On any given week, a new health claim surfaces regarding the benefits of vitamins and supplements. As consumers sift through the data, the rambunctious $16-billion vitamin and supplement industry is adjusting to new Food and Drug Administration (FDA) regulations that require companies to back up their health claims and ensure proper manufacturing practices. However, instead of slowing down this growing category, these measures are predicted to only increase consumer confidence in and usage of these products, as well as increase brand owners’ reliance on experienced contract manufacturers.

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As baby boomers