion in 2009) in the first paragraph of the story. Here are a few more stats:

Top 3 Supplements by 2009 Sales Volume
Multivitamins, $4.8 billion
Sports powders & formulas, $2.5 billion
B vitamins, $1.2 billion

Dirty Dozen Supplements by 2009 Sales Volume
Kava, $20 million
Bitter orange, $20 million
Yohimbe, $10 million

The other nine are too small to track independently, so we lump them into an Other Herbs & Botanicals bucket.

To its credit, CR has a serious and important mission to protect consumers from the likes of colloidal silver and other supplements with dangerously inaccurate label claims. I do not mean to disparage CR’s right and duty to report a story like this. What I do want to suggest, for CR and the rest of the modern mainstream media to hear with wide-open ears, is this: The supplement industry is too big and too nuanced now to paint with one coarse brush. There is earnest and important research happening around the 12 least dangerous supplements, whatever those might be, and reporting of that nature might be more useful, though less frightening, to a population of consumers looking to stay healthy in a broken health care system.

Let’s talk more about the $2.5 billion market for sports supplements, which CR rightly highlights as more prone than others to adulteration. And let’s talk more about the supplements CR profiles as popular and “likely” safe. There are some material sales levels at play here, so I’ll close with a few more stats:

CR’s 11 Supplements to Consider by 2009 Sales Volume
Calcium, $1.2 billion
Cranberry, $78 million
Fish oil, $976 million*
Glucosamine sulfate, $803 million**
Probiotics, $527 million***
Psyllium, $89 million
Pygeum, $7 million
SAMe, $123 million
St. John’s wort, $57 million
Vitamin D, $425 million

*NBJ tracks a collective fish/animal oil.
**NBJ tracks glucosamine with chondroitin.
***CR lists lactase and lactobacillus, which NBJ does not track independently.

As always, NBJ welcomes your comments below.

Related NBJ links:

‘09 Sales Growth Sputters in Every Nutrition Category as Economy Takes its Toll

2010 Nutrition Industry Overview Web Seminar

Supplement Research

MMS: Why Is This Product Still on the Market?

Carlotta Mast — Tue, 03 Aug 2010 17:35:06 +0000

The supplement market has been hit with some pretty negative press over the last week, thanks to the meta-analysis questioning the safety of calcium supplements and Consumer Reports’ cover story on what it calls “the 12 most dangerous supplements.” Yet, it’s a third piece of news that broke regarding a product called the Miracle Mineral Solution that has me concerned. After all, the quality and validity of the calcium meta-analysis is debatable, and the Consumer Reports piece also advises consumers to consider taking what the magazine says are 11 safe and beneficial supplements—but I believe the MMS issue is a symptom of a more serious problem that threatens the legitimacy of the entire supplement industry.

On July 30, the U.S. Food and Drug Administration (FDA) issued a warning to consumers about Miracle Mineral Solution (also called Miracle Mineral Supplement and MMS). What’s the cause of FDA’s concern? Well, apparently when this product is consumed according to the directions on its label, this liquid mineral supplement turns into a “potent bleach used for stripping textiles and industrial water treatment,” the agency reported in a warning letter to consumers. As if that weren’t alarming enough, MMS marketers and distributors claim the product can treat an unbelievable range of diseases, including HIV, hepatitis, the H1N1 flu virus, acne and cancer.

Available for purchase via a wide range of Internet sites (including Amazon.com and eBay) and sold through several different companies, MMS contains 28% sodium chlorite. The product’s labeling advises consumers to mix MMS with an acidic drink such as orange juice, which turns the solution into an industrial-strength bleach. The FDA said it received several reports from consumers using MMS who experienced serious adverse reactions, including “severe nausea, vomiting and life-threatening low-blood pressure from dehydration.”

Upon reading the FDA’s warning, my immediate reaction was, “Why the heck is this product still on the market?” The agency did say it is continuing to investigate MMS and “may pursue civil or criminal enforcement actions as appropriate to protect the public from this potentially dangerous product,” but I’m wondering what will be required to push the agency to take more forceful action.

I posed that question to supplement and food attorney Marc Ullman, who turned out to be equally perplexed by this situation. “I have no idea why this product is still on the market,” Ullman told me via e-mail. “To my knowledge, the long history of outrageous claims associated with [MMS] is well documented.” According to Ullman, the last product posing such potential health risks was GHB (gamma-hydroxybutyric acid), a precursor to GBL (gamma buterol lactone), a.k.a. “date rape drug.”

“FDA did bring criminal charges against some distributors in that instance,” Ullman said. “If the allegations here are correct, I think that similar action would be warranted. In fact, I believe that criminal charges could easily be justified based on the kind of claims associated with MMS alone.”

What do you think should happen with MMS? Should responsible industry take steps to get involved and protect itself from products such as MMS?

Related NBJ links:

2010 Nutrition Industry Overview Web Seminar

FDA Files Motion to Shut Down Three Sports Supplement Manufacturers

From Zander to Ohno, Inspiration Abounds at 2010 NBJ Summit

Carlotta Mast — Tue, 27 Jul 2010 16:32:40 +0000

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.

