From NDIs and regulations to key categories and product innovations, Vitamin Retailer conducted a roundtable of industry professionals and association leaders to reflect on 2011 and forecast what’s to come in the New Year.

THE PANEL:

• GUNNY SODHI, director of operations and marketing with Ayush Herbs® Inc. (Redmond, WA), manufacturer of high quality ayurvedic herbal products, vitamins and minerals.

• DAN LIFTON, COO of Quality of Life Labs (Purchase, NY), manufacturer of a wide range of efficacious dietary supplements.

• SHAHEEN MAJEED, marketing director with Sabinsa Corp. (East Windsor, NJ), manufacturer and marketer of phytonutrients, ayurvedic herbal extracts and specialty ingredients.

• MIKE UCKELE, CEO of Uckele Health & Nutrition® (Blissfield, MI), manufacturer bringing 50 years of nutritional knowledge to a broad spectrum of nutritional supplements.

• PAUL BORREL, vice president of sales with Pharmachem Laboratories, Inc. (Kearny, NJ), an international manufacturer and supplier of quality ingredients for nutritionals, food and beverages, flavors and fragrances.

VR: What were some of the primary challenges facing the natural products industry in 2011?

Sodhi: With all the new regulations coming out, [manufacturers] have to oblige by new standards, with more paperwork involved and a more cautious end. Overall, we have to be in accordance with more rules.

Lifton: To borrow Bill Clinton’s campaign slogan that has become a cliché: “It’s the economy, stupid.” While the industry did not suffer as much as people had feared, consumers definitely substituted down to lower priced products and, in some cases, to lower priced channels, namely mass and internet.

Uckele: The larger challenge is twofold: The first is that all manufacturers are now required to meet GMP standards as set forth by the FDA, and some are having difficulty with that adjustment. The second is the major fluctuating prices of raw materials.Between higher raw ingredient prices caused by worldwide supply shortages and rising energy costs, this instability leads to economic challenges for the manufacturers that compels cost increases for the retailer. Ultimately, the retailer is caught between the manufacturer having to pass on some of these cost increases to them, and then is naturally concerned about raising costs for their customers, who are also experiencing economic challenges.

Majeed: We’ve been challenged by continued fallout from the unscrupulous minority of companies engaging in tactics like economic adulteration, inferior or counterfeit ingredients, and GMP infractions that shake confidence in our industry’s products.

In addition, there has been a feeling of uncertainty for the last half of 2011.
The NDI Draft Guidance issued by FDA has shaken things up a little, leaving a lot of uncertainty in the dietary supplements industry. We don’t yet know what the final rule will look like, but if it is unchanged there will be a lot less innovation.This will impact everyone—suppliers, manufacturers and retailers. This has resulted in a reluctance to move forward on new projects in some quarters.

VR: What were some of the hottest product categories in 2011? Do you see those categories continuing their reign in 2012?

Sodhi: Cognitive and stress support were hot, along with anti-aging and memory, liver products, curcumin (turmeric) and pet products. I see their popularity continuing in 2012.

Majeed: We’re seen a tremendous growth in interest in curcumin, which is likely driven by a growing body of science on its benefits, including on our C- 3 Complex. With joint health and inflammatory issues increasing as the population ages, the search for effective remedies with science to back them up isn’t a surprise. It’s interesting how many mainstream doctors are enthusiastic about curcumin.

Lifton: Krill oil, curcumin and vitamin D have been top sellers this year, and we expect further growth as more research on these compounds emerges.

Uckele: Vitamin D has had explosive growth, and we predict continued momentum with more than 1,000 studies showing D’s critical role in an everbroadening range of health conditions.Consumer awareness of D is also continuing to rise, particularly for the vitamin’s benefit to immune and bone health. Fish and krill oil still have terrific traction with the omega-3s many positive potential applications for everything from blood fats, cholesterol levels and blood sugar to depression.

We definitely forecast continued growth in these markets and the industry overall because more consumers are using supplements than ever before.Consumers have become more focused on prevention than intervention and health has become a priority, and they are willing to spend a little more for the sake of their mental, physical and emotional well-being. And the last thing anyone can afford to do in this job market is become ill, even less so if their health insurance isn’t premium or even available.

Borrel: Surprisingly, our “tried and true” vitamins and minerals showed strong growth this past year. According to an industry report, sales of vitamin C were up 2.8 percent across the board from the previous 12 months.

Antioxidants, in general, showed nice growth. We think this may be a result of the economy where many consumers are looking for less expensive alternatives to traditional drugs in order to maintain their health, and we expect the trend to continue.

