Guru Gold steers Health Sciences into branded goods

Gold, who describes himself as a "zentrepreneur"​, may be an unusual choice for heading up a nutraceutical company but his recent appointment as CEO highlights a radical volt face for Health Sciences Group (HSG).

According to Fred Tannous, HSG's founder and former CEO, who has now stepped aside into the role of chief financial officer, the company was looking for a new leader with experience in branding to steer it away from research and development and into consumer products.

"Being strictly an ingredients purveyor was limiting,"​ Tannous told NutraIngredients-USA.com.

"Margins were eroding,"​ he said, admitting that the company's sales fell when faced with competition for value-added ingredients. In full year 2005 HSG reported sales of $60,000, down from $67,000 the previous year, and a net loss of $5.75m.

Tannous described the company's philosophy regarding R&D as "buy it rather than build it"​ and said it will be doing clinical trials or studies "to a much lesser extent"​.

Over the last two years the company has acquired a several new technologies through UTEK: the patented process for hydrocolloid sponges for use in functional food products; the technology behind an antioxidant powder from apple peel; and cholesterol-lowering Sequesterol from kelp.

The company is sticking with its plans to market its proprietary heart healthy supplement, Sequestrol, through infomercials, but is keeping mum for now about new acquisitions, product lines and its planned branding scheme.

The company says it has identified certain key functional categories and target markets, but Tannous would not expand on what these are at this time.

But he did say: "It's much better to take a value-added product to market. That's part of what Stuart's [Gold] been preaching."​

HSG's search for a branding expert took six months. "He has a background that it didn't matter what he was in, it was successful,"​ said Tannous of Gold.

Previously CEO of Novato, California-based The Republic of Tea, Gold oversaw the company's brand building, marketing, and product development strategies. On his website, Gold says he is "both imagineer and champion of imaginers"​, as well as a motivational speaker and author of many books including "Ping: a frog in search of a new pond".​

With the appointment of a charismatic new leader like Gold, it would appear the HSG pond not only has a new frog, but is also having a lily-pad re-fit. HSG's move is one not often seen in the nutraceutical industry, where the between ingredients supply and finished products is not often crossed. But it is a move of the kind Gold appears to thrive on.

In "Ping"​, he writes:

"To avoid taking a risk is to take the biggest risk of all.​

Go with the flow, because the flow knows where to go."​

"The idea is to bring the product to the marketplace to the widest spectrum,"​ said Gold. "And that's through brand-driven awareness."​

This is not the first change for HSG which has shifted course numerous times in its existence.

Since it was initially founded in 1996, the company has changed its name three times - initially Centurion Properties Development Corporation, it became iGoHealthy.com and finally HSG in 2001.

The publicly traded company, which has acquired seven companies since 2001, was first incorporated in Colorado only to be reincorporated in Delaware in 2005.

Subsidiary companies Quality Botanical Ingredients and Xcel Medical Pharmacy ceased operations in 2004 and 2005 respectively, said at the time to be "inconsistent with the Company's revised strategic direction of identifying, developing and commercializing nutritional products and functional food ingredients".​

With its latest set of announcements, HSG is once again revising its strategic direction, but this time with a combination of secrecy and hype and with Gold as its trailblazer.

"The new products that are coming out are going to create a totally new category,"​ said Gold. "They're not going to follow the curve, they're creating the curve."​