Herbs & botanicals: a market under the microscope: can herbal supplements ride out the storm conjured by the New York Attorney General?
Igniting debate about industry regulation, quality standards and testing protocols, New York Attorney General (NY AG) Eric Schneiderman sent cease-and-desist letters to GNC, Target, Walgreens and Walmart in February, demanding the retailers recall store brand herbal dietary supplements. Based on controversial DNA barcoding analysis, the investigation alleged that many products contained contaminants but not the dietary ingredients listed on labels.
While independent test results found its products were legitimate, safe and compliant with regulations, GNC reached an agreement with the NY AG in March, whereby the retailer will expand testing and integrate traceability standards, including DNA barcode testing to confirm the authenticity of all plants used as sources for its herbal dietary supplements prior to processing. GNC also agreed to provide semiannual reports to the AG's office.
However, immediately following the NY AG investigation, class action lawsuits were filed, negative reports, articles and editorials were published in the mainstream consumer media, and Congressional leaders along with a coalition of state attorneys general have called for increased oversight and new industry regulations.
Meanwhile, the major trade associations have spoken loudly in defense of the Dietary Supplement Health and Education Act (DSHEA), advocating for full enforcement of the landmark law. Additionally, two white papers commissioned by the trade groups were published in March, detailing the capabilities and limitations of DNA barcode testing on botanical dietary supplements.
"For botanical identification, DNA barcoding is mostly limited to raw materials," explained Maged Sharaf, PhD, chief science officer of the American Herbal Products Association (AHPA), Silver Spring, MD. "Because of the relatively new application of DNA barcoding to finished supplements, there is a general lack of understanding of its limitations ... DNA barcoding is not capable of identifying the chemical constituents or plant parts, nor is it able to quantify the amount of plant material used in the product. Therefore, the use of additional methods (e.g., microscopic and chemical) is necessary to control the overall quality of a botanical dietary supplement and to verify label claims by identifying chemicals of interest, confirming the plant part, and/or ensuring the potency of the product."
While the full impact of the investigation on retail sales has yet to be quantified, prior to the NY AG controversy, the herb/botanical supplement market experienced positive growth for 10 consecutive years through 2013.
In fact, sales of herbal dietary supplements in the U.S. increased by 7.9% in 2013, reaching a total estimated figure of more than $6 billion dollars for the first time, according to a 2014 report published in HerbalGram, the peer-reviewed quarterly journal of the non-profit American Botanical Council (ABC), Austin, TX.
Sales in the mainstream market channel (food, drug and mass-market stores, plus club and convenience stores) continued to grow, increasing an estimated 7.7% over 2012 sales, while sales in natural food stores rose by a stronger estimated growth of 8.8%.
The top-selling herbs--as coded by primary ingredient--of 2013 in the mainstream multi-outlet channel, according to SPINS/IRI, were horehound (Marrubium vulgare), a key ingredient in throat drops; yohimbe (.Pausinystalia johimbe), used in numerous athletic performance and sexual enhancement products; cranberry (Vaccinium macrocarpon), popular primarily for its claimed benefit of helping to prevent urinary tract infections; black cohosh (Actaea racemosa), a popular aid to manage menopausal symptoms; and senna (Senna alexandrina), used as a stimulant laxative.
The five top-selling herbal supplements--as coded by primary ingredient-- of 2013 in the natural channel, according to SPINS, were turmeric (Curcuma longa) and extracts standardized to curcumin; grass (wheat and barley; Triticum aestivum and Hordeum vulgare, respectively); flaxseed (Linum usitatissimum) and/or flax oil; aloe vera (Aloe vera); and spirulina/blue-green algae (.Arthrospira spp.). Turmeric showed a 26.2% increase in sales in 2013, taking the top ranking in the natural channel (turmeric ranked third in 2011 and 2012).
Fruit/vegetable supplement sales topped $117 million in 2014, after three years of double-digit growth, according to Nutrition Business Journal, Boulder, CO. Superfood juice supplements posted strong sales: noni $229 million, mangosteen $176 million and goji juice jumped 10.4% to $119 million. Green tea supplement sales topped $135 million in 2014, green foods $103 million, mushrooms $32 million, and hops $15 million.
