Nutrition Business Journal

BOULDER, Colo. (March 9, 2009) — The 29th annual Natural Products Expo West/SupplyExpo (www.expowest.com), held March 5-8, 2009, at the Anaheim Convention Center in Calif., engaged more than 53,000 industry members in active business, up from last year’s record-breaking event. The event showcased the newest and most innovative products in natural, organic, and healthy living.

“Natural Products Expo West has been incredible. The show floor here certainly does not look like there’s a recession in this country,” said Stephen Brooks, Co-CEO, of Kopali Organics, a Miami, Florida-based company that buys from small organic farmers from around the world.

According to Nutrition Business Journal, consumer sales of nutrition products grew an estimated 9 percent in 2008 to more than $100 billion.

“Retail buyers need face-to-face meetings, particularly in a slower economy,” said Adam Andersen, show manager of Natural Products Expo West. “Buyers come to this show to seek out those new products that will fly off their shelves and offer a competitive advantage to their stores.”

Natural Products Expo West 2009 occupied 300,000 square feet and featured more than 1,900 exhibiting companies from 28 countries, with 484 new exhibitors. The show’s success proved that, despite a cool economy, innovation and retailer interest in natural products remains strong. Co-located events included Fresh Ideas Organic Marketplace, Healthy Baking Seminar, Nutracon, and SupplyExpo (www.supplyexpo.com), which featured the latest ingredients and manufacturing supplies.

“Products and technologies introduced at SupplyExpo allow manufacturers to get a head start in highly competitive and emerging markets around the world,” said Len Monheit, supply portfolio director with New Hope Natural Media.

Last year’s Natural Products Expo West/SupplyExpo was honored by Tradeshow Week as one of the “Top 50 Fastest Growing Shows” and was awarded a prestigious Gold Standard Award by Trade Show Executive magazine as a “Leader in Green Initiatives.” This year’s sister trade show, Natural Products Expo East, will splash down in Boston, Sept. 23-26, 2009, celebrating its 24th anniversary.

New Hope Natural Media (www.newhope.com), a division of the Penton Media Inc., is the leading media resource and information provider for the natural, organic and healthy products industry, with print, in-person/event, and e-business products and services. Penton Media is the largest independent business-to-business media company in the U.S., serving more than 6 million business professionals every month. The company’s market-leading brands are focused on 30 industries and include 113 trade magazines, 145 Web sites, 150 industry trade shows and conferences, and more than 500 information data products. Headquartered in New York City, the privately held company is owned by MidOcean Partners and U.S. Equity Partners II, an investment fund sponsored by Wasserstein & Co. , LP, and its co-investors. For additional information on the company and its businesses, visit www.penton.com.

Just in case you needed one more reason to take your vitamin C supplement tomorrow morning, I came across this study that links high vitamin C intake levels with lower arthritis risk. The study was published in the Archives of Internal Medicine and found that consuming more vitamin C may help reduce the risk of developing gout (a painful form of arthritis). The analysis was based on a study of almost 47,000 men who regularly consumed vitamin C between 1986 and 2006.

The study found that for every 500 mg increase in vitamin C intake, the risk for gout fell 17%. More than 1,300 of the research subjects developed gout. Compared with those whose vitamin C intake through food and supplements was less than 250 milligrams a day, the risk for gout was 17% lower among men with a daily intake of 500 to 999 milligrams, 34% lower for those who took in 1,000 to 1,499 milligrams, and 45% lower with a daily intake of 1,500 milligrams or more. Vitamin C appears to reduce levels of uric acid in the blood, according to Dr. Hyon Choi, lead author of the report. If untreated, the compound can form crystal deposits around joints, leading to the symptoms associated with gout.

“Given the general safety profile associated with vitamin C intake, particularly in the generally consumed ranges as in the present study (e.g., tolerable upper intake level of vitamin C of less than 2,000 milligrams in adults according to the Food and Nutrition Board, Institute of Medicine), vitamin C intake may provide a useful option in the prevention of gout,” Choi concluded.

U.S. consumer sales of vitamin C increased 2.3% to $884 million in 2007, according to NBJ estimates. NBJ forecasted vitamin C sales growing another 3-5% in 2008. NBJ will present 2008 vitamin sales estimates as part of the June/July Industry Overview issue.

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Study Deals a Second Blow to Vitamin E and C

Vitamin Category Struggles with Disappointing News

Our friends at Supermarket News announced Whole Foods’ intention to sell 32 stores, most of which are closed, in a settlement agreement with the Federal Trade Commission. The stores that will be sold include 19 Wild Oats locations, ten of which were closed by Wild Oats prior to the merger. The 13 stores to be sold that are currently operating include 12 Wild Oats locations and one Whole Foods store. A total of seven Colorado stores, five that are currently operating, are included in the settlement.

Whole Foods also has six months to sell intellectual property and trademarks associated with Wild Oats. This comes on the heels of a long battle with the FTC, in which the company has reportedly spent in excess of $16.5 million to fight the case. So what is the outlook for Whole Foods?

The retailer secured an investment in January 2008, by The Yucaipa Companies, LLC., led by supermarket investment mogul Ron Burkle. I spoke with Andrew Wolf of BB&T Capital earlier this week and he viewed the investment as a big vote of confidence. He also spoke favorably about the store’s outlook, despite the unfavorable economic conditions and problems with the FTC. “I think that in the long term, once economy turns, Whole Foods is still very valuable concept. There will still be enough people interested in best quality natural and organic.” He went on to comment on the company’s current positioning. “Whole Foods core grocery is doing ok, because the customer knows that price points are lower and they are pretty well priced in the middle of the store. It’s the high quality perimeter where consumers are trading down to lesser quality or taking a pass.”

