“2009 witnessed some major events, including the inauguration of a new president in the U.S., a nearly bottomed-out economy and healthcare system, and soaring unemployment rates. Despite these game-changing occurrences, the health and wellness market remained, well, healthy. In fact, as many industries experienced declines, the nutrition industry held its own, probably as a result of several factors, such as an increasing distaste for pharmaceuticals and mainstream healthcare. Whatever the reasons, the industry has so far weathered this storm. Now, however, it must deal with a new administration, which will be squarely focused on safety and regulatory enforcement. As the new faces at FDA and other regulatory agencies find their footing and gain more understanding of dietary supplements and functional foods, expect some major changes in 2010.”—Rebecca Wright, Editor

“A few years ago, when I talked with major food companies about functional ingredients, what I mostly saw was polite interest, but no real commitment. That is, everyone acknowledged making products that promoted health was a virtuous endeavor, but very few felt an urgent need to take the plunge. That’s beginning to change. We now see major companies throughout the value chain committing real resources—staff, time and money—to creating ingredients and finished goods that provide a health benefit beyond basic nutrition. And some are putting products into the marketplace. We may be approaching a ‘tipping point’.”—Bob Jones, Principal, Scientia Advisors

“There are storms on the horizon with intermittent sunshine. The forecast for nutraceuticals is dicey. Regulatory hurdles are looking higher—a fortunate forecast on the food safety side but discouraging for marketing health benefits. Expect advances with the new food safety PulseNet program to increase identification and recall of products and ingredients. This is a good safeguard for consumers and our industry that discourages contaminated products. This is occurring just as consumers are pursuing foods that are homegrown and often outside the traceable commercial channels. Our food culture is redefining healthy foods away from deconstructed ‘nutritionism’ just as our medical community is beginning to notice nutrigenetics and the impact of isolated nutrition components.”—Nancy Childs, PhD, Professor & Chair, Department of Food Marketing, St. Joseph’s University

“The safety and quality of food products and dietary supplements remain at the forefront of consumers’ and regulators’ awareness, and depend to a significant degree on the integrity and authenticity of the ingredients used to produce them. In answering growing consumer demands for innovative products—such as new, non-nutritive sweeteners or functional foods—industry faces constant, new challenges in securing raw materials from around the world. Public quality standards that are developed through a science-based, transparent process and supported by analytical reference materials are becoming increasingly important as an authoritative measure to define and determine the authenticity and purity of these ingredients for buyers and sellers alike. These standards also serve to demonstrate the integrity of supply chains. The U.S. Pharmacopeia is answering industry needs for quality standards through the publication of documentary standards for food and dietary supplement ingredients in its Food Chemical Codex (FCC) and Dietary Supplement Compendium (DSC).”—Markus Lipp, Director of Food Standards, U.S. Pharmacopeia (USP)

“From our position as a key global supplier of nutritional ingredients to the supplement and food & beverage industries, we are presented with a broad view of the current market situation. We see that, despite a struggling economy, demand from our customers has remained firm. This demonstrates that consumers are focused on wellness and feel vitamins and nutrients play a key role in their day-to-day efforts to maintain good health. This is also true in the fortified foods area where we have seen the strongest growth. People are dining out less and eating at home more. Additionally, they are making decisions in stores based on the nutrition profile of the products offered.

"We have seen some preference for private label brands as consumers try to cope with a higher cost of living and a stagnant economy. Regardless, demand across the board from consumers is for high quality and safe products. New innovative functional food products promising specific health benefits continue to draw consumer interest. While taste still remains ‘King,’ consumers are looking for their food to provide them with more, including a good nutrition profile and identified health benefits.”—Jim Hamilton, President, DSM Nutritional Products, North America

