“We see it as a tipping point moment,” said Loren Israelsen, President of the United Natural Products Alliance. “Forces are now moving that were not moving this time last year, and part of it can be attributed to the NY AG.”
Jim Emme, CEO of NOW Health Group, agreed that it was a tipping point. “The NY AG investigation brought more people to the table a lot faster,” said Emme. “I don’t want to give out any accolades to AG Schneiderman about how it what handled or what the motives were, however it has gotten everyone’s attention who were complacent about the situation.”
“We continue to strongly disagree with a lot of what came out of the NY AG investigation, but it did amplify a conversation that was already going on in the industry, and hastened the conversations around supply chain integrity and transparency, so we do have to give that whole episode some credit for encouraging some companies to consider it more,” said Steve Mister, President and CEO of the Council for Responsible Nutrition.
The NY AG’s actions led to a lot of negative media, and talking about transparency directly with consumers provides a way to counter these messages, said Suzanne Shelton, principal of The Shelton Group.
“The constant drum beat of the media and the conventionally conservative part of the medical field identifies a tiny segment of the industry as representative of the whole,” she said. “The media has not been open to hearing our side and because we cannot get a fair hearing we have to talk to the consumers directly.”
Transparency is the number one topic within the UNPA membership, said Israelsen. While the NY AG’s actions may have accelerated interest and transparency in the dietary supplement industry, “transparency” itself is just the latest buzz word to describe what really good companies have been doing all along, said Shelton: “Using really good ingredients, testing the products appropriately, and using therapeutic dosages. Doing things right. All along these companies have tried to tell their story with honesty, accuracy and authenticity.”
The fifth and final member of the panel, Robert Craven, CEO of Food State/ MegaFood, said the best definition of transparency that he has seen comes from a Forbes.com article titled Why Transparency Should Matter to Food and Beverage Companies. That article articles notes:
“That transparency speaks to consumer desire for connectedness, authenticity and control; Reveals product quality and integrity; Creates a stickiness that transforms a transactional exchange into a brand relationship; Enables consumers to make intentional choices based on easy access to relevant and truthful information about products, ingredients, sourcing and business practices.”
Do consumers really care?
“I don’t believe there is an explicit demand for transparency from consumers from a supplement standpoint,” said FoodState’s Craven. “I think what’s happening is that great companies that are attempting to be transparent are trying to distance themselves from the bad players in the space. So the more transparent we are, the higher we raise the expectation for a consumer on what it means to be a good brand, the easier it us to distance ourselves from these bad players that might not want to share transparency or what’s in the bottle.
“I don’t think this is an outward expression from a consumer demanding transparency, as much as it is good manufacturers in this space see this as an opportunity to tell a good story about the supplements space and raise the bar.”
The broker issue
Achieving transparency in the supply chain is complicated by the global nature of the food system and the presence of ingredient brokers (who some stakeholders call the “bane of the industry”).
“In most cases, the raw material supplier is foreign,” said UNPA’s Israelsen, “and people simply don’t realize how many times one ingredient will change hands. It’s not from ingredient supplier to broker to brand holder: in many cases there are three or four or five other pairs of hands that we don’t know about. Brokers are the ones under new law (FSMA) who have the most to lose, and so they have to work the hardest to find a reason to remain in the supply chain. If they don’t do that then ultimately they will be out of business.
“I don’t think that ingredient brokers will go away but there is a change in the relationship,” added CRN’s Mister. “Ingredient brokers have to find a different way to provide way to provide value to stay in the supply chain.”
“We’re also looking for more companies to be more vertically integrated, and that also puts the squeeze on brokers,” said Mister.
The panelists also discussed a number of other topics, including intellectual property and proprietary brands, the influence of price, and the challenges facing companies with a large number of skus. The forum is available to access for free on-demand by clicking HERE.
The event was supported by the following leading companies:
Gemini Pharmaceuticals Inc: For over 30 years Gemini Pharmaceuticals has been the contract manufacturer of choice for countless dietary supplement companies. The Gemini Difference is the transparent Quality Partnership it offers its customers.
Alkemist Labs: An ISO 17025 accredited laboratory offering a wide range of services for identity, purity & quality testing of botanical materials, dietary ingredients & finished products. Alkemist also offers botanical and phytochemical standards.
NutraGenesis: NutraGenesis is an industry leader dedicated to enhancing human health by providing a select portfolio of advanced, scientifically-validated, patented nutraceuticals that feature highly marketable claims and exceptional purity, quality, and safety.