Nutrition Business Journal

The higher regulatory hurdles being constructed in Europe and, to a lesser extent, the United States for dietary supplements and functional food ingredients have many industry participants “wailing and gnashing their teeth”—as Nutrition Business Journal writes in our upcoming 2010 Functional Food and Beverage Issue. But, not everyone believes increased regulatory enforcement and claims scrutiny will spell bad things for the global supplement and functional food and beverage industries. In fact, according to David Atkinson, managing partner and founder of Circadia Ventures LLP, tighter regulation in both Europe and the United States is “supporting rather than inhibiting investor interest” in the functional food and supplement sectors.

Atkinson made this point during Nutrition Capital Network’s February 16 Webinar, “Trends in International Financing for health and Nutrition Companies.” Although he acknowledged that increased regulation is “setting high hurdles” and “increasing the costs to the industry,” Atkinson said he does not believe—as many in the industry do—that these consequences of stepped-up regulatory oversight “will kill the embryonic sector” of the health and wellness market. “We believe the high hurdles will bring much-needed barriers to entry to the industry and will increase and improve consumer confidence,” he added. “Ultimately, it will allow some higher pricing … and add value to the underlying IP and technology of the industry.”

Investors, Atkinson said, are increasingly interested in the health and wellness space because, “despite the increased regulatory environment the industry faces, it is still likely that a functional food ingredient with very clear, proven clinical benefits could be on the market in half the timeframe of a new drug—while the actual capital costs of getting that product to market are likely to be only a fraction of what a drug would cost.”

Atkinson cited the small, publicly listed U.K. company Provexis as an example of a functional ingredient company that is attracting growing investor interest. “Provexis’ current market cap is over £74 million ($116 million)—a year ago it would have been a fraction of that,” Atkinson said. Helping to fuel investor appetite for this small-but-growing ingredient company is the fact that Provexis was the first company to gain an Article 13.5 health claim approval from the European Food Safety Authority (EFSA) for its tomato extract, Fruitflow.

As NBJ discusses in detail in our upcoming 2010 Functional Food and Beverage Issue, EFSA’s positive opinion has made a huge difference to Provexis. “We got our approval on the 17th of December, and we have since received a very high level of interest from global food and beverage players,” said Provexis CEO Stephen Moon. “The change has been instant. It’s almost like we have got through the desert and finally arrived at the oasis. It has raised the profile of the company.” As Moon explained, the benefits have gone far beyond his company’s ability to commercialize Fruitflow, which has been clinically proven to inhibit platelet aggregation and has been licensed to DSM. “The financial and investment community has now seen the potential of Provexis, and it’s enabled us to raise substantial capital, which is going to help us drive forward our total pipeline.” Most recently, in December 2009, Provexis announced it had raised £2.1 million ($3.4 million) via an open offer to its shareholders.

NBJ’s 2010 Functional Food and Beverage Issue publishes later this month. To order a copy or become a subscriber visit the NBJ subscription page.

Related NBJ links:

A Cascade of Global Regulatory Changes Likely for Supplements Over Next 12 Months

Global Supplement & Nutrition Industry Report 2010

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

Thanks to strides in technology and product formulation, which have allowed for better-tasting functional ingredients with a longer shelf life, the offerings in the functional food and beverage category continue to expand. Despite the recession, 770 new functional food and beverage products were launched in the United States in 2009.

But just how “functional” are these products?

It’s a question being asked with urgency by many in the functional food and beverage industry—and one Nutrition Business Journal explores in depth in our upcoming 2010 Functional Food and Beverage issue (which publishes later this month). As we learned, concern appears to be growing regarding the use of less-than-efficacious amounts, or varieties, of ingredients within functional foods and beverages products in order to boast them on product labels and command a premium price. The practice, which some refer to as “pixie-dust” dosing, has prompted an array of regulatory actions in the past year and is prompting some ingredient companies, such as Cognis Nutrition & Health, to establish mandatory guidelines for their clients on just how much of an ingredient must be used in a product and how it must be portrayed on the label.

In the meantime, manufacturers, including The Hain Celestial Group and Next Foods, are calling on their peers to be more clear and consistent in their labeling, while consumer watchdog groups are asking the government to force the industry to do so.

In surveying functional food and beverage companies and ingredient suppliers for NBJ’s functional food and beverage issue, we asked participants to rate the impact the lack of efficacious ingredient dosage levels in functional foods and beverages is having or will have on this product category. Thirty-five percent of those surveyed said it would have a large impact, while 36% said it would have a medium impact.