“We are entering ‘The Year of Vitamin D.’ In mid-2010 the Institute of Medicine is expected to issue revised dietary reference intakes (DRIs) for vitamin D and calcium. The industry is betting that current vitamin D Adequate Intakes of 200, 400 and 600 IU/day for children and younger adults, mid-life adults and older adults, respectively, will be revised upward. Already, the American Academy of Pediatrics has jumped the gun and upped its recommendation for children to 400 IU/day. Obesity leads to lower serum vitamin D, and we are becoming more obese. Dietary supplements that contain 1000, 2000 and 5000 IU are already on the market. Meanwhile, the dairy, cereal and baked goods industries are clamoring for higher fortification levels. Experts have estimated that the majority of Americans would need to take more than 1000 IU/day to raise serum levels above 75 nmol/L. Going forward, watch out for overly enthusiastic claims of benefits, and perhaps potential risks of raising vitamin D intake.”—David Mark, PhD, President, Dmark Consulting

“I feel the industry is going through a rather aimless period right now, with questions about the economy, regulation, conflicts of interest, what is ‘natural’ and advertising practices rearing their head in a way that seems to have put the use of strong science and technology on hold in some cases. And that is a shame.”—Fergus Clydesdale, PhD, Distinguished Professor & Head of the Department of Food Science, University of Massachusetts, Amherst

“During these economic times, companies may still be looking at ways to slash their marketing budgets. One area that should not be subject to a cut back is brand promotion. This is as good a time as any to work the communication of a brand—refine it, clarify it, freshen it and ramp it up. While the competition may be pulling back, companies should be taking this opportunity to create ways to show customers that their organization is as strong as ever. Companies that have spent time and money on communications have been steadily weathering the storm.”—Sheldon Baker, Senior Vice President & Principal, Baker Dillon Group

“I feel so blessed these days as the economy drags, unemployment hits numbers not seen in decades, businesses file for bankruptcy protection or closure and the stock market doesn’t reflect the real world. All of these things are unfortunate, but through it all, HealthyBrandBuilders (TonkinConsulting) is experiencing one of its best years in its 24-year history. Many factors contribute to this upbeat message. We have worked hard to stake a claim on an area of influence, know it well, be good at what we do and become trustworthy and reliable. Those mainstay clients in consulting practices, frankly, make the failures—and yes we all have them—easier to take. Together with our clients, we give our all to mutual goals. So the messages are simple: stay true to simplicity, read the market intensely, play by the rules, always be aware, and ‘plan the work, work the plan’.”—Jim Tonkin, Principal, Healthy Brand Builders

“China has two distinctions that make it very important to the future safety and growth of the U.S. dietary supplement industry. First, China is the largest supplier of raw materials and the safety of these ingredients is coming under heavier scrutiny. Second, with proper regulatory reform, China will be the largest market for dietary supplements and a key market for U.S. industry growth. The Natural Products Association (NPA) established an office in Beijing in 2006 to work on increasing the quality and safety of ingredients being exported from China and to open China’s restrictive dietary supplement regulations.

“Safety: NPA’s China office has held 10 quality assurance seminars in cities across China, educating suppliers on third party testing and GMP compliance. Thus far, the association’s seminars have been attended by more than 200 suppliers, as well as Chinese officials from State Food and Drug Administration (SFDA), Ministry of Commerce (MOFCOM) and Administration for Quality Supervision Inspection and Quarantine (AQSIQ). NPA also offers its ingredient testing and GMP certification programs to Chinese suppliers, which is assisting to increase the safety of ingredients flowing out of China.

“Growth: NPA and the U.S. Department of Commerce have been consistently meeting with Chinese regulators while also providing an annual industry white paper that is submitted to both the U.S. and Chinese governments. This year China released its new food safety law together with draft regulations on the administration of dietary supplements. At this point, the draft regulations are moving in a positive direction. Consumer safety will be increased and access to the market for certain ingredients will become more transparent and simplified.”—Jeff Crowther, Executive Director, Natural Products Association (NPA) China

“The trend toward natural products is stronger than the economic situation. Despite the recession, Naturex has continued to grow. Research and development investments and the size of manufacturing facilities play more and more prominent roles in our markets. The companies that cannot afford these investments face difficulties.

