Vitamin Retailer January 2013 : Page-28

VR: What were some of the main chal-lenges facing the natural products industry in 2012? Antriasian: One of the biggest challenges we continue to face as an industry is the con-stant barrage of media attacks, which, at best, question the efficacy of our products, and at worst, seek to convey them as not only ineffec-tive, but detrimental to our health. It is our responsibility as an industry to counter that misinformation not only with products that work, but with substantial and irrefutable research to support them. Mount: Overall, the economy was challeng-ing, which found its way to the natural prod-ucts industry. Justifying the importance of our products to a consumer who is already tight on money is a difficult proposition. Retailers need to educate now more than ever on the bene-fits of their products and define the results clearly in the customer’s mind. There are many nutritional supplements that are taken because people know they are good for them, however they may not feel any different. Unfortunately, these supplements often get the axe in a recessionary environment. [Conversely], colla-gen supplementation provides customers with visible hair, skin and nail improvements as well as mobility benefits like increased flexibility and improved exercise recovery time. We are making a concerted effort to educate retailers so they can effectively relay the benefits of our collagen products during the customer’s deci-sion-making process. Green: On the supply side, the main chal-lenge has been with the new cGMPs: the cost and time involved in putting all of the neces-sary quality controls into place, and preparing the vast amount of documentation now required. While the manufacturer is technically responsible, the pressure trickles down to sup-pliers like Nutratech, who must have the har-vesting, manufacturing and testing protocols in place along with the documentation, to meet these quality standards. Vitamin Retailer conducted a roundtable of industry professionals and association leaders to reflect on the key trends and challenges of 2012, and to project what’s to come in the New Year. THE PANEL: • Ron Antriasian, vice president of sales and business development with Florida-based Life Extension Precision Operations, Inc., manufacturer of high-quality, science-based supplements • Bob Green, president of New Jersey-based Nutratech, Inc., exclusive distribu-tor of the thermogenic weight-loss and sports nutrition ingredient, Advantra Z® • Jay Jacobowitz, president and founder of Retail Insights, a natural products industry consulting firm in Vermont • Tim Mount, CN, CMH, sales and marketing manager with NeoCell, manufac-turer of collagen-based natural supplements for skincare, health & wellness in California 28 VITAMIN RETAILER VR: What were some of the hottest product categories in 2012? Do you see those categories continuing their reign in 2013? Antriasian: One of the hottest product cat-Ron Antriasian From Left to Right: Bob Green Jay Jacobowitz Tim Mount WWW.VITAMINRETAILER.COM s JANUARY 2013

2013 Industry Forecast

Vitamin Retailer conducted a roundtable of industry professionals and association leaders to reflect on the key trends and challenges of 2012, and to project what’s to come in the New Year.<br /> <br /> THE PANEL:<br /> <br /> • Ron Antriasian, vice president of sales and business development with Floridabased Life Extension Precision Operations, Inc., manufacturer of high-quality, science-based supplements<br /> <br /> • Bob Green, president of New Jersey-based Nutratech, Inc., exclusive distributor of the thermogenic weight-loss and sports nutrition ingredient, Advantra Z®<br /> <br /> • Jay Jacobowitz, president and founder of Retail Insights, a natural products industry consulting firm in Vermont<br /> <br /> • Tim Mount, CN, CMH, sales and marketing manager with NeoCell, manufacturer of collagen-based natural supplements for skincare, health & wellness in California<br /> <br /> VR: What were some of the main challenges facing the natural products industry in 2012?<br /> <br /> Antriasian: One of the biggest challenges we continue to face as an industry is the constant barrage of media attacks, which, at best, question the efficacy of our products, and at worst, seek to convey them as not only ineffective, but detrimental to our health. It is our responsibility as an industry to counter that misinformation not only with products that work, but with substantial and irrefutable research to support them.<br /> <br /> Mount: Overall, the economy was challenging, which found its way to the natural products industry. Justifying the importance of our products to a consumer who is already tight on money is a difficult proposition. Retailers need to educate now more than ever on the benefits of their products and define the results clearly in the customer’s mind. There are many nutritional supplements that are taken because people know they are good for them, however they may not feel any different. Unfortunately, these supplements often get the axe in a recessionary environment. [Conversely], collagen supplementation provides customers with visible hair, skin and nail improvements as well as mobility benefits like increased flexibility and improved exercise recovery time. We are making a concerted effort to educate retailers so they can effectively relay the benefits of our collagen products during the customer’s decision- making process.<br /> <br /> Green: On the supply side, the main challenge has been with the new cGMPs: the cost and time involved in putting all of the necessary quality controls into place, and preparing the vast amount of documentation now required. While the manufacturer is technically responsible, the pressure trickles down to suppliers like Nutratech, who must have the harvesting, manufacturing and testing protocols in place along with the documentation, to meet these quality standards.