Quick Take on NBTY Acquisition

Marc Brush — Fri, 23 Jul 2010 16:28:21 +0000

I spoke with Scott Van Winkle of Canaccord Genuity this week to parse the pending acquisition of NBTY, Inc. by the Carlyle Group, an asset manager based in Washington, DC with more than $90 billion invested in companies and real estate across the globe. NBTY is a leading manufacturer and marketer of nutritional supplements, with 22,000 products sold worldwide under a host of brand names, including Nature’s Bounty and Puritan’s Pride.

The deal has support of NBTY management and is expected to close late this year. Carlyle offered $55 per share, a significant premium over the current stock price, for a total transaction cost approaching $3.8 billion. Or so I thought. “The irony is that it’s really not much of a premium to the stock price from April of this year, when NBTY traded at $51,” says Van Winkle. “It’s only 8% above the three-month high for the stock.”

According to Van Winkle, Carlyle’s valuation of NBTY on an absolute basis is not that expensive at 8.6 times EBITDA. Relative to peer companies, the valuation places a slight 5-10% premium on NBTY compared to market prices for Herbalife, NuSkin and a host of supplement companies. The bottom line, however, is actually how little such a big deal says about the state of the nutrition industry.

“This is a financial deal,” says Van Winkle. “If you look at all the businesses you can buy, and you’re going to use leverage, you need cash flow to service that debt. NBTY generates a ton of cash and has done so very consistently over the years. They’re a market leader, so this is a very easy deal at this valuation to justify financially. That’s the game here. This isn’t a strategic play. It’s a financial investment.”

I did ask Van Winkle about the finance & investment climate across the broader industry, a topic NBJ will explore in detail with our next issue, and he hinted at a general lack of confidence from investors in supplement companies. “We are seeing lower valuations,” says Van Winkle. “Back in spring 2009, supplements started growing 10% in the mass market, where NBTY does business. Any time you have a big acceleration in growth that’s hard to justify, you want to discount that level of growth.”

Related NBJ links:

June/July 2010: Nutrition Business Overview

2010 Nutrition Industry Overview Web Seminar

Is New Product Development Finally Picking Up Steam in the U.S. Nutrition Industry?

Whither Goes the Wise Woman

Marc Brush — Tue, 13 Jul 2010 20:46:27 +0000

Nutrition Business Journal is coming down from its healthcare practitioner high, but I couldn’t let the channel rest without discussing Wise Woman Herbals (WWH) out of Creswell, Oregon. In reporting our issue about MLM & Practitioner Sales in the Nutrition Industry, and then again in our issue about Direct-to-Consumer Sales, we heard repeated and emphatic accolades about the quality of WWH’s handmade products.

So I picked up the phone and talked to Dave Garland, Operations Manager for WWH, about the story behind the company’s quiet success. WWH produces more than 350 supplements, with a focus on organic, wildcrafted and natural ingredients sold primarily to healthcare practitioners. You won’t find WWH in many health food stores.

“We’re trying to represent that whole traditional, handcrafted approach to herbal medicine,” says Garland. “We don’t do huge batches. Everything’s small-crafted. We think of ourselves as a micro-manufacturer, if you will, of small-batch tincture.” A key to this philosophy is preservation of whole-herb constituents, working as an herbalist might have hundreds of years ago. In fact, the company name reaches back to a time of village doctors, when every small community had a ‘wise woman’ treating illness with handmade tinctures and herbs.

“We don’t want to strip the herbs, to heat-treat them to death,” says Garland. “Our philosophy is that the whole plant is good, there are things there that we don’t want to destroy.” This allows WWH to exert a high-level of quality control into its processes, from sourcing locally to manufacturing compounds by hand. “We don’t manipulate much,” says Garland. “It’s a more natural approach, if you can have a more natural approach to natural medicine.”

WWH follows cGMPs rigidly, and has operated from the outset with quality and safety a top priority. Many of the companies NBJ encounters at the leading edge of quality control—like Gaia Herbs and Ascenta Health, whose traceability programs get a closer look in our upcoming issue—are companies verily built on the concept. GMPs aren’t a big deal if you’ve been operating in-line with them for a decade.

WWH was one of the first small companies granted cGMP compliance. Many product ingredients are sourced locally in the Cascades and coastal mountain regions, with some vendor relationships dating back 20 years. This is another key ingredient to the current debate about supplement safety and efficacy rearing its head in the media and on Capitol Hill. Safety and efficacy seem, in part, the result of working with trusted vendors, whether you are a manufacturer sourcing component ingredients or a retailer selling finished products. Trusted vendors are the kind of vendors who accept corporate audit programs, independent third-party testing, and strategic alignment with philosophical goals around wildcrafting and organic certification. Trusted suppliers lead to trusted products, and consumer trust in the supplement industry as a whole.

Quality control is all the more important when you sell directly through the healthcare practitioner channel. Some products that Garland refers to as ‘low-dose’—like an anti-parasital supplement with black walnut—have alkaloids and low levels of toxicity that preclude sales to a general, retail audience. These are short-term, low-dose compounds that require professional supervision, and a sharp focus on safety during manufacture.