"Naturex develops innovative botanicals that combine performance with sustainability. For instance, our organic certifications are part of our growing business initiatives, by extending and enhancing our current products and services portfolio. It contributes to better serve our existing clients and reflects our continuous drive to go one step further.”—Antoine Dauby, Group Marketing Manager, Naturex

“Despite the sluggish economy, the natural products industry continues to grow, illustrating Americans’ immense interest in taking charge of their health in a natural and proactive manner. This increased level of consumer interest ensures FDA and FTC will continue to monitor all aspects of our industry. External scrutiny aside, the larger issue at hand is the industry’s responsibility for its own actions and practices. Gone are the days when companies can bypass the rules! Today, it’s paramount that companies have valid science behind their products and adhere to standard GMPs. To this degree, we can police ourselves.”—Paul Faganel, President, Embria Health Sciences

“This year clearly demonstrates the take-charge attitude consumers are displaying regarding their own healthcare. We are seeing a convergence of supplements and functional foods as demand continues to grow for nutrients from various sources. Looking ahead, Cognis and other leading suppliers must partner with brand marketers to reinforce current buying patterns and sustain the public’s interest in bridging the nutritional gap by making it easier for them to identify products that fit their needs. Given global events and safety concerns, consumers will take a closer look at the products they buy, who makes them and where they originate. Demand will continue to escalate for natural and health-enhancing ingredients. Cognis is well positioned with our broad portfolio of products, including Tonalin CLA, Covitol natural vitamin E, Betatene natural mixed carotenoids, Heart-Choice natural phytosterols, Xangold natural lutein esters, and Omevital omega 3 fatty acids.”—Dave Eckert, Vice President, Cognis Nutrition & Health

“The dietary supplement industry is no longer a place for the uninitiated, uninformed or undercapitalized. The liability insurance industry is now better informed about the risks associated with our space and underwriters are being very selective about where they place their resources at risk. The Federal Trade Commission is being aggressive in the oversight of rogue marketing claims and is securing significant fines from—and even incarcerating—those who run afoul of the law. FDA is now inspecting mid-sized companies engaged in manufacturing dietary supplements. The very fact this is happening militates against the argument so often mistakenly made that ours is an unregulated industry. Try telling that to companies dealing with extensive Form 483s worrying about defending potential plaintiff litigation by bounty hunters in various jurisdictions.

“Those who engaged in willful adulteration of dietary supplements with pharmaceutical compounds to enhance various states of being, whether for personal reasons or for athletic performance, should seek legal representation or exit the marketplace. It is clear that federal and several state agencies are going to clean up this swamp, which is far removed from the responsible dietary supplement companies.

“The balance of the industry engaged in dietary supplement production will fall under the scrutiny of FDA and its inspectors in June of 2010. In my discussions with several participants at all levels of commerce, it is clear many of these folks may be unprepared for what is coming their way. Further consolidations in this industry are inevitable, and companies with high debt loads may be forced to restructure or reposition their enterprises for sustainability. If we all thought 2009 was challenging, take heart—I predict 2010 will be even tougher.”—Mark LeDoux, Chairman & CEO, Natural Alternatives International & Chair, Council for Responsible Nutrition (CRN)

“Scientific and clinical evidence will drive both regulatory issues and public perception, while compliance with regulations will shape the market. Companies such as ingredient providers and large distributors will align with contract research organizations in the same way they once aligned with offshore raw material suppliers.

“New consumer tests will emerge in the market to measure either the nutrient value of a specific supplement or the physiological effect of a specific supplement or diet, thereby providing the consumer evidence of effect. Kiwifruit will become strongly associated with improvements in gut health in the same way probiotics have.”—Grant Washington-Smith, Nutraceuticals World “From the Corners of the World” Columnist