<br /> <br /> VR: What were some of the hottest product categories in 2012? Do you see those categories continuing their reign in 2013? <br /> <br /> Antriasian: One of the hottest product categories In 2012 was weight management, fueled by the green coffee bean extract craze. Originally introduced primarily as a postprandial glucose management tool, green coffee bean extract gained an instant reputation as the goto product for weight management after a highly visible appearance on the Dr. Oz Show. As weight management continues to be an area of focus by consumers— and as January brings New Year’s weight-loss resolutions—this category should continue its strong performance into 2013.<br /> <br /> Jacobowitz: Organic produce, which enjoyed some price deflation, functional beverages and gluten-free will all continue their popularity in 2013, but eventually gluten-free will tail off. Gluten-free is a necessity for maybe one or two percent of the population with actual Celiac Sprue. The other 10 percent buying the items may lose interest in restricting diet and lack of convenient access and ability to share eating occasions with others.<br /> <br /> Mount: Functional foods and beverages continue to gain popularity. As American “pill fatigue” increases, innovative delivery systems for nutrients will continue to gain popularity. In January, [NeoCell is] launching a product called Beauty Bursts, which are gourmet collagen soft chews packed with nutrients for hair, skin and nails. We know that consumers are looking for ways to get the benefits that nutritional supplements provide, but also want some immediate gratification; providing a fantastic-tasting product to deliver those nutrients is a sound solution.<br /> <br /> Green: Fitness and energy are booming, especially pre-workout formulas, and we think it will continue into 2013, primarily because the audience has grown. No longer catering only to serious athletes and bodybuilders, fitness and energy formulas are now also tailored for the “active lifestyle enthusiast”— people of all ages who want to increase energy, improve general physical and mental performance and overall Toning, build definition and stay in shape, as well as people who simply want an afternoon boost.<br /> <br /> VR: What are some trends retailers should be prepared to meet in 2013? <br /> <br /> Antriasian: From a category standpoint, inflammation, immune support and cardiovascular support should be poised to have a strong 2013. From a quality standpoint, consumers will continue to seek out vegetarian and non-GMO products, as well as veracity of label potency. From an availability standpoint, product developers will be seeking sustainable ingredients and raw materials sources. And for retailers, the focus needs to continue to be on education of their customer base, which generates not only customer satisfaction, but repeat business through long-term loyalty. <br /> <br /> Green: Mandatory labeling of genetically modified organisms (GMOs) is a consumer movement that the industry must pay attention to. Technically, the GMO issue doesn’t affect most herbs and botanicals and pertains mostly to a few major commercial food crops. But the underlying issue is transparency in labeling: 100 percent disclosure of the ingredients in a product. Retailers need to be prepared to address consumer demand for full disclosure— meaning that the label of each product they carry represents exactly what is in that product.<br /> <br /> Mount: In the past, the natural health industry has offered individual ingredients in a product and left it up to the consumer to combine a slew of products to fit their specific needs. This has led to “pill fatigue.” Formulations, not individual ingredients, targeting a niche market directed at common health issues will be preferred.<br /> <br /> VR: How would you advise retailers as they face an increasingly competitive market in 2013?<br /> <br /> Jacobowitz: Whole Foods Market is aggressively moving down-market to Lower-population-density trade areas that historically have been contested only by conventional supermarkets with relatively smaller natural products sets. Also, the “compact grocer” phenomenon, averaging 10,000 square feet, illustrated by Trader Joe’s and Natural Grocers by Vitamin Cottage, can also appear in secondary markets, and hurt independents.<br /> <br /> [Independent retailers] have to look at their competition’s vulnerabilities, weigh them against their strengths and make an assessment. For example, the vast majority of Whole Foods’ sales are foods. Yes, they do sell a lot of supplements, but the service levels are below that of an independent retailer in the supplement aisle, specifically, the level of engagement with individual customers. At Whole Foods, you’ll get referred to reference materials, while an independent will engage in conversation.<br /> <br /> Green: Smaller specialty retailers can’t compete on price, but they can offer a quality alternative that many consumers of natural products crave: personal service, knowledgeable staff, as well as products that have stood the test of time. Their “go-to” brands should either be exclusive to their channel or at least brands that don’t offer steep discounts to competing channels. And, go-to brands that contain branded ingredients that are safe, effective, backed by years of research instill a level of consumer trust and confidence that is above reproach.<br /> <br /> In addition, social media provides independent retailers a chance to start “conversations” with their customers. Not only will retailers learn what their customers want, but it’s an opportunity to share their knowledge and showcase the kinds of services they provide.<br /> <br /> Jacobowitz: And we can’t forget continued efforts to limit natural sector growth through regulatory policy and attempts to dilute of dismantle DSHEA (Dietary Supplement Health and Education Act). Retailers should take seriously being or becoming a member of NPA (Natural Products Association) and join their regional and national chapters, and offer to Assist. At the state level, NPA needs captains to make the grassroots context to state legislators when they get mischievous. Be ready to alert customers when there are large enough threats at the federal level.