Here’s what one survey participant said about the dosage issue as it relates to label claims: “The number of profitable companies in the space making unsubstantiated claims indicates that this issue doesn’t really play into consumers purchase decisions. It is unknown whether that’s because consumers are uninformed or disinterested. Meaningful change will likely come only from increased government scrutiny of the industry.”

Another survey respondent had this to say: “Lack of evidence far surpasses dose issues. Dose is always a problem but it’s my opinion that functional foods and beverages should not necessarily be the same strength as dietary supplements.”

Subscribers can read more about this complex and perplexing issue in NBJ’s 2010 Functional Food and Beverage issue. To order a copy or become a subscriber visit the NBJ subscription page.

Related NBJ links:

Functional Food and Beverages Are Finally Making a Big Splash in the United States

Global Functional Food Sales by Region 1999-2008 - Chart 243

Kraft, NextFoods Tap Sweden’s Probi as Probiotic Functional Food Partner

Related Functional Ingredient Magazine links:

Probiotics: Strains Matter

The news for the U.S. dietary supplement industry was huge Wednesday: Sen. John McCain, R-Arizona, and Senator Byron Dorgan, D-North Dakota, unveiled a bill that would ramp up regulatory oversight of the entire $25 billion U.S. dietary supplement industry—from suppliers to manufacturers and marketers to retailers. Part of the impetus for the bill, named the Dietary Supplement Safety Act of 2010, are the numerous illegal steroids and drugs being sold as sports supplements. The bill is being championed by the U.S. Anti-Doping Agency (USADA) and sporting leagues, including Major League Baseball.

“Like many of you, I am looking forward to watching the Super Bowl this Sunday and the Winter Olympics later this month,” said McCain, who was surrounded by celebrity athletes from skiing, swimming, cycling, baseball and football during the press conference announcing the bill. “However, a little over a year ago the NFL suspended six players, including two players from one of the teams competing this Sunday, for violating the league’s anti-doping policy.”

Kimberly Lord Stewart, editorial director of Nutrition Business Journal’s sister publication Functional Ingredients, summarizes the proposed bill and the changes it would deliver to the Dietary Supplement Health and Education Act (DSHEA) of 1994 in a story posted on the magazine’s Website.

Immediately following the introduction of the bill, the Council for Responsible Nutrition (CRN), the Natural Products Association (NPA) and the American Herbal Products Association (AHPA) released statements.

“CRN looks forward to the opportunity to study the legislation and find common ground with the sponsors and supporters of this legislation,” said CRN President and CEO Steve Mister. “Where specific provisions are extensions of positions we have already supported and lobbied for, we applaud more voices joining with ours.”

“Our industry has long supported efforts to remove the relatively few bad actors who market adulterated products,” said John Gay, NPA executive director and CEO. “We have advocated for additional enforcement funds for regulators, and for giving regulators additional authority to act. What we cannot support is wholesale changes to a regulatory structure that is working, and could work better if the measures we have supported were adopted. A series of new laws for criminals to ignore is not the answer.”

“Though we have not yet examined this bill completely, it places new burdens on dietary supplements that are not required for any other class of food,” said AHPA President Michael McGuffin. “And at least in the case of the proposed policing responsibility for retailers, it appears to be more stringent than retailer requirements under current drug laws.”

NBJ will follow up in next week’s e-newsletter (which publishes on Tuesday) with an analysis of what such regulatory changes could mean for U.S. dietary supplement sales in the short and long-term. Sign up for our free weekly e-newsletter via the NBJ Website.

Functional Ingredients magazine will publish a podcast discussing the proposed bill with CRN on its Website later today.

Related NBJ links:

NFL Suspends 6 Players for Banned Substance, Balanced Health Products Recalls Supplements

2009 Supplement Business Report

Is USADA’s ‘Supplement Safety Now’ Campaign a Threat to the DSHEA?

A literature review article published February 1 in the Journal of the American College of Cardiology demonstrated once again how deep the misunderstandings over herbal supplements and how these products are regulated runs in the United States—and how important the work of industry trade groups, such as the Council for Responsible Nutrition (CRN), to refute such misunderstandings is today. The article, titled “Use of Herbal Products and Potential Interactions in Patients with Cardiovascular Disease,” warned that herbal supplements may be dangerous for people taking heart disease medication. It also argued that there is a general lack of science proving the safety and effectiveness of herbs.