“At the 15th anniversary of the passage of DSHEA, we have an industry that has reached one of its potentials: Profits. In spite of a bad economy, the industry continues to motor along, turning tidy sums of profit for those who venture into it. This is both a blessing and a curse at this milepost. The blessing is that we have motivated ourselves to action in response to DSHEA and built products, companies and icons (e.g., Smilin’ Bob) as a result of this landmark legislation. The curse is that we have built a short-term industry. Granted we have done so at the tacit behest of our regulatory agencies, but it is what we have done nonetheless. The two most revelatory signs of this short-term approach include the fact that we are still scrambling to come to terms with GMPs even though that handwriting has been on the wall for a decade. Will this be the lever that tips the applecart of the industry? I for one doubt it, but it is an indicator. As an industry, we behave as though we are immune to future challenges. GMPs have ‘been coming,’ are now ‘ in place,’ and yet we are still waiting for the gun to be put to our heads before we come to compliance. This is a practical demonstration of that short-term thought that has served us so well. The second revelation remains, as always, in the fact that we have not done the quantity of science necessary to fulfill DSHEA’s promise. These revelations are open and obvious to those who watch the development of the industry. These occur as reflections of the profits garnered short-term through lack of enforcement (deliberate for some time as has now been shown) while refusing to invest in that which will carry us farther long-term. We should not be surprised. Many industries have followed along similar paths since the passage of DSHEA. The question to be answered in the longer term is: Will we become an industry-wide Enron (see short-term profit results) or rather more like the financial sector? Should the sleeping regulatory giant ever awaken, we have taken advantage of the climate, the profits and moved along blissfully while the category narrows. The coming year will likely not bring much change—the term may be short but it is not yet complete. So for now at least, we should toast ourselves much as those in the financial industry did prior to the end of last year and hope that the bubble does not burst and the regulatory agencies do not address us more directly—or worse, through Congressional intervention.”—Jim Lassiter, Principal, The Lassiter Group

“Although the FDA GMPs went into effect June of 2008, their impact will continue to be felt well into 2010 and beyond. Implementation of the GMPs has raised the industry’s level of business sophistication across the operational spectrum, as these new regulations have forced manufacturers to scrutinize not only their internal processes, but also their logistic chain processes to ensure the quality of their suppliers’ raw materials. Contamination and adulteration of products continues to be a major issue plaguing our industry as a whole, and manufacturers must take action to minimize their risk by partnering with suppliers that maintain GMPs and have established testing and traceability programs. You have to know where your materials are coming from. Ongoing evaluation of materials for contamination and adulteration will continue to be a core, critical component for maintaining a viable business in the dietary supplement industry.”—George Pontiakos, President & CEO, BI Nutraceuticals

“The business climate in the nutraceuticals industry has been very strong so far in 2009. In the wake of food safety scandals, the emphasis has shifted away from purely price toward quality and product integrity, which helps higher quality suppliers like The Wright Group. Firmness in energy prices and a weaker dollar have raised food ingredient import prices, but have helped exporters immensely. Softening in agricultural commodity prices has enabled margin expansion by many of our food industry customers, which helps our pricing power as well.

“We feel demand for nutraceuticals will remain strong in 2010, since there is an unprecedented economic component to remaining healthy in the face of an aging population, high unemployment, benefit reductions and escalating healthcare costs.”—S.L. (Sam) Wright IV, President & CEO, The Wright Group

“This year has proven to be an interesting one for the industry, as many companies prepared for a recessionary economy that didn’t really strike the natural products industry on a wide scale. From my vantage point as an executive coach working with raw material suppliers, I saw many exhibit caution in spending money and heard comments about many of their customers (finished product manufacturers) adopting a ‘wait and see’ attitude in terms of new product development and major R&D initiatives. Now, as we head into 2010, it appears the reigns on spending and new developments may be loosening and I see continued enthusiasm from smaller suppliers who remain optimistic about their future and the future of the business.”—Ellen Schutt, Partner, LaunchNatural

“As companies adapt to the new GMP requirements, one of the primary issues facing manufacturers will be to qualify and secure supply chains. Some of the most complex aspects of compliance with GMP rules have to do with ensuring that ingredients meet the requirements set forth under the rules. Relatively few ingredient suppliers, especially trading companies, are prepared to provide all the requirements necessary for compliance. Partnering with valued suppliers will be key for manufacturers to ensure the quality, safety and traceability of their supply chains.”—Paul Altaffer, Nutraceuticals World “From the Corners of the World” Columnist