Probiotics are really taking off and we see that trend continuing in 2012.

Weight-loss products always do well.Energy-related ingredients did well and will continue to grow.

VR: What are some trends retailers should be prepared to meet in 2012?

Sodhi: Retailers should be ready to adjust their stores per the regulations. Brush up on the new standards and policies.

Lifton: We believe that consumers will either look for low-priced products or premium products with superior efficacy.So the center-ground products will suffer and high-priced “vanity” items without strong supporting evidence will likely struggle.

Uckele: The anti-aging category is Getting a large corner of the supplement market. Brain health and mental focus is becoming priority as Baby Boomers age, and cognitive products will be on the rise. Boomers looking to age gracefully are looking for internal, nutritional support more than topical or cosmetic cover-up in formulas that contain ingredients that include ingredients such as antioxidants, the B vitamins, vitamin D3, amino acids, herbal extracts, MSM, DMAE and sodium hyaluronate.

Majeed: New dosage forms are likely to be introduced. For example, we introduced an innovative selection of Integrated Nutritional Composites™ (INC): bilayered, multi-release nutritional compositions targeting specific health maintenance needs. These compositions deliver stable dosage forms of actives that may not otherwise be compatible or are difficult to formulate. These ready-made formulations, many of which include Sabinsa’s science-based, patented ingredients, are available in highdemand categories such as weight management, heart health and joint support.

Borrel: We’re seeing strong growth for chia oil due to the increased consumer awareness of omega-3 benefits.We think 2012 is going to be another big year for our Benexia™ Omega-3 Chia in its many forms (bulk seed, sprouted seed, milled seed, flour and oil). It is the only GMP, HACCP and GAP-certified source for highest quality and purity, and offers numerous health benefits as a supplement and a food.

We expect the market for probiotics to be strong as consumers continue to understand what they are and how they positively impact digestion. We see a great correlation with the boom in yogurt sales. Consumers are just starting to understand the benefits of probiotics and will want to find alternative ways to supplement their diet.

VR: What are the greatest challenges relating to the industry as we head into the New Year? How do you suggest retailers turn those challenges into opportunities as they stock their stores and care for their customers?

Sodhi: We will see a lot more movement to create products that adhere to The new regulations. Some products may not be launched, and stores may need to change their merchandising and marketing material.

Lifton: The regulatory axe is hanging over the industry, and the economy is likely to continue hurting consumer confidence.Meanwhile, unscrupulous marketers of products making wild claims and selling adulterated products are hurting the reputation of the industry. Negative media coverage is likely to continue.

In spite of the challenges, we are optimistic that the market will continue to grow as consumers learn about the extensive health benefits that supplements can offer. Educating consumers is the key to growing demand throughout the value chain. So in our view, retailers should invest their time and resources into consumer education.

I would also advise focusing on differentiated products that are not available in the mass market. Quality of Life’s CoQ10-SR product has done extremely well this year because our retailers were able to offer a clinically backed, sustained- release, high-bioavailability form Of CoQ10 to their customers that is not available in the mass market.

Majeed: With health care increasingly expensive and insurance increasingly rare, consumers are putting a lot of emphasis on prevention, and that is what we as an industry are all about. It’s more important than ever for consumers to get what they expect from the products they buy, which means manufacturers need to focus on quality ingredients manufactured correctly and well-formulated, and retailers to make sure the products on their shelves meet the highest standards.

Without knowing what the final NDI rule will look like, there may be less innovation in the future; the NDI uncertainty is the major wild card. One thing retailers can do is to examine the triedand- true products they have been selling that may have been forgotten as new products stole the limelight and focus on reminding their customers about them.

Borrel: Raw material shortages could create pricing issues in the coming year.
We expect to see some spot shortages.We try to counteract this by purchasing our critical ingredients in bulk to lock in prices and insure we have adequate quantities on hand. Retailers can respond to this challenge in the same manner by making sure they have adequate inventory of their most popular products.

Uckele: We’re definitely going to see products that combine quality and value. With FDA guidelines demanding more clarity, the industry will go the extra mile to provide the customer with the supplements they need and want.Supplement sales have never been higher and the trend will continue to include more mainstream avenues of distribution. Prevention has become part of the customer’s financial economy, and they are willing to expend the resources for better quality of life—their energy, time, productivity and mood.

The most important thing retailers can do is spend more time developing their understanding of nutrition and how and why specific supplements work in the body. We advise retailers to continuously educate themselves rather than running after the latest trend. An educated retailer will always keep the customer.

