Costs, adulteration concerns making domestic botanical supply more attractive, expert says
Cumberford heads the Bent Creek Institute in Asheville, NC, which acts as a consultancy and technology accelerator for natural product companies in western North Carolina. He was also an executive with Gaia Herbs, where he experienced first hand the wreckage a supply interruption can cause.
“This notion of adulteration issues and companies repatriating manufacturing to the US, I think there’s a real connection there,” Cumberford told NutraIngredients-USA.
“You can cite the examples of big companies like Herbalife and Nutrilite in the last year and a half breaking ground or acquiring new manufacturing capacity in the United States and citing publicly their goals of vertically integrating supply chains and having the work happen under direct US FDA regulatory requirements,” he said.
“And we’ve had confidential queries from foreign companies about manufacturing botanicals in the US, and I think is perhaps a reflection of the elevated concern about adulterated botanicals in the supply chain. So I can say that is definitely happening,” Cumberford said.
New cost equation
Many of the newer botanical ingredients on the market were discovered and still grow overseas, making going to those places for supply an obvious choice, at least in the short term. Lower labor costs is another one of the considerations that drove manufacturing offshore in the dietary supplement sector as it did in other manufacturing categories. But with new costs cropping up for verifying overseas supply chain integrity to fully comply with GMP requirements, coupled with the concerns about how much a recall could run if an adulterated ingredient finds its way into the supply chain, some companies are coming up with new answers that cost equation.
“Those are two factors and a third factor—one that is equally costly—is the cost of supply chain disruptions affecting manufacturing operations. From my experience in manufacturing, there is nothing more stressful that to have committed to a timely launch of a product and then to find out that an ingredient was delayed at the border or has been delayed because of something in the company’s own internal QA controls,” Cumberford said.
“It’s enormously expensive for an organization to stop the works for a given product in manufacturing because of an ingredient holdup. After several of those instances happening, the cost computation logic shifts, and companies start looking at it in terms of full cycle costing rather than per-kilogram costing for an ingredient. Now it has been driven home the need to assure full supply chain integrity,” he said.
Foreign ingredients taking root
Cumberford said this drive to assure supply integrity has also created an incentive to start growing once exotic botanicals from other parts of the world in North America. If Mexico and Canada are thrown into the supply mix, the region can provide suitable climate and soil conditions for growing almost anything, he said.
“There are efforts happening right now in the United States that show that companies are investing in those sorts of trials,” he said. Cumberford cited as an example stevia company Sweet Green Fields, which has a pilot project to grow the crop in North Carolina. Similar efforts are underway with chia and with tropical botanicals such as ginger and turmeric, he said.
Cumberford said that while overseas sources will always be part of the botanical supply picture, the momentum continues to build for domestic sourcing and production.
“There has been a lot of innovation in cultivars and optimizing those cultivars for bioactive marker delivery,” he said. “I would say that North America—Mexico, the US and Canada—offers a tremendous variety of microclimates and capacity to supply this demand.
“I think all of these factors—climate change, the devaluation of the dollar, these persistent ingredient quality adulteration concerns—are all contributing to companies re-examining that categorical exclusion of North American supply. I don’t see anything stopping that trend from continuing,” Cumberford said.