“This year has been an interesting one for regulatory developments in a number of areas, but none more visible and harmful to the overall industry than sports nutrition and steroid contamination and adulteration. These stories, which have long plagued the industry, started off again in January with the 6-OXO Major League Baseball (MLB) suspension stories, followed up in July with an article in Sports Illustrated, and capped off with raids of Bodybuilding.com and a Senate hearing in September. This issue could be the catalyst for more legislative hearings, increased negative media, and potential new regulations surrounding steroid contamination and illegal marketing of steroids disguised as supplements.”—Edward Wyszumiala, General Manager, Dietary Supplement Programs, NSF International

“The Japanese food and nutraceutical industry is currently focused on the outcome of the new Japanese government regulatory priority reviews that are underway. Most companies are anxiously waiting for clear signals from the new government. So far the words are encouraging, and the companies are hoping for ‘real change you can believe in.’ (Sound familiar?) After nearly 50 years of essentially one-party rule, it is definitely time for change. It remains to be seen whether or not the promised actions follow the words. Until then, new initiatives in the industry are being put on hold, even though research and development is continuing. It is expected to be a few months before the direction is clear and the options for new food and nutraceutical ingredient and product technologies are revealed.”—Ron Bailey, Founder, California Functional Foods

“No longer is the industry on the periphery of critical product quality pillars. The National Center for Complementary and Alternative Medicine (NCCAM) is refining its product integrity standards that AHPA helped define and implement. USP published its Dietary Supplement Compendium complete with AHPA guidance documents. The National Institute of Standards and Technology (NIST) conducts laboratory quality assurance test exercises that AHPA envisioned more than a decade ago. AOAC, through industry guidance, is tackling the issue of how to validate identity tests, and laboratories are doing the hard work to test the tests! It’s gratifying to connect these resources, often employing them to solve company product quality and identity issues.”—Steven Dentali, PhD, Chief Science Officer, American Herbal Products Association (AHPA)

“Our future appears bright in spite of the economy and our critics, but to guarantee it is fruitful going forward, now is not the time to look back. Rather, it’s the time to forge ahead and focus on the opportunities and challenges at hand. By the book, we’re the fourth-most-regulated industry by FDA—an FDA that now has resources to enforce. As with all FDA regulated industries, success is predicated on regulatory compliance (especially where AERs and GMPS are concerned) but also being responsible legislatively. This means joining a trade association, contributing to PACs and meeting your elected officials to tell them how important our actions are for the daily health and well-being of millions of Americans.”—Daniel Fabricant, PhD, Vice President, Scientific & Regulatory Affairs, Natural Products Association

“Caution was the prevailing theme for the branded and functional ingredient sector in 2009. Sales of established finished products were adequate to good; however, there was a palpable reduction in development and new product launches. Branded and premium products faced the biggest challenges and saw some loss of market share due to generic substitution. On the positive side, companies that are faring well are growing impatient on the sidelines. We anticipate at least modest investment in expansion and new products in 2010 to meet future growth expectations.”—Dan Murray, Vice President, Business Development, Xsto Solutions, LLC

“The impact the nutraceutical industry can have on improving consumer health, prevention and quality of life is vast. Unfortunately, inferior or tainted raw materials and exaggerated, unproven product claims continue to cast a dark cloud over our industry. This contributes to consumer and industry skepticism and an onslaught of mainstream media criticism. Product integrity and quality from raw material sourcing, alongside promotion of finished products, is necessary for the industry to grow with credibility while offering true value to consumers. InterHealth offers manufacturers safe and effective branded ingredients such as Super CitriMax, ChromeMate and UC-II, which are produced using the highest of standards and backed by published, peer-reviewed research.”—Paul Dijkstra, CEO,
InterHealth Nutraceuticals

“Despite economic hardships for many industries, in the supplement industry, we can perhaps be so bold as to comment ‘What recession?’ As American consumers take their health seriously, despite visits to the doctor on the decline, supplement and over-the-counter (OTC) drug use is on the rise. A goal now as an industry is to ensure that these independent consumers receive safe, effective products manufactured to firm standards of quality. The future for the omega 3 category looks bright with an RDI only a few years away, a USP monograph for concentrates in the works and a communication and education program in place to teach the consumer about the need for omega 3s for optimum health and wellness.”—David Shannon, Sales Director, Health Care, Croda Inc.