Scientific research elucidating the benefits of specific ingredients has helped develop the market for those herbs, according to Shaheen Majeed, marketing director, Sabinsa Corporation, East Windsor, NJ. For example, "With new clinical evidence emerging on curcumin for a variety of health benefits, the market for curcumin supplements is growing rapidly. Curcumin is now included in a variety of supplements for managing joint health, overall health and wellness, cholesterol management, liver support, and a number of other health benefits beyond its initial use for inflammation."
Studies on Sabinsa's patented Curcumin C3 Complex have helped bring curcumin to the forefront in managing healthy lipid levels, he added, especially in obese subjects and those with metabolic syndrome. In a recently conducted study published in the peer-reviewed journal Complementary Therapies in Medicine, lipid-modifying benefits of curcuminoids (Curcumin C3 Complex) were studied in metabolic syndrome subjects.
"The results were very encouraging," said Mr. Majeed, "with reduction in total cholesterol, low density cholesterol (LDL), triglyceride levels, and lipoprotein (a) levels, whereas the HDL (which is considered as healthy cholesterol) was found to be elevated in these subjects. The study also used the bioavailability enhancer BioPerine, a patented black pepper extract from Sabinsa, with the curcuminoids."
While curcumin has experienced healthy growth, some traditional herbs such as salacia are not doing as well, partly due to a lack of new science, Mr. Majeed noted. "Apart from combination products without any demonstrated clinical efficacy, there are also concerns on the sustainability of the product, as well as adulteration from different species of salacia, making manufacturers and customers wary of such combinations without good science."
Randy Kreienbrink, director of marketing, BI Nutraceuticals, Long Beach, CA, said botanicals that are performing well of late include plant-based proteins, fruit and vegetable powders, turmeric, maca, algae, chia, psyllium, green tea, guarana and guayusa. "Medical research is always striving to provide advice on ingredients and diets that can aid in heart health, weight management, diabetes, digestive health, and the like. These categories are leading the trends for plant-based proteins, fibers and antioxidants."
Conversely, with poorly conducted research and scrutiny over health claims made by Dr. Mehmet Oz, sales of ingredients he promoted have dropped, Mr. Kreienbrink suggested (e.g., garcinia cambogia, green coffee bean and raspberry ketones).
With more consumers looking for "clean label" products that contain fewer ingredients, and emphasis on whole foods, BI's Mr. Kreienbrink said the popularity of botanicals has been raised due to their inherent health benefits. "In addition, botanicals may address the different diet restrictions of consumers (e.g., dairy-free and gluten-free). For instance, there is more and more interest in plant-based proteins such as fava bean and pumpkin seed over whey protein, and quinoa flour over wheat flour."
There has been a definitive consumer shift toward whole foods, especially those grown in the U.S., according to Hartley Pond, senior vice president of technical sales, FutureCeuticals, Momence, IL.
"In particular, the demand for organic and conventional kale, spinach, broccoli and blends of grasses and cruciferous vegetables has increased exponentially during the past couple of years/' he said. "There has also been growing market demand for sprouted vegetable and legume powders. At the same time, the demand for whole food powders of vibrant colored fruits, including blueberries, cranberries, blackberries and tart cherry continues to grow."
Herbals/botanicals are projected to drive growth in the whole food supplement category, with sales approaching $1.1 billion by 2018. The hottest category of the overall supplement market today, the whole foods movement is driven in part by both Millennial and Baby Boomers, Mr. Pond, said. "Consumers are gravitating toward minimally processed, whole food powders with recognizable names--products that they know they should be eating at meal times each day."
He also noted growing demand for North American herbal ingredients. Herbs such as chives, cilantro, basil, dill, tarragon, marjoram, fennel and others continue to have culinary applications but also enjoy rich histories of traditional medicinal use.
"Educators such as Dr. Tieraona Low Dog, MD, have been telling the story of North American herbs for decades and the interest is taking root with the consumer. Van Drunen Farms is one of the largest herb farms in America."
