Nutrition Business Journal

If you want the inside scoop on investment activity within the U.S. nutrition industry, turn to David Thibodeau. As a managing director in Canaccord Adams’ Investment Banking Group, Thibodeau focuses on mergers & acquisitions and public and private financings in Canaccord Adams’ Health, Wellness & Lifestyle franchise. Nutrition Business Journal recently sat down with Thibodeau to recap the significance of the big deals that transpired last year in the U.S. nutrition industry and discuss the general mood of investors as we move into 2010.

NBJ: How would you describe the overall mood in the financial/investment community right now?

David Thibodeau: We’re seeing investors start the year with guarded optimism. In the second half of 2009, we saw both the equity markets and the M&A markets come back to life. There were two very successful IPOs in the nutrition space last year: Vitamin Shoppe and Vitacost.com. In the fourth quarter of 2009, approximately 69 IPOs were filed with the SEC—this was a much more robust number than we saw during fourth quarter of 2008, when only seven companies filed to go public. The prevailing feeling is that the equity markets are open and will be open through at least the first half of 2010. We also saw renewed interest from private equity in the back half of 2009. Reasonable levels of leverage are creeping back into the market, and this is helping to support recent private-equity backed transactions.

NBJ: 2009 wasn’t a particularly active year for investment or M&A deals in the nutrition industry. Of the deals that did occur, what do you believe was most significant and why?

DT: 2009 was the year of the strategic deal. Any of the deals that were consummated could be considered significant: We saw a multi-level marketing company enter the healthcare practitioner space through the Alticor-Metagenics deal; big pharma re-entered the nutrition space through the Sanofi-Aventis purchase of Chattem; and an international supplement company predominantly focused on the healthcare practitioner channel, Atrium, entered the health food/specialty channel through its purchase of the supplement company Garden of Life. Taken as a whole, these transactions suggest a fundamental shift within the nutritional supplement playing field. These moves by large, well-financed acquirors point to a newfound acceptance of the health benefits and profit potential of the nutritional supplement space. I believe we will continue to see significant strategic moves in 2010.

NBJ Subscribers can read the full Q&A with Thibodeau in the upcoming Awards and Executive Review issue, which publishes later this month. Subscribe to NBJ or download a free sample issue via the NBJ Website.

Related NBJ links:

Atrium Solidifies Standing in Natural and Specialty Retail with Garden of Life Acquisition

Sanofi-Aventis Purchase of Chattem Puts Dexatrim, Garlique Brands in French Hands

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

Metagenics CEO: We Need Alticor’s Backing to Make a Dent in Chronic Illness Epidemic

Two non-profit organizations that are near and dear to Nutrition Business Journal’s heart were featured in Nicholas Kristof’s New York Times op-ed column on January 3. Titled “World’s Healthiest Food,” the column lauded the work of Project Healthy Children (PHC) and Vitamin Angels to eradicate micronutrient malnutrition through food fortification and supplementation. Folic acid and other micronutrients—which are often tragically absent from the food supplies within developing countries such as Honduras and Rwanda—are “miracle” substances, Kristof wrote. “There’s scarcely a form of foreign aid more cost-effective than getting them into the food supply,” he added.

PHC, winner of NBJ’s 2008 Nutrition-Related Non-Profit award, works with governments and private industry to establish efficient and cost-effective food-fortification programs that improve the health of people around the globe—every time they eat a meal. “Our mission is to help develop and implement food-fortification strategies in seven countries over seven years covering 70 million people,” PHC Founder David Dodson told NBJ last year. “We go into a country with the intent of leaving as quickly as possible, but we don’t leave until the food is fortified. That is our commitment to the country, to our donors and to ourselves.”

Vitamin Angels, winner of a 2005 NBJ award, is well known (and supported) throughout the nutrition industry for its work to aggressively address the problem of global malnutrition—one vitamin at a time. “One of our tag lines at Vitamin Angels is: ‘Be an angel, save a life.’ This is not something that is hopeful. This is a literal reality,” Vitamin Angels Founder Howard Schiffer told NBJ last year. “We are saving lives every day. For this industry, that is a very powerful message and initiative to align yourself with. To be able to say, ‘We are working with Vitamin Angels. We are saving lives every day.’ That is very powerful.”

According to Kristof, adding iodine, iron, vitamin A, zinc and folic acid to food is pretty inexpensive—costing about 30 cents per person per year—but highly effective. “As the United States reorganizes its chaotic aid program,” Kristof wrote, “it might try promoting what just may be the world’s most luscious food: micronutrients.”

My hope is that such premium media coverage earns PHC, Vitamin Angels and other organizations working to eliminate malnutrition the support and funding they need to continue doing their good work in 2010 and beyond. If your company does not yet support one of these organizations, please consider getting involved this year.

