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Associations Work to Prevent Swine Flu from Infecting Supplement Industry with False Claims

The FDA is bracing for an onslaught of dietary supplements and other products making false or misleading claims for the H1N1, or swine flu, virus. A quick Internet search found that a number of U.S. companies are currently touting products they say can prevent or cure the H1N1 virus. In an effort to get out in front of what could be a public relations nightmare and provide fuel for tighter supplement regulation in the future, a coalition of supplement industry trade associations issued a statement today urging supplement manufacturers and retailers to “refuse to stock or sell any supplements that are presented as treating or curing swine flu” and to “refrain from promoting any dietary supplement as a cure or treatment for swine flu.”

The groups backing the statement are the American Herbal Products Association, the Consumer Healthcare Products Association, the Council for Responsible Nutrition and the Natural Products Association. In their statement, the groups also noted that “federal law does not allow dietary supplements to claim to treat any diseases, including swine flu” and that they are “unaware of any scientific data supporting the use of dietary supplements to treat swine flu.”

The statement did note that “there are dietary supplements that have much to offer in terms of enhancing general immune function. However, therapies for the treatment of swine flu should only be recommended by qualified healthcare professionals or public health authorities.”

Given mounting public anxiety in the United States and beyond over the fast-spreading H1N1 virus, the associations’ action is an important step in encouraging the supplement industry to act responsibly and legally in the face of a potential health crisis. Let’s just hope companies heed their warning rather than put the industry in jeopardy by attempting to milk profits from public fear.

Related links:

Natural Products Foundation Urges full Enforcement of the Law Regarding False Advertising for Dietary Supplements

Industry Making Strides in Improving Tarnished Image of Weight-Loss Supplements

Avian Flu: Consumer Scenarios and Responsible Marketing

FTC Files Complaint Against New Jersey Supplement Suppliers

The Federal Trade Commission (FTC) has charged a group of Delaware-based supplement suppliers with making false and deceptive claims surrounding the sale of hoodia gordonii, or in some cases, an adulterated hoodia product. The complaint names four individuals who were employed by Nutraceuticals International or Stella Labs as being the parties liable for the charges.

The individuals allegedly provided customers with documents touting the following false claims: that it would enable consumers to lose weight and suppress appetites; that it was scientifically proven to suppress appetite, resulting in weight loss; that it was clinically proven to reduce caloric intake by 1,000 to 2,000 calories per day; that it was derived from South African Hoodia gordonii; and that hoodia was an effective treatment for obesity. The FTC hopes to permanently bar the defendants from deceptively advertising hoodia and a forfeiture of the profits obtained from sales of their hoodia products.

While this appears to be an isolated incident, the case underscores the concerns that remain about the dietary supplement industry’s ability to police itself, both at a supply and finished goods level. Cases like this where the FTC is forced to get involved only serve to tarnish the reputation of the entire industry. In NBJ’s upcoming Direct Selling in the Nutrition Industry issue, we will take an in-depth look at the claims being made by supplement manufacturers and marketers on the internet, and the difficulties the FTC faces in trying to regulate the disparate e-commerce markets. To download a free sample issue of Nutrition Business Journal, including content from the 2008 Direct Selling issue, please visit our subscriber page.


Relates Links:

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

Whole Foods Sues FTC

FDA Sends Warning to Bayer About Drugmaker’s OTC-Supplement Combo Products

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Related Topics: Regulatory Issues

NBTY Reports Solid Q2 Sales Growth, Investors Take Notice

Shares of NBTY jumped over 27% after the company reported a 12% net sales increase for the fiscal second quarter ended March 31. The company also reported a 20% net sales increase for the combined results of the first two quarters, driven by its Wholesale/U.S. Nutrition division. Profitability remains a concern, as total gross profit margins were down 9% for the quarter, though CEO Scott Rudolph chocked that up to foreign exchange and inflationary pressures—the British Pound Sterling declined 27% compared to the previous quarter–and noted that the company continues to garner greater market share in the supplement market.

The company’s wholesale division continues to drive growth within the company, as total revenues increased 35% to $350 million for the quarter. That represents the only one of NBTY’s four divisions to post growth for the quarter, as domestic retail growth was flat and European retail was down 15%. Direct and e-commerce sales fell 6% compared to the second quarter of 2008.