Paul Altaffer, chief innovation officer, RFI Ingredients, Blauvelt, NY, noted that turmeric and ginger in particular are very popular of late. "Ginseng and garlic are making major comebacks," he added/'and consumers are beginning to discover the power of vegetarian nutrition from the sea by way of seaweeds and algae. We at RFI feel that one of the major technology drivers for this trend is fermentation. There is a strong consumer resonance with this idea of 'back to basics.' Instead of super standardized ingredients, consumers are more interested in whole and wholesome ingredients, products that are minimally processed and more easily digested. Fermentation is a time-tested means of processing foods and herbs, and makes them more easily digested."
For example, RFI offers fermented black garlic. Through fermentation, the garlic converts key nutrients into more stable and bioavailable secondary metabolites like S-Allylcysteine (SAC), Mr. Altaffer explained.
"These compounds have demonstrated great potential to support cardiovascular health and act as powerful antioxidants on their own. RFI offers FermaPro Black Garlic, a whole black garlic product (not an extract) that is standardized to SAC content. It can be used as a food or dietary supplement."
Mr. Altaffer also noted a swell of research on thyroid function and the importance of dietary iodine. Other than through iodized salt, Americans do not have quality sources of this important nutrient, he said.
"Iodine is significantly important for immune health, metabolism and cognitive function, all major areas of consumer interest. RFI offers Hebridean sea kelp (Ascophyllum nodosum), an important brown seaweed from the Outer Hebrides in Scotland. The water is pristine and the patented process for harvesting guarantees the purest and finest product. Iodine is a key marker compound in this product, part of a natural matrix of nutrients that supports sustained release of iodine."
Steve Siegel, vice president, Ecuadorian Rainforest, LLC, Belleville, NJ, said herbs performing well in today's market offer alternatives to ubiquitous products that don't deliver added value. For example, he noted, "Guayusa is quickly becoming the tea of choice for many consumers interested in specialty teas."
Guayusa is used for its "clean energy," Mr. Siegel added. "Coffee gives consumers a boost in the morning but the crash is debilitating. It peaks early and leaves you crashing when you need it the most. Guayusa provides a more sustained burn, giving consumers the energy they need to complete their daily tasks and helps keep that energy at a steady level. Guayusa is also used for its L-theanine content, which may help with anxiety."
With longer work days and busy modern lifestyles, people crave extra energy to complete their daily routines, Mr. Siegel noted. "With so many things to do, people need a way to stay alert and awake to make sure they get the most out of their days."
In a report released this year by Mintel, older Millennial are looking for energy to keep up with the demands of their responsibilities and are finding it in energy drinks. The number of Millennial who now consume energy drinks has gone from 55% to 61% between 2014 and 2015. However, 74% of older Millennial worry about the safety of these products.
"That may be a reason why guayusa's popularity is on the rise," Mr. Siegel said, "because those who are looking for energy drinks also want natural ingredients to be the source of that energy. Energy drink manufacturers would be wise to look at alternative, natural ingredients like guayusa to ameliorate the consumer's growing safety concerns."
Alongside energy drinks, tea has continued to grow in popularity. According to the Tea Association of the USA, in 2014 Americans consumed more than 80 billion servings of tea, or more than 3.6 billion gallons. Approximately four in five consumers drink tea, with Millen nial being the most likely (87%). About 84% of all tea consumed was black tea, 15% was green tea, and the remaining amount was oolong, white and dark tea.
The U.S. has also become the second largest importer of tea after Russia; in 2014, U.S. tea imports were approximately 285 million pounds, with an estimated retail value of approximately $10.8 billion.
Questions of Quality
Attracting a tremendous amount of attention, and marking a critical point in the herbal supplement market's maturation, the NY AG investigation has spotlighted the importance of quality control/assurance, as well as supply chain integrity/transparency and testing.
"Although the long-term effects of this specific challenge may not be known," said FutureCeuticals' Mr. Pond, "we do know that consumers are intensely interested in knowing the real identity of the products they consume. Product identity and knowing and trusting where your foods and supplement products come from are of paramount importance to the consumer. We believe this is fueling the surge in whole food powers and especially the interest in products grown, harvested, processed and packaged in North America."
Jeff Wuagneux, CEO, RFI Ingredients said industry needs to develop a minimum common standard for quality and identification that will allow everyone to have some degree of confidence in the supply chain. "As we all know, DNA barcoding alone does not come close to doing this."