On a different note, NBJ will announce its 2009 Award winners later this month. Once again, we are recognizing an impressive lineup of companies, executives and organizations within the global nutrition industry.

Related NBJ links:

Vitamin Angels: ‘We Are Saving Kids’ Lives, And We Can Prove It’

Project Healthy Children Takes on Micronutrient Malnutrition with Global Food-Fortification Efforts

If you were not a Nutrition Business Journal subscriber in 2009, you missed our coverage of some of the most pressing issues facing the global nutrition industry today—not to mention our analysis of current and future market opportunities for dietary supplements, functional foods and beverages, natural & organic foods and beverages, and natural & organic personal care and household products across every sales channel.

Whether we were looking at the influence new dietary supplement GMPs are having on U.S. supplement manufacturers and ingredient suppliers, investigating the impact the global recession is exerting on specific product categories and sales channels, or exploring the effect of the massive Hydroxycut recall on the overall weight-management sector, NBJ went behind the news headlines this year to provide our subscribers with a deeper understanding of how current events are affecting sales, growth and future opportunities.

In 2010, NBJ will continue to make the news headlines make sense to our subscribers. Topics we will be covering include:

* NBJ’s new proprietary consumer research on supplements and other nutrition industry categories

* An entire issue dedicated to discussion of the capital markets and investment and M&A activity within the global nutrition industry

* Continued monitoring and analysis of the economy and consumer spending levels and how they are affecting sales in every nutrition industry category, including organic and supplements

* Our investigation into how well dietary supplement companies are delivering on the “product promise,” which NBJ defines as making sure that a product is safe and that what’s on the label is in the pill at the point of purchase and is absorbed efficiently and effectively into the body

* A deep dive into the regulatory environment for dietary supplements and what possible changes might mean for specific companies and the industry as a whole

* An exploration of the “new” FDA and who we believe the agency will go after next in their efforts to better enforce supplement, food and drug regulations

* A look at how the FTC’s recently released guidelines for the use of testimonials is impacting nutrition industry product sales and how the agency is enforcing the new rules

* An analysis of how government healthcare reform and new corporate-driven healthcare initiatives could impact the U.S. nutrition industry and what companies need to do now to reap the greatest benefit from changes likely to occur in the coming months

* Continued investigation of supply-quality issues, including economically motivated ingredient adulteration, and the affect GMPs and other regulations are exerting on the global nutrition industry supply chain

* Discussion of the synergy between integrative medicine and condition-specific health products and how this could help fuel future industry growth

* A look at the shakeout occurring in natural & organic personal care standards and what it means for companies operating in or evaluating this space

* Two issues dedicated to the nutrition industry’s non-retail sales channels: network marketers, practitioners, e-commerce, mail-catalog, and direct-response television and radio

* And much, much more. See the NBJ Website for next year’s complete editorial calendar.

From the economic downturn to the growing global obesity epidemic to the H1N1 flu pandemic, a handful of common forces are impacting the global dietary supplement industry today. Beyond all of this, however, the one issue most poised to shape the future of worldwide supplement sales is the rising tide of regulatory changes sweeping the globe. Whether they operate in Europe, Asia, Latin America, Russia or North America, supplement companies are awaiting potential changes that could affect everything from the ingredients that can be used in supplements to the health claims that can be made for these products.

“The past two years have provided the warm-up for what will inevitably be some very significant regulatory and policy decisions made across the world on dietary supplements over the next 12 months,” writes Simon Pettman, executive director of the International Alliance of Dietary Supplement Associations (IADSA), in a bylined article for Nutrition Business Journal’s upcoming 2009 Global Nutrition Industry Overview issue.

Publishing later this month, this issue will include IADSA’s roundup of recent and pending global regulatory actions involving dietary supplements; NBJ’s updated sales and growth estimates for the global supplement market; a deep dive into China’s, Brazil’s and Russia’s supplement sectors; results from NBJ’s survey of more than 240 global nutrition companies; discussion of how the growing worldwide focus on preventative health will affect health and wellness products; and much more.

Companies interviewed for NBJ’s 2009 Global Nutrition Industry Overview issue include: Capsugel, NBTY, Fortitech, Plethico Pharmaceuticals Limited (India/Asia/United States), Walmark (Eastern Europe), Maabarot Products (Israel), Blackmores (Australia/Asia), Vital Health Foods (South Africa), Optihealth Inc. (Canada/West Africa), Cerebos Pacific Limited (Southeast Asia), Bionorica (Western Europe), Neotropico (Latin America), Natural Health Labs (New Zealand) and Randy Dennin and Associates LLC.

Related NBJ links:

Global Supplement & Nutrition industry Report 2007

What Will it Take for China to Surpass the U.S. in Supplement Sales?