<br /> <br /> VR: How do you advise retailers as they stock their stores and care for their customers in 2013? <br /> <br /> Antriasian: The focus by retailers must be to both educate their customers And to provide them with individualized supplement programs. Life Extension offers its retailers complimentary copies of its bimonthly magazine, which provides the latest, fully referenced findings regarding the role of nutritional supplements, and acts as a comprehendible educational tool. To help customize a regimen, Life Extension offers comprehensive blood testing to its retailers, who may in turn offer it to their customers. Baseline and follow-up testing of key markers is critical to measure the success of a supplement regimen and to help modify the Components when and where necessary.<br /> <br /> Mount: Retail stores should focus on tried and true products as a core set and be cautious when carrying the newest “hot” ingredient without a history of safety and effectiveness. Innovative new products are an important part of our industry, but caution should be used for products that lack a decent theoretical or scientific foundation.<br /> <br /> Jacobowitz: Prevention and the nutrition- health connection are now ingrained in the culture, which has embraced the concept my grandmother [preached]: “You are what you eat.”<br /> <br /> Associations’ View From Capitol Hill<br /> <br /> As associations are the industry’s voice in Washington, D.C., representatives offer their views on where the industry stands heading into the New Year:<br /> <br /> Steve Mister, president and CEO of the Council for Responsible Nutrition<br /> <br /> GMP compliance continues to be a challenge for the industry, particularly as we’re seeing an increase in FDA enforcement. Even non-observance of these requirements by a few can tarnish the reputation of the entire industry. The problem with tainted products also remains an issue as evidenced by the warning letters and enforcement actions FDA has conducted this year.<br /> <br /> Manufacturers must test their incoming ingredients and qualify their suppliers, and retailers need to be aware of their responsibility to know what’s in the products on their shelves. Retailers should do the right thing when it comes to questions about tainted products or failed GMP inspections: If companies have repeated FDA warning letters that demonstrate a pattern of noncompliance, retailers should refuse to put those products on the shelf for their customers.<br /> <br /> The scientific landscape of our industry is ever-changing. We’ve had lots of wellpublicized studies come out this year, both positive and negative. Sometimes the studies are poorly conducted, and other times their results are taken out of context, but there is no denying that negative research outcomes dampen consumer enthusiasm for our products. This is why retailers need to stay on top of the research, particularly as they become trusted sources of information for their customers. Retailers should make sure They stay informed and prepared to discuss how each new study fits into the larger context of scientific information about a particular ingredient.<br /> <br /> Having a well-regulated industry that consumers trust is really dependent on having an adequately funded FDA. FDA’s critical underfunding will continue to be a political issue that impacts our industry moving forward. Even as Congress and the President aim to make more budget cuts to the agency, we have to recognize that if FDA can’t do its job for lack of resources, then our critics will rightly argue that for all practical purposes this industry is “unregulated,” and that is not helpful to any of us.<br /> <br /> This industry is attracting a lot of attention from consumers, as there is more of a focus on “well care” as opposed to “sick care.” And new research promotes new interest in the category for everything from multivitamins to omega-3s to cinnamon.<br /> <br /> As retailers stock their stores, they need to always remember to choose credible and trustworthy vendors that make quality products, and to stay within the boundaries of the law when talking to their customers. For more information on what retailers can and can’t say, visit CRN’s guide, Roadmap for Retailers at www.crnusa.org/roadmap/.<br /> <br /> John Shaw, executive director and CEO of the Natural Products Association (NPA) <br /> <br /> We continue to see negative or slanted reports about vitamins and other supplements, though I’m encouraged that we saw more positive studies in 2012.<br /> These news reports are an opportunity for retailers to educate their customers about the benefits and safety of dietary supplements. We at NPA will continue to lead the charge in defending the industry from unwarranted attacks. We offer informational resources for consumers at www.npainfo.org/consumers. And retailers can arm themselves with NPA’s responses to media stories at www.npainfo.org/nparesponds.<br /> <br /> Currently, NPA doesn’t anticipate that 2013 will offer a new host of regulatory challenges. What we expect to see is an extension of the issues we have been dealing with the past few years. For instance, we know the FDA is actively working on a couple of guidance documents that will affect the food and dietary supplement industry, including the next version of the New Dietary Ingredient (NDI) draft guidance, and the final guidance distinguishing between conventional beverages and liquid dietary supplements. We also know the FDA continues to implement the Food Safety Modernization Act requirements. This 2011 law added a number of deadlines for the FDA to publish regulations and guidance documents, but so far we have seen the FDA struggle to keep up.<br /> <br /> I’m personally very excited about the prospects for our healthy industry, not just next year but for many years to come. We are really at the forefront of a mass movement toward natural and healthy living in this country. It’s important for retailers to do their research when seeking out the best products for their customers. And retailers that take the extra step in service for their customers are likely to be rewarded with higher growth and stronger sales.<br /> <br /> This year, we will be holding our annual Natural Products Day event on March 19, 2013. We invite all NPA members and the rest of the industry to join us and help NPA spread the word to legislators about the issues.

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