Profitability in the wholesale division actually decreased from 41% to 27% for the second quarter. The company’s wholesale profit margin has been negatively affected by a raw material market that has seen significant price increases over the last 18 months. In January, executives announced their plans to begin passing along increased raw material costs to consumers. Up until that point, the company had been hesitant to pass along any increases because both the supply and consumer markets were so volatile. The company has increased costs over the last three months, but the increases have not been enough to offset increased material costs. NBTY made a conscious effort to be one of the last companies in the market to increase costs to consumers, according to Rudolph, and it would appear as though the company’s profitability has been slow to catch-up as a result.

Still, investors and analysts see a bright future for NBTY. As of April 28, shares were up 34% over a five day period and were trading at $25.22 per share. RBC Capital upgraded the stock from “Sector Perform” to “Outperform” status. Canaccord Adams increased its target price from $24 to $25 and expressed confidence that profit margins will improve over the next 6 to 9 months.

NBJ doesn’t anticipate any significant bumps in the road for NBTY now that Leiner has been fully integrated. Its wholesale margins can only improve as the company is able to realize profits associated with price increases. Once the retail and direct selling markets begin to show signs of recovery, the company should be firing on all cylinders.


Related Links:

NBTY Revenues Up, Profit Margin Down for Fiscal ‘09 Q1

NBTY Reports Strong October and November Sales Growth

NBTY Reports Strong 3rd Quarter Sales

Who Is to Blame for Childhood Obesity?

I’m a big fan of comedian Bill Maher, host of HBO’s Real Time With Bill Maher, in large part because he is such a strong proponent of good nutrition (high-fructose corn syrup is his nutritional nemesis) and of creating a U.S. healthcare system that is focused on preventing disease before it takes hold. This was a topic Maher addressed yet again on his April 24, 2009, Real Time broadcast. I’m posting a partial transcript of the discussion here because it touches upon many of the issues NBJ has been thinking and writing about as part of our healthy kids’ market research. I found the exchange between Maher and New York Times’ ethics columnist Randy Cohen over the question of who is to blame for the current childhood obesity epidemic particularly salient for the U.S. nutrition industry.

Bill Maher: We are never going to solve this healthcare crisis unless people make the connection that most of what they buy in the supermarket is making them sick. Then the pharmaceutical companies offer relief, which makes them sicker. I know I am a broken record on this, but it is true. I mean, I read this last week that one out of four children under 4 is obese. I gotta ask the question, because kids don’t feed themselves at that age, is that not child abuse?

Randy Cohen, New York Times ethics columnist: Well, wait a second. I think you’re blaming the victim an awful lot here. There are many reasons why that kid is overweight. One reason is that there is so much car traffic that he can no longer walk to school the way we could when I was a kid. So that exercise is impossible. We’ve cut the budget at his school so there is no gym program, so he doesn’t get that kind of exercise. McDonald’s advertisements are a billion dollars a year to promote [fast food]. You’re saying this little four year old should stand up and say, “No, no! Bring on the carrots.”

Maher: No, I’m saying his parents should.

Cohen: Even when you’re asking an individual parent to stand up against the weight of massive social forces…

Maher: Well, when it’s your child, yes, you should.

Cohen: Well, it would be a lovely thing if everyone could.

Howard Dean, former Democratic National Committee chairman: I think Bill is on to something here. You know, we’re talking about healthcare reform in Washington. All we talk about is Medicare and who gets what and public and private and all of this stuff. A lot of the health problems in this country are [due to] lifestyle choices. They really are.

Cohen: I reject this. What you’re calling a choice… the reason the kids in my old neighborhood don’t ride their bikes to school is because it is much too dangerous to ride their bikes to school. There is too much traffic. Their parents are right not to let them. That is not a lifestyle choice. That is responding to the actual world that we live in.

Maher: Then go to the park.

Bethany McLean, Vanity Fair contributing editor: They had soda pop and chocolate when I was growing up, and we didn’t have it in the house because my mom wouldn’t let me eat it. She took our Halloween candy away and doled it out over the course of the year.

Cohen: Your mom is so mean [laugh]. But when McDonald’s spends a billion dollars a year to advertise to these kids, they are not doing it because it is ineffective. To suddenly say, oh, why doesn’t this working mother stand up for her kids and say no.

Dean: It’s not just the working mothers. The whole society has to say no.

Cohen: Thank you. Thank you.

Dean: We have to have a wellness society instead of an illness model.