BI Nutraceuticals' Mr. Kreienbrink agreed that clarification around testing is needed. "As those in the industry know, each ingredient has its own testing method that works best. It's not this one-solution situation. Eventually, in the long run, we will see just how costly and insufficient it is. As the focus on quality intensifies, the industry will become stronger and more vibrant as we get rid of the unethical manufacturers."
Sabinsa's Mr. Majeed said his company supports responsible initiatives that help rid the industry of potentially unsafe products or dubious vendors.
However, "we are concerned that DNA testing has been elevated to be viewed as more useful than it is; using only DNA-- not a robust testing method for extracts which may lack any DNA due to processing of the herbs--could have the unintended consequence of undermining, not enhancing, product quality."
He continued, saying, "We hope the NY AG's actions will help the industry to devise better qualitative and quantitative testing methodologies, which can provide more solid and useful results."
The quality of ingredients coming into the market is obviously a significant concern, according to Ecuadorian's Mr. Siegel. Companies simply cannot succeed with low-quality ingredients. "It is important for product manufacturers to know their supplier and that the supplier has an impeccable record delivering high-quality ingredients."
Full enforcement of existing regulations is critical to quality assurance, according to Mr. Pond. "Co-packers need to look for ingredient manufacturers they can rely upon, rather than seeking out those that provide rock-bottom prices. Real quality is not cheap."
Vertical integration, from the farm to finished ingredient, includes robust quality control and quality assurance, he continued. "Our commitment is evidenced by our extensive in-house testing capabilities wherein we screen every incoming material for identity. Whether in the biggest of pictures, properly motivated, relevant or even legal, the NY AG's actions are nonetheless indicative of the heightened general demand for transparency within the supply chain."
Mr. Pond opined that consumers will pay more for products they can trust. "Consumers are gravitating to products that are USDA organic, non-GMO, gluten-free and grown and harvested in specific, identified regions because they want to have as much assurance as possible about the products they consume. These products are not inexpensive. You do not see many products boldly claiming to be a product of China but, in fact, the vast majority of vitamins consumed in the United States comes from China, and many consumers would be shocked to know this fact."
Likewise, companies can't put a price tag on the value of trust and confidence in suppliers. "Dietary supplement and functional food marketers are increasingly realizing this, especially in today's litigious and arbitrary regulatory environment, "Mr. Pond said.
In May the Organic and Natural Health Association (ONHA) filed a citizen's petition arguing that dietary ingredient suppliers should be held to the same GMP requirements as product manufacturers.
"Neither the existing regulations governing dietary ingredients and finished dietary supplements nor the proposed rules under the Food Safety Modernization Act (FSMA) adequately address the quality manufacturing of dietary ingredients," argued Todd Harrison, partner with Venable, LLP, and president of ONHA. "Moreover, neither justifies the exclusion of dietary ingredient suppliers from the responsibility to manufacture products in accordance with quality standards. The interesting part is that the reputable dietary ingredient suppliers welcome Part 111 and are already complying with it. Yet, we force these suppliers to compete against others that offer low quality alternatives, counterfeited ingredients, or a combination thereof. Unfortunately, the reputable suppliers are hammered in the marketplace by these low-cost suppliers, and the losers in this scenario are the consumers that we serve, as well as the reputation of the industry."
RFI's Mr. Wuagneux said he would welcome GMP requirements for ingredient suppliers,"as it would make our work of qualifying outside suppliers a great deal easier."
"This is a tall order when one understands that suppliers, many of which are food ingredient companies, would be hard-pressed to meet these requirements," he added.
Mr. Wuagneux went on to call the NY AG claims "destructive," as they do not serve the best interest of consumers in the long run."Nor do we agree that the industry lacks regulations, oversight or a sense of care for its consumers. RFI strongly believes in quality and is committed to third party GMP certification as well as to the rule of law, and will continue to work on improving on those quality standards. While we do not support these kinds of attacks, we feel that RFI is well positioned to work with our clients and to address the quality and other requirements they are facing."
Ultimately, legislative requirements should be market driven, said Mr. Kreienbrink, "not dictated by some ill-informed sound bites or misintentions. BI has no objection conforming to any regulations as long as they are written sanely and the legislators take in all aspects and impacts of their proposals. What we see in the market currently is that professional providers of raw material to our marketplace still compete with grifter/cobbler/distributor companies that are not compliant on any issue, yet they continue to thrive because elements in our industry are price driven."
