Photo Gallery: Top trends from NBJ’s Annual Industry Overview

Jul. 12, 2011 3:00pm

NDI guidance drops

Nearly 17 years after the enactment of the Dietary Supplement Health and Education Act (DSHEA), the U.S. Food and Drug Administration (FDA) finally announced its new dietary ingredient (NDI) guidelines on July 1, to industry’s colossal disappointment. The guidance calls for a laborious number of new ingredient filings, to the extent that finished products containing several approved ingredients require an individual filing, and multiple manufacturers employing the same ingredient each have to make independent filings for that ingredient. From FDA’s standpoint, the numbers are compelling: 1,000 new supplement products are introduced every year, and yet FDA receives only 50 NDI filings in that time. But the current guidance seems like more of a loud statement than a reasonable expectation for industry.
Is FDA a paper tiger?

FDA seems to be afraid of losing its grip on the nutrition industry, and numerous entities are stealing its thunder. Whole Foods Market, for one, the biggest U.S. purveyor of natural products, has its fair share of regulatory clout. The retailer is much more nimble in its oversight than FDA could hope to be, often banning certain ingredients and products, and rolling out various qualitative schemes for its meat, seafood, personal care products and household cleaners. Across the pond, the European Food Safety Authority (EFSA) uses its teeth to regulate its food supply, taking a tougher stance on things like genetically-modified organisms (GMOs), antibiotics in food, and ingredient health claims than FDA does. Add to that the consumer perception that the U.S. supplement industry is unregulated, as well as proposed budget cuts for the agency in 2012, and FDA seems less authoritative. No wonder their recent NDI guidance came out so tough on industry.
Innovation on the lam

New product development has flown somewhat under the radar in the supplement industry since 2008, when the down economy scared innovators into hibernation. Follow that down development cycle into 2010 and 2011, and the new trends are the old trends. Fish oil, probiotics, vitamin D. Supplement sales growth was solid—not stellar—in 2010, as the industry climbed 4.4% to $28.1 billion. In an industry so dependent upon new products, new ideas and all-around newness, growth requires a strong dedication to the development pipeline.
Whole food supplements start to hit

Natural & organic food won big in 2010, with U.S. sales growing 8% to $39 billion. Compare that to supplements and functional foods, each of which saw mid-4% growth in 2010. In other words, emphasis moved away from engineered approaches to nutrition in 2010, and swung over towards the whole, natural side of the spectrum. The combined specters of GMOs, synthetics in natural products, and the toxic potential of nanotechnology all moved nutrition consumers to products with a softer emphasis on science and engineering. Enter whole food, green and organic supplements, from manufacturers like Garden of Life, New Chapter, Rainbow Light and Juice Plus+, which offer a more palatable synergy of science and nature.
Walmart's supplement sales slump

Fifteen years after Walmart plunged headfirst into the wellness business with its in-store nutrition centers and cut-rate vitamins, the nation's largest purveyor of dietary supplements appears to have hit a serious rough spot. According to NBJ, the retail goliath saw sales of supplements slip approximately 4% in 2010, a stark contrast to the modest 4.7% gains made across the mass channel as a whole. Walmart's missteps in the supplement aisle helped drag the mass channel down considerably from its heady double-digit growth in 2009. Sources close to Walmart confirm that the decline at the retailer continues into 2011 sales.
Non-GMO label goes live

A raft of natural products opted into non-GMO labeling last year, employing the Non-GMO Project Verified marker on their packaging. T. J. McIntyre, general manager of natural foods brand Earth Balance, told NBJ that non-GMO certification was "about as costly and a lot more time intensive" than organic certification. Detractors might argue that the label steals some thunder from organic, as an organic product would theoretically be non-GMO. It's also just another eco-label that can confuse consumers. But on the other side, more and more knowledge and discourse about GMOs could bring attention to the natural products industry at large.
D still strong, moves toward food

Vitamin D rocked the supplement world in 2008 and 2009, as a tidal wave of positive research heralded the vitamin's manifold benefits. D sales shot up over 80% in 2009, turning the supplement into a $400 million category nearly overnight. In 2010, sales were naturally a bit more subdued, but still strong, as the category again garnered double-digit growth. The Institute of Medicine upped the recommended daily intake of D (though many experts would argue that it's still too low) in November 2010, meaning more D all around. That may lead to higher fortification levels in milk, and also offers opportunities for suppliers looking to break into functional food. Just this year, news of Lallemand working on bread fortified with D2 yeast hit the wires, and LycoRed introduced a water-soluble, microencapsulated D3 beverage.
Raw material & ingredient suppliers go vertical

Many companies have made successful forays up and down the supply chain in recent years. In terms of vertical integration, many of the industry's flops come from suppliers drifting downstream into brand ownership. Kemin and Cognis both developed branded finished products for sale on the consumer market—Kemin with FloraGlo and Cognis with Tonalin—but pulled back after the required marketing spend loomed too large. In that vein, organic expansion in a vertical direction can be a slow and uncertain undertaking, as suppliers often lack the experience, expertise and cash required to successfully market consumer products. Acquisition strategies, however, have proven successful for several suppliers. Glanbia, for example, a world leader in whey protein, recently glommed two of the biggest U.S. sports nutrition companies, Optimum Nutrition and BSN, both of which are heavyweights in the protein powder market.

Nutrition Business Journal’s Annual Industry Overview issue recently went to press, elucidating the many trends that shaped the nutrition industry in 2010 and thus far in 2011. The nutrition industry grew 6% last year, with a strong performance from natural & organic food, and more modest growth for supplements and functional food. These are a few of the most important development in industry over the last 18 months, as seen by NBJ.