Dana Gould, comedian: My kids are 5 and 6 and we go through this. They do want to go to McDonald’s, and it’s hard to keep the bad things… the bad things just have to be out of the house. And it’s hard. Everybody is running around, everybody is busy. But you do just have to sit down ahead of time, like we do on Sunday night, and say, “Here’s the healthy stuff. These are the healthy choices.”

Dean: Not to beat up on McDonald’s too much. Look at McDonald’s changes in the menu. They’re not perfect, but they have gotten a lot better. Why? Because people like you [points to Dana Gould] have said, “I’m not taking my kids to McDonald’s unless you start having salads and stuff like that.”

Cohen: Whenever someone starts saying, “It’s all the mother’s fault,” that is when I reach for my actually quite legal automatic gun [smiles], because you’re ignoring the tremendous social forces that lead the world to be the way it is.

Maher: Well, for the ethicist, you’re such an apologist.

Cohen: I’m not an apologist, but I think you’re blaming the wrong people.

Maher: I think you have a tremendous lack of personal responsibility… I’m not going to follow your ethics anymore, Mr. Ethicist [laugh].

Cohen: I think you’re seeing people as isolated, atomized individuals when in fact they are social creatures. They are members of communities, and people tend to behave pretty much like their neighbors. So this doesn’t eliminate our responsibility. It means we have a responsibility to create good neighborhoods, and that is politics and that is social policy and that is why Canadians are so slender and attractive. It is because of that. It is a healthier society. It is why Tuscany is so damn pretty and why no one wants their summer houses in Detroit. [laugh]

Gould: But it goes back to what we were talking about before: unlimited consumption. … [we now have] fun size Snickers bars, which are the size of support beams [laugh]. There is no cause for that. No one should eat that much Snickers. At a certain point it stops being fun. It just becomes suicide.

Maher: No one should eat any Snickers. Excuse me, but where you folks set the bar, where you set the goal post on health is going to keep us sick for the next century.


Related links:

U.S. Healthy Kids’ Market Positioned to Tackle Obesity and Other Top Health Issues

Renegade Lunch Lady Takes on School Lunch Programs

Much Work Remains in U.S. Diabesity War, Author Says

Nutrition Industry Must Tackle Childhood Obesity Epidemic Head On

Over the last several months, the NBJ team has been deeply immersed in studying, researching, analyzing and scrutinizing the U.S. healthy children’s market for our U.S. Healthy Kids’ Market Overview issue (which is hot off the presses this week). The more I learn about childhood obesity and the food our kids are eating, the more convinced I become that the nutrition industry must step up and address this problem head on. I mean, heck, we’re living in a country where kids eat more French fries than they do vegetables.

Sure, progress is being made in improving the way our children eat, and this industry is playing an important role in educating parents and kids about nutrition and in rolling out healthier food and beverage offerings for kids. Yet, so much more could be done to create even-better-for-you products that prime children for a lifetime of healthier eating. I’m not talking about organic versions of candy or cookies, but rather tasty, nutrient-dense foods and beverages that help teach kids at an early age to appreciate and crave healthy, whole food fare.

In fact, I believe a convergence of forces—the Obama administration’s focus on children’s nutrition, the childhood obesity epidemic, parents’ growing concern over food quality and safety, and even the troubled economy—is creating a “sweet spot” in the kids’ market for the U.S. nutrition industry. Yes, children’s products in general are hot, but the real growth is likely to be in natural and organic offerings that are truly healthy and free from long ingredient lists, artificial colors and preservatives, high-fructose corn syrup and even common allergens, such as gluten and nuts. As our research and interviews with more than 25 companies revealed, parents are proving increasingly willing to pay for such products for their kids, even if it means scrimping on something for themselves in the current economy.

On May 28, NBJ will host a Web seminar that is designed to help companies evaluate, break into and succeed in the U.S. healthy kids’ market. Along with providing an overview of children’s product sales by category, we’ll delve into product trends and opportunities, finance and investment options for healthy kids’ product companies, and advice on how to target and effectively communicate with mothers from a moms marketing expert. If your company is operating in, attempting to move into or simply evaluating the children’s nutrition market, you’ll want to attend this Web seminar. To register, contact Chris Lasonde at clasonde@nutritionbusiness.com.

Also in May, NBJ will publish our in-depth report on the U.S. Healthy Kids’ Market.


Related links:

U.S. Healthy Kids’ Market Positioned to Tackle Obesity and Other Top Health Issues

Renegade Lunch Lady Takes on School Lunch Programs

Kids’ Obesity Epidemic Spurs Paradigm Shift in Schools’ Vending Machine Policies

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