Ingredient suppliers form an important part of the dietary supplement industry and its standards, said Sabinsa's Mr. Majeed,"and hence they should be following GMP requirements, as do finished product manufacturers."
GMPs are actually meant for the manufacturers to ensure that quality raw material is provided to the finished product manufacturers, he continued. "However, this does not mean that GMPs at the ingredient manufacturer levels can reduce the burden of testing at the finished good levels. Proper raw material selection, testing of the extracts at intermediate and final stages, proper monitoring of the processing and quality of the product and clean and green processing goes a long way to ensure that quality material is provided to the supplement manufacturers."
The responsible players in the industry follow GMPs and usually have a third party audit system in place to ensure proper processing of ingredients and finished products, Mr. Majeed added. "A robust procurement and auditing system can ensure good raw material selection. The supplement manufacturers also play an important role in ensuring that quality raw material goes into the finished products. As we have seen in recent times in the curcumin market, with synthetic mixed into real curcumin without transparency, adulteration can take place by many means that slips by a less-attentive manufacturer's procurement process. Hence, it's important to select a responsible supplier and work closely with them to ensure that proper raw material is selected and not just based on cheaper cost."
Back to Basics Innovation
With more consumers opting for basic, whole foods, the concept of innovation in the natural products space must take on a slightly different meaning, according to FutureCeuticals' Mr. Pond. In many respects, "innovation means the capability to put a product on the shelf that meets the very reasonable consumer demands of it being'safe, active, and good for me.'"
A return to whole food and supplements, the way nature intended, is innovative itself, he continued. "As a company with a 150-year tradition of organic farming, by definition we find ourselves at the center of the whole food revolution. It's been the backbone of our business since the beginning and is complemented well by our ability to custom process and to coordinate supply chains on nearly every fruit, vegetable, and grain product available. Innovation in whole foods is predominantly tied to consumer assurance of the quality and nutrient value of a particular offering in its natural matrix."
Consequently, the company has introduced a new line of organic whole foods (a spinach and kale blend and a blend of organic legumes) standardized to minimum levels of protein. "We have also worked extensively with our partners regarding the importance of clearly conveying how processing techniques and certain dehydration methods can have profound effects on the nutrient content of foods."
For instance, a substantial portion of the broccoli consumers eat has been heat-treated, which kills the natural enzymes in broccoli that are required for conversion of glucosinolates into healthy sulforophane.
"As a solution to this problem," said Mr. Pond,"we developed an all-broccoli product that is low in micros, yet with significant amounts of the myrosinase enzyme activity essential to obtain the greatest benefit from broccoli/'Innovation is the key to future growth and sustainability in the market, according to Sabinsa's Mr. Majeed, and curcumin provides a good example. "While turmeric powder and extracts have been on the market for a long time, it is the innovation and scientific studies which have made it grow, sustain and stay vibrant."
Recently, Sabinsa took the next step in curcumin delivery by creating uC3 CLEAR, a beverage grade of Curcumin C3 Complex. This delivery system allows curcuminoids to be added in beverages without any precipitation or flocculation. uC3 CLEAR allows formulators to add curcumin to shots, beverages and liquid dietary supplements without unappealing sediment, said Mr. Majeed. "Understanding the demand of the market, this innovation allows curcumin-based beverages such as fruit juices, vegetable juices, health drinks, protein shakes and tea possible."
RFI's Mr. Altaffer noted that innovation is happening on a variety of fronts. RFI is moving in a direction he called a "retrovolution," meaning the company is getting back to basics as well.
"We feel customers are as concerned with what is not in a product as what is in it. Our goal is to develop products using minimal processing, with the fewest added ingredients and concentrating on looking for non-GMO, gluten-free and organic sources whenever possible. We use simple, yet proprietary extraction and fermentation processes that are closer to what one would expect to see in brewed or fermented beverages and food products."
This article in a nutshell:
* Sprouting Sales
* On Trend
* In Demand
* Questions of Quality
* Supply Standards
* Back to Basics Innovation