CRN quickly responded to the review article, which triggered a round of negative mainstream news stories on the risk of herbal supplements. “This article represents a biased, poorly written and contrived attack on herbal supplements,” said Douglas MacKay, ND, vice president of scientific and regulatory affairs at CRN. “We question how a peer-reviewed publication would even accept an article such as this, given the fact that the authors make conclusions about ‘herbal remedies’ based on their own uninformed, inaccurate, and outdated interpretation of the law which covers dietary supplements, including herbal supplements. The article contains sweeping generalizations, often not backed by relevant citations, and copious factual errors, including a reference to products—some of which are not actually herbal supplements—that produce adverse effects on the cardiovascular system.”

CRN went on to point out how U.S. supplement regulations have been strengthened by the implementation of good manufacturing practices and the serious adverse event reporting law for all dietary supplements. “In the first full year that the law requiring manufacturers to report serious adverse events was in effect, FDA reported receiving 1,080 adverse event reports, only 672 of which were considered serious—for all dietary supplement products,” MacKay noted. “For the same year, FDA received over 526,000 adverse event reports related to drugs and biologic products, over 300,000 of which were considered serious, including close to 50,000 deaths.”

In a bit of good news for the industry, CRN’s communication efforts on this article reached reporters, many of whom included at least some of MacKay’s comments in their news pieces. It is this type of outreach that earned CRN a 2009 Education Award from Nutrition Business Journal. Media education was a key focus last year for CRN, which engaged with reporters and responded to inaccurate stories about the industry or the safety of supplements.

Such efforts help address a major concern for responsible supplement companies: protecting and enhancing consumer confidence, said Randi Neiner, director of market research for Shaklee Corp. “CRN has taken a responsible, fact-based approach to informing writers about the supplement industry and to correcting communications that misrepresent the industry,” Neiner told NBJ. “They continually correct the misunderstanding that our industry is not regulated and respond to misrepresentations of research results that are inconclusive or not representative of the totality of available data. They cite good science that supports responsible supplementation, while at the same time communicating our industry’s ongoing concern over questionable ingredients, studies and claims. This serves not only our industry but the consumer as well.”

Related NBJ links:

2009 Education Award: CRN

Fitzgibbon: Research Bar Being Raised for Supplements

Will JAMA Study Linking Folic Acid to Cancer Affect Consumer Sales?

Top 50 Herbs in the U.S.: 2000-2008 - Chart 83

Drum roll, please…

Nutrition Business Journal announced the recipients of its 2009 NBJ Business Achievement Awards this month, and the winners—and nominees—proved that positive things can be born amidst adversity. Whether they were expanding their sales by double digits, buying up new businesses that will better position them for the future, creating a product breakthrough, educating others on the benefits of the industry’s products, or donating their time and talents to help others in need, our 2009 winners represent companies and executives who bucked the downward trend last year and serve as beacons of hope for the coming decade.

Profiles of the winners are published in NBJ’s Awards and Executive Review issue. Winners will also be honored during an awards dinner, to be held at the 2010 NBJ Summit. This year’s Summit will take place July 20-23, at the St. Regis Monarch Beach Resort in Dana Point, California. We look forward to celebrating all of our 2009 award winners later this year at the NBJ Summit. We hope you can join us.

2009 NBJ Business Achievement Award Winners:

Efforts on Behalf of the Industry

Anthony Almada

National Animal Supplement Council

International Alliance of Dietary Supplement Associations

Product Merit

Cardiokinase by Pure Prescriptions

Soléo Organics by Skin Elements USA

Scientific Achievement

USANA

Fast-C by Scientific Food Solutions

Growth in Small Companies

Zevia

Azantis

Growth in Mid-Size Companies

Annie’s

Growth in Large Companies

Living Essentials (5-Hour Energy)

Europa Sports Products

Environment & Sustainability

United Natural Foods Inc. (UNFI)

Lotus Foods

Education

Pharmavite

Council for Responsible Nutrition

Investment in the Future

NOW Foods

Management Achievement

Fortitech

Philanthropic Activities

Michelle Goolsby

Organic Excellence

Kathleen Merrigan

Deals of the Year

Alticor-Metagenics

Atrium Innovations-Garden of Life

Vitamin Shoppe IPO

GF Capital-Airborne

Mead Johnson Nutritionals IPO

Coca-Cola Co.-ZICO; Pepsi-Amacoco

Nestlé Waters NA-Sweet Leaf

Herbalife-Micelle Laboratories

Naturex-Natraceutical Group

Vitacost.com IPO

Stock Performance

NBTY

Whole Foods Market

Nu Skin Enterprises

Lifetime Achievement

Announced at 2010 NBJ Summit