Supplements industry set to shrink, predict experts
Speaking at the annual conference of trade group Council for Responsible Nutrition (CRN) earlier this month, experts suggested that the current challenges facing industry could cause it to “contract aggressively”.
This is primarily a result of greater financial pressures facing companies as they implement new safety and quality measures to meet new regulations, as well as less investment capital in the midst of an economic downturn.
Economic woes
The tight economic environment is expected to stunt growth in the number of dietary supplement companies in the marketplace, with a renewed focus on consolidation.
According to Harvey Kamil, president and CFO of supplement firm NBTY, a lack of financial capital will also play a role in shrinking the number of companies manufacturing and marketing supplements.
“With the new good manufacturing practices (GMPs), as well as other financial pressures, we’ll see that many companies can’t handle the financial pressures and the industry will shrink in size,” he said.
Kamil was part of a panel discussion on future views of the supplements industry. Other panel members included Janice Binger, president of Archer Daniels Midland’s Natural Health & Nutrition Division, and George Pontiakos, president and CEO of BI Nutraceuticals. The session was moderated by Steve Mister, president and CEO of CRN.
Pontiakos added that it costs millions of dollars to maintain a laboratory to test ingredients that are used in dietary supplements.
“From a raw materials standpoint, the market will contract aggressively. The next space to go under will be small contract manufacturing,” he said.
Not all gloom
However, despite the challenges facing the industry, dietary supplements are expected to benefit from a growing focus on preventative healthcare, which has been identified as a priority by the presidential candidates, said the panelists.
If this emphasis continues beyond the November elections, there will be a shift in the way consumers perceive healthcare, with an increased awareness and focus on prevention before cure.
“Consumers increasingly recognize that they own the responsibility of their healthcare,” said Pontiakos.
Supplements are slowly entering the mainstream, and are no longer considered ‘alternative’ products but rather an integral part of health and wellness, he said.
This is potentially the greatest opportunity to present itself to the industry, with medical professionals becoming increasingly comfortable with the supplements arena. Nevertheless, Binger said it was “disappointing” that the US does not currently integrate nutrition into healthcare.
Quality control
Manufacturers must also not become complacent when it comes to quality control, the panelists warned.
Major steps have already been taken to ensure quality throughout the supply chain, including lobbying for publication of the final GMPs rule and for the new adverse event reporting (AER) law.
In addition, four supplement industry trade associations are leading the Standardized Information on Dietary Ingredients (SIDI) protocol, a guideline to standardize and streamline the communication of information on raw ingredients from ingredient supplier to manufacturer.
However, a focus on quality must not stop there, as the supplements industry is particularly susceptible to damage from rogue players, and must therefore remain alert in order to protect its image.
“The biggest challenge I see in the market is that some [outliers] think that you can still get away with stuff,” said Pontiakos.
