How did the recession impact New Chapter?
It’s hard to say whether it is over yet although things seemed to peak in early 2009. We saw a slowdown in growth then but we still carried on growing. Some consumers ‘traded down’ to private label in more commodity-driven parts of the market, but New Chapter customers are not prepared to do this because we are offering something unique in the marketplace. And right now we’re growing at twice the category rate.
Do consumers get the ‘wholefood’ and organic ethos that New Chapter is promoting as its USP?
Back when we started in the early 1980s? No probably not. But today? Yes. I think the market is finally coming to us as people are looking more and more carefully at what’s in their supplements and foods and asking whether a synthetic chemical isolate is the same as a whole food – whether they would rather eat calcium carbonate from limestone or get calcium from a whole-food plant source [the calcium complex in New Chapter’s bone health products is from seaweed]. Where would you rather get your calcium from? A plant or a rock?
I think the starting point should be wholefoods that have been safely consumed for thousands of years rather than eating something that contains the equivalent of 87,000 glasses of red wine so we can get enough resveratrol. Can that be right?
Where are the biggest growth opportunities for New Chapter?
Fish oils continue to show the fastest growth, partly because they offer such a multiplicity of benefits but also because fish consumption in western culture is lacking. But there is also strong growth in probiotics, which has been helped by big consumer products companies which have raised awareness about the relationship between gut health and overall health.
You have a product range - Zyflamend – that promotes a ‘healthy inflammation response’. Does this mean anything to the average consumer?
10 years ago, inflammation was all about pain, something that needed to be ‘treated’. Today more people recognize that the body’s natural inflammatory response affects every major organ system and that inflammation also plays a critical role in aging. I can’t tell you exactly why people buy Zyflamend, and I’m sure the trigger for many people is joint pain, but what’s interesting is that they see all these other side benefits on things like prostate health, and when they stop taking it, they notice that these symptoms come back.
What are the barriers to growth for New Chapter?
The problem in this industry is that for every company that’s doing things right, there’s another one out to make a buck, and because we are quite limited in what we can claim on pack, consumers see two products that look the same, but one is $30 for a month’s supply and the other is $10. They buy the cheaper one, they don’t see any benefit and they think all natural products don’t work. But the good thing for us about being exclusively in the health and natural channel is that staff can explain the differences between products.
The other thing [that thwarts progress] is the institutional bias in the medical community against natural products.
How can dietary supplement firms such as New Chapter work more effectively with retail customers?
In stores, products are usually organized by health condition, but we have had very successful partnerships with retailers who do selective brand-blocking with some New Chapter products bundled together around areas such as bone health and inflammation, which is good for the retailer because they might sell two products rather than one.
What new products are in the pipeline?
Our three new condition-specific fish oils [for cardio health, joint health and healthy brain function] have been really well-received and we have just launched two products for energy and relaxation: Perfect Energy [with maca, ginseng, and rhodiola, a proprietary grapeseed extract, vitamins and minerals but no caffeine] and Perfect Calm [with Holy Basil, chamomile, lemon balm, vitamins and minerals].
I think we intuitively expected the energy product to do well, but what’s been really surprising is how well the calming one is doing.