“In 2009, we’ve seen an increased demand for domestically-manufactured ingredients. This may be a result of national attention on the quality and safety of certain imported ingredients or global trade challenges. It could also simply be the effect of the consumer trend to ‘buy local.’ In light of this demand, RFI opened a new certified organic manufacturing facility in Colorado in 2009. This facility will produce custom extracts and powders made from a variety of raw materials, helping our customers source numerous ingredients, such as fruits, vegetables and botanicals, from within the U.S.”—Jeff Wuagneux, President & CEO, RFI Ingredients

“The staying power of the natural products industry is strong, as it has weathered many regulatory and economic storms. Despite the recent economic recession, the industry has fared well, which speaks to its legitimacy, necessity and popularity. But with no definite end in sight to the recession, every sector—from consumers to retailers to manufacturers—continues to look for a combination of quality and value. As a supplier, OmniActive Health Technologies prides itself on delivering high-quality ingredients for an exceptional value, which is why our company has continued to experience positive growth, even during tough economic times.”—Hiren Doshi, Business Development Director, OmniActive Health Technologies

“Today, there is talk within the industry of change—potential new legislation that would alter DSHEA, a new administration and new leadership at FDA and FTC, an economic downturn that has put stress on our companies, though the industry overall seems to be weathering the recession.

“Yet some things endure, like the dietary supplement industry’s commitment to providing quality products that help consumers stay healthy and cultivate wellness. CRN is ready for the changes on the horizon. We’re poised to help our members be their best because when we join together to form a single voice, we are all stronger, and the industry rises.”—Steve Mister, President & CEO, Council for Responsible Nutrition (CRN)

“Consumers have more access to information than ever before and are often well educated on what they should be looking for with regard to an omega 3 supplement. They want to know if their fish oil is coming from sustainable fish stock, can be traced back to the origin and made in food-approved facilities. EPAX’s consumers appreciate that all the handling and processing is done in an environmentally responsible way that has as little environmental impact as possible.

“Consumers also want to know that the product works. Therefore, clinical trials are crucial to show what clinical benefit it gives the consumer. Health condition-specific products—concentrates with different ratios of EPA and DHA that are tailor-made for certain conditions—play an important role here. They contain enough EPA and DHA to provide clinical benefits with a reasonable daily dosage.”—Baldur Hjaltason, Sales Manager, EPAX AS

“The effects of the economy on consumer spending habits led to slightly lower volumes in 2009 for ingredient manufacturers. Although volumes have stabilized and show positive signs for next year, our customers need strong messages provided by evidential science and support for ingredient quality and reliability.Lonza continues to invest in new development, science and manufacturing to provide our customers with tools to help build their pipelines and create sustainable value.”—Michael DeGennaro, Vice President of Sales & Marketing, Human Nutrition, Lonza

“Recently, FDA urged food companies to re-think their approach to their own front-label symbols. This was the result of pressure from the Center for Science in the Public Interest. The industry quickly responded by phasing out these types of healthy symbol programs.

“My impression is that these big food companies had great intentions, but somehow got caught up in the complexity that they were trying to make simple for their consumers. I believe that consumers appreciate the communication devices the industry has created for them. I also believe that the communication tools and devices on labels actually create a healthy competitive environment between food manufacturers. The result is increased emphasis on health and nutrition. It is clear that some of the criteria for the communication were flawed, but the overall concept is good.

“The likely ramification of this situation will be some sort of standard criteria for such labeling. I just hope FDA will allow enough self regulation that will allow food companies enough incentive to provide their consumers better choices.”—Paul Paslaski, Vice President of Sales & Marketing, BioVittoria USA