Scott Van Winkle, Managing Director of Canaccord Adams, thinks the company may have endured the brunt of the storm in 2008 and positioned themselves well for a rebound. “I think they saw their trough in the pace of the decline of purchasing from consumers in November and December. All of the efforts they have made over the last 9 months are going to start to bear some fruits–slowing down the pace of store development, cost controls they’ve done in Austin, headcount reductions and a hiring freeze, that should result in more attrition, improving margins.”

So one might conclude that the company has done a good job managing the forces they can control, now it just needs the macroeconomic conditions to improve. “They’ve already cut prices, given better value, now they just need to educate their consumer that it’s not that expensive at whole foods,” added Van Winkle.

Related–

Court to Whole Foods: FTC Trial Won’t Be Thrown Out

Whole Foods Strives to Shrug Off Whole Paycheck Image in Current Economic Climate

Mannatech Inc., a multilevel/network marketer of dietary supplements, has agreed to pay $4 million in restitution to Texas customers in a settlement with the Texas Attorney General. The company and its former CEO Samuel L. Caster were accused of unlawfully marketing products from 2002 to 2006 by exaggerating their health benefits. In addition to the $4 million, the company will pay $2 million to cover fees and expenses of Texas regulators, and Caster will pay a $1 million civil penalty and is prevented from serving as an employee of Mannatech for the next five years.

Mannatech’s marketing materials falsely claimed that its supplements could cure and treat down syndrome, cystic fibrosis, cancer and other serious illnesses. Under state and federal law, drug manufacturers cannot claim their products cure, treat, mitigate or prevent illness unless the product has been approved by the U.S. Food and Drug Administration as a drug. The state also cited Mannatech for encouraging product testimonials that exaggerated the products’ healing effects. The company reportedly used misleading “before and after” photos that deceived consumers.

The Texas Attorney General commented on the civil action in a press release. “Texans will not tolerate illegal marketing schemes that prey upon the sick and unsuspecting. These deceptive practices posed a health risk to seriously ill consumers who may forgo traditional medical attention because of the company’s false claims. Today’s agreements put an end to Mannatech’s deceptive marketing practices in Texas.”

Mannatech detailed “significant changes” to its operating practices in a press release. Those changes include the expansion of its compliance department, banning the use of disease claims and implementing a six-month money back guarantee on all of its products.

Clearly, the government—be it federal or state—is increasingly cracking down on blatantly false supplement marketing claims. The claims only serve to tarnish the image of the all supplement companies and add to the misperception that this is a rogue, unregulated industry. News like this Mannatech story will always be bad for the industry, but it could be particularly harmful during tough economic times when consumers are being more careful than ever with their healthcare spending.

Related-

Mannatech Cuts U.S. Workforce by 15%

Mannatech Reports Mixed Q1 Company Performance

Nutrition Business Journal is hosting and moderating a number of panels later this week at Natural Products Expo West in Anaheim, California.

We hope to see you at these events:

Wednesday, March 4

* NBJ Publisher and Editorial Director Patrick Rea, NBJ Editor Carlotta Mast and Natural Products Consulting Group Principal Bob Burke will give our State of the Industry presentation to Nutracon attendees from 12:30 p.m. to 2 p.m. in the Anaheim Hilton.

Thursday, March 5

Michael Movitz, vice president of business development at SPINS, will join Patrick, Carlotta and Bob for NBJ’s State of the Industry: Hot New Products and Industry Trends presentation from 10:30 a.m. to noon in room 204AB of the Anaheim Convention Center. We will discuss the latest nutrition industry growth figures, identify key trends for 2009, highlight the hottest products on the market, and address the challenges facing the industry this year and beyond.

* Starting at 1 p.m., Patrick will be dishing out the NBJ data during private one-on-one “speed data” sessions with Nutracon attendees.

* At 3 p.m., Patrick will discuss the state of the nutrition industry with Global Business Program participants.

* Carlotta will join Chef Ann Cooper, Organic Bistro’s Laryn Callaway and YoNaturals’ Mark Trotter to discuss the opportunities and challenges facing retailers and manufacturers in the kids nutrition market during the Healthy Children, Healthy Future panel, which runs from 4:30 p.m. to 5:45 p.m. in room 207B of the convention center.

Friday, March 6

* Patrick will take on the issue of genetically modified food with UNFI’s Michael Funk, Helen Holder of Friends of the Earth, FoodChain Global Advisors’ John Fagan and Consumer Union’s Michal Hansen during the GMOs: Gettin’ M Out of Our Food panel from 8:30 a.m. to 10 a.m. in room 207A.

* Next door in room 207B, Carlotta will do the introductions for the Natural Products Marketing: Lean and Green SupplyExpo Seminar from 8:30 a.m. to 10 a.m. This event will feature Jeff Hilton, president of the Integrated Marketing Group, and Jon Goldman, a leading expert on unusual marketing techniques that achieve monstrous results.

Saturday, March 7

* Don’t miss Nutrition Capital Network’s 2009 Investor Forum at Expo West. The meeting will take place from 8 a.m. to 10 a.m. in room 207A of the Anaheim Convention Center. Designed for investors in the nutrition, natural products, healthy foods and green products industry, this NCN Investor Forum will present current perspective on industry trends and the investment climate, case studies of representative recent deals, and a qualified list of companies exhibiting at Natural Products ExpoWest that are also interested in raising capital. The Forum is free and open exclusively to investors registered for Expo West.

If we don’t see you at one of these events, we hope to be able catch up with you on the tradeshow floor or at one of the many social events planned for this year’s Expo West. Also, be sure to check out NBJ’s Twitter page to read Patrick’s updates throughout the show.