Growth Strategies for Developed and Emerging Markets

With November already in full swing, Nutrition Business Journal is busy pondering the product, ingredient, regulatory, sales channel and other trends we believe will most impact the global nutrition industry in 2010. I’ll be sharing some of our ingredient predictions this week during a VendorWorks session sponsored by Cognis Nutrition & Health at the 2009 SupplySide West trade show in Las Vegas. The session—titled, “Media Roundtable: Ingredient Trends Hot Off the Press,”—will be held from 9 a.m. to 9:50 a.m. on Friday, November 13, in the Galileo 905 room of the Venetian & Sands Expo.

Below is a sneak peek at some of the ingredient trends likely to be discussed during this session and showcased on the SupplySide West tradeshow floor. Many of these ideas come from NBJ’s recently published 2009 Raw Material & Ingredient Supply issue—as well as from Todd Runestad, who is the science editor for NBJ’s sister publication, Functional Ingredients magazine. More 2010 ingredient trend predictions will be published in the January issue of Functional Ingredients magazine.

Immunity-support ingredients: Even though companies cannot talk about the H1N1 flu virus when talking about their ingredients or products, the current global “freak out” over the swine flu pandemic will benefit all ingredients touting immune-support properties, Runestad said. Such ingredients include antioxidants, beta-glucans and botanicals such as elderberry and echinacea.

Brain boosters: The time appears to be right for new cognitive health products, with everyone from aging Baby Boomers to stressed out professionals to parents of children exhibiting symptoms of Attention Deficit Hyperactivity Disorder (ADHD) showing growing interest in these types of offerings. Many well-known ingredients, including omega-3s, are well suited to cognitive-related products and have been scientifically studied to support everything from mood to mental clarity. In addition, the market continues to see the introduction of new branded ingredients targeted toward brain health and global conglomerates such as Nestle are investing millions into cognitive health research.

Prebiotics—what every probiotic needs: Research continues to emerge demonstrating that probiotics work better when combined with prebiotic fibers, such as fructo-oligosaccharide (FOS), inulin and galacto-oligosaccaride (GOS), said Runestad, who added that he believes GOS could be the “big winner in the year ahead.” That’s because food formulators are beginning to formulate with GOS, which also benefits from the fact that companies can make fiber claims for it.

The quest for fullness: As NBJ explored in our 2009 Sports Nutrition & Weight-Loss issue (which published in September), consumers are increasingly craving weight-management products made with proven ingredients that help them lose weight the old-fashioned way: by eating less. This quest for satiety is benefiting ingredients such as FOS and GOS and leading to opportunities for branded ingredients such as DSM Nutritional Products’ Fabuless, a new patented palm oil and oat mixture that is billed as a “natural way to feel full faster” and that is cropping up in functional yogurts and milks.

Bring on the baobob: People have been saying it’s time for ingredient sales of this African super fruit to begin blooming for a while now, but the regulatory acceptance of baobob in both the European Union and the United States is likely to finally make such predictions a reality, Runestad said. Baobab is already showing up in personal care products, as well as in “beauty from within” dietary supplements and functional foods. Alaffia makes baobab lotions and lip balms, while Korres now offers an $80 Wild Rose Face & Eye Serum that contains baobab tree extract. The ingredient, made from the African baobab tree, is packed with riboflavin, niacin, and vitamins C, A, D and E. Because it is relatively new, baobab is not backed by as much clinical research as some other super fruits.

Hemp time: “Thanks to the boom in medical marijuana dispensaries and the Obama administration saying that it won’t go after medical marijuana, I’m guessing that healthful hemp could see some benefits from its evil twin’s get-out-of-jail-free card,” Runestad said. One hemp pioneer is Manitoba Harvest, which recently launched its Hemp PRO 70, the first water-soluble hemp-protein concentrate. Each 30g serving of Hemp PRO 70 contains 21g of protein and 800mg of omega-3s.

Resveratrol boom continues: Media hype has helped to keep consumer sales of products containing resveratrol growing. According to NBJ estimates, consumer sales of resveratrol dietary supplements alone hit $30 million in 2008. ReserveAge Organics, a finished goods supplement firm specializing in resveratrol sourced from organic grapes, has taken advantage of the resveratrol boom and expanded sales by more than 300% since launching in March 2009. Of course, growing demand for products containing resveratrol, which is one of the many polyphenolic compounds found in red wine, has suppliers scrambling to keep up. According to Matt Phillips, president and COO at Cyvex Nutrition, total production volumes of resveratrol have increased more than 100% in the last year. Cyvex sells an ingredient called BioVin Advanced, which is a red wine extract that is standardized to 5% transresveratrol. BioVin Advanced sales have increased more than 150% in 2009 and are forecasted to grow another 100% next year, Phillips said.

Related NBJ links:

Ingredient Trends Likely to Help Boost Sales in 2010

2009 Raw Material & Ingredient Supply Overview

Top Product Development Trends in Healthy Kids’ Market

Related Functional Ingredients magazine links:

Industry resilient, but takes its shots