Another way to make high-quality products? Keep it simple. “Our premise is traditional, naturopathic,” says Garland. “Basic, simple tinctures. Simple compounds. We don’t believe in standardization. There are constituents in the herb we want to preserve.”

Related NBJ links:

NBJ’s Integrative Medicine Report 2009

April 2010: MLM & Practitioner Sales in the Nutrition Industry

Health Practitioners Value Revenue-Generating Potential of Selling Supplements

Atkins Nutritionals: Following Obesity around the World

Marc Brush — Wed, 07 Jul 2010 20:13:41 +0000

I thought about titling this post—“Fat and foreign? Let’s make a deal!”—but that seemed a bit too sensational and disrespectful to Monty Sharma, CEO of Atkins Nutritionals, who inspired the thought. In a recent interview for our upcoming issue on the overall nutrition industry, Sharma discussed global obesity rates and how certain countries, unfortunately, present better growth opportunities for Atkins than others.

In 2009, Atkins expanded operations to Spain, Portugal, the Middle East and India. “The reason these countries are important for us,” says Sharma, “is that obesity and diabetes are rampant there.” He pointed to the Gulf Cooperation Council (GCC) countries in and around Dubai as some of the highest incidences of diabetes and obesity in the world. “These countries have serious issues because of food habits,” says Sharma.

International revenue at Atkins is trending toward 15% of total revenue, up from about 5% in the past two years, when Atkins began a reinvention of itself as a weight-management platform far removed from its ‘no-carbs’ origins. Though specific figures remain unspecified—Atkins is privately held by North Castle Partners—Sharma does verify 45% annual growth on the trailing 52 weeks of data. That’s no small feat given the pernicious softness of the U.S. economy.

Looking forward, Sharma sees potential in the Benelux countries, Sweden, Norway, South Africa and Germany. “We will continue to grow internationally in 2010,” says Sharma. “The markets we look at are all very good markets in terms of their obesity.”

A further sobering thought from Sharma that I can’t seem to shake: “The number of people overweight and obese overseas is far greater than that in the U.S. The opportunity overseas is greater, one would argue, than the sales opportunity here in the U.S.” There are too many ways to digest a statement like that in a mere blog post, but let’s just say that the growing trend toward wellness has some big hurdles to overcome far beyond the usual suspects of consumer education, regulatory scrutiny and competitive pressures.

Related NBJ links:

SNWL Sales Suffer Blow from Recession and Flurry of Negative News Events

Spain: An Innovator in the Global Functional Food Market

Healthy, Lesser-Evil & Functional Foods

Supplement Leaders Trend toward Transparency

Marc Brush — Tue, 29 Jun 2010 19:07:17 +0000

I spoke recently to Rene LeClerc, Vice President of Sales at Ascenta Health, about the world of fish oil. In the process of researching an upcoming story about traceability tools in the supplement industry, I came across Ascenta’s Pure Check platform, featured prominently on its website and packaging. Pure Check lets a consumer track, with just a few clicks, the specific ingredient content and quality markers of the very bottle he purchased at the store. It’s a compelling and friendly approach to building consumer confidence, and verifying that NutraSea products (Ascenta’s branded line of fish oil supplements) are as pure and potent as they claim to be.

“The reason we launched Pure Check?” says LeClerc. “We were frustrated. Every fish oil company was saying the same thing. They all claimed to have the purest, the highest-quality fish oil. Everyone was saying it, but no one was backing it up.” It’s easy to get frustrated in today’s world of supplements, where marketing claims sometimes stretch beyond legal and responsible limits, but it’s also becoming easier to separate the wheat from the chaff.

I talked to several companies in the past few weeks with new, web-based traceability tools at the top of their priority lists. These companies tend to be industry leaders. They tend to be the very sorts of companies you’d expect to have the resources and expertise to provide more transparency into their manufacturing process. Ascenta, a powerful player in the Canadian market now making major inroads into key distribution accounts across the U.S., appears to be among their ranks.

Maybe a company’s genuine commitment to quality has something to do with its ability to achieve and maintain a leadership position, and maybe innovations on the traceability front will have something to do with steering the entire industry toward more transparency and credibility in the months and years to come. Says LeClerc: “With Pure Check, we simply wanted to put our money where our mouth is, and show our consumers that, when taking NutraSea, they were getting a quality, clean product, every time, every batch. We wanted to go so far as posting the results of every batch online—full transparency, full disclosure. I don’t have one batch of product in the marketplace anywhere where you cannot get the third-party quality report for that batch on our website. That is by far the most powerful point of difference about our line.”

Be sure to check out the next issue of Nutrition Business Journal, our annual overview of the entire nutrition industry, for more about Ascenta and the trend toward traceability. Subscribe now, or come back in July when the issue goes on sale.

Related NBJ links:

NBJ Video Interview: Gaia Herbs Introduces ‘Meet Your Herbs’

2010 Archived Practitioner Supplement Sales Web Seminar

2009 Supplement Business Report