Associations Weigh In

As The door closed on 2011, industry groups labored to confer with their members to respond to the FDA’s New Dietary Ingredient (NDI) Draft Guidance by the December 2 deadline. Here, association representatives offer their views on where this issue stands and what the industry needs to keep on its radar as the New Year begins.

Steve Mister, president and CEO of the Council for Responsible Nutrition (CRN, Washington, D.C.)

Some of the challenges the industry faced in 2011 include the introduction of potentially burdensome legislation by Senator Durbin, negative media coverage of several studies questioning the value of supplements, FDA’s implementation Of the GMP regulations with companies who were unprepared and addressing the FDA’s unrealistic NDI Draft Guidance. As we proceed into the New Year, the issue of steroids and prescription drugs that are illegally being marketed as dietary supplements is not going away.

The issue of economically motivated adulteration of supplements will continue to be a major issue as well.

In response, it’s important for retailers to be savvy customers— just like we urge consumers to be—and to ask their suppliers direct questions: Do they know where their ingredients come from?Can they support their claims?How will they stand behind the quality of their products?It’s also important to be attentive to negative studies reported in the press, so retailers can assure their customers that their products are safe and beneficial in the face of this Bad publicity. With regard to Senator Durbin’s bill and other potentially burdensome legislation that may be introduced, retailers should get and stay politically active and build relationships with their members of Congress.

The biggest challenge to DSHEA relates to the NDI Draft Guidance. While just a draft at this point, the negative implications on the industry could be vast. FDA clearly overstepped its legal authority here, and after submitting comments on December 2, the industry will have to see what the agency’s response will be.
In the meantime, we need to educate Congress about the implications of the Draft Guidance if it isn’t withdrawn.We hope FDA will work with the industry to come up with something that benefits consumers, is reasonable to industry and can be accomplished within the legal framework created by DSHEA.

John Gay, executive director and CEO of the Natural Products Association (NPA, Washington, D.C.)

With the NDI Draft Guidance released in July, the FDA is asking for far more from the industry to prove that an ingredient was on the market before 1994 than is required under DSHEA. These requirements will reduce ingredients meeting the established grandfathered status to an unfortunately small number.
This could, in turn, limit the availability of products that have been on the market for decades. A potential game changer for the industry, NPA has submitted forceful comments calling on FDA to rewrite key pieces of the Guidance to comply with DSHEA.

The FDA completed almost three times the number of CGMP inspections this past fiscal year over 2010, and have stepped up violation enforcement. We welcome cGMP enforcement, but are concerned that the inspections have been uneven.

Companies should also be aware that the FTC has been overreaching in its interpretation of allowable advertising claims. Retailers should continue making sure they are complying with what they can lawfully share with customers about supplements, and can refer to NPA’s educational toolkit at www.npainfo.org/toolkit.

We expect our legislative challenges continue, such as the Durbin bill, which would add unneeded new regulations for dietary supplements.And with Congress looking for more revenues, we must watch out for proposals to set excessive regulatory fees for the industry. New fees could cause products to become More expensive to produce with those costs passed on to retailers and their customers.

Retailers educating customers about these threats and how they might negatively impact their ability to get their favorite products in the future are key.

Michael McGuffin, president of the American Herbal Products Association (AHPA, Silver Spring, MD)

AHPA has provided significant NDI education, including the publication of an interim Guidance document that is available from the bookstore on the AHPA website (www.ahpa.org). In addition to the 75-page comment document submitted to FDA in early December, AHPA maintains and recently expanded its NDI Database (www.ndi.npicenter.com), which provides access to and understanding of notifications submitted to FDA for NDIs that are used in dietary supplements.
It currently includes more than 600 notifications and includes a number of searchable forms and the “Outcome Statement” that summarizes FDA’s response to the filings.

The issue of illegal tainted products being sold as dietary supplements is one that continues to affect all areas of the natural products industry—from brand marketers to retailers. FDA has indicated repeatedly that this issue is at the top of its list of enforcement priorities as these illegal products pose a threat to public safety.AHPA created its KeepSupplementsClean.org website this year, which is designed to keep the industry and the public informed on just this issue.

Another challenge that creates a great opportunity for industry, especially retailers, is to address the continued harping by critics of the trade on the purported dangers of “unknown” and “worthless” herbs. One solution: AHPA is a partner in the annual HerbDay celebration, which will be held on Saturday, May 5,2012. It’s a great opportunity to take control of the story line. More information can be found at www.herbday. org.

In addition, retailers should buy herbal products from companies that are active in one or more of the trade associations. Whether large or small, they are industry leaders working to ensure that their products meet all federal and state requirements, provide exactly what their labels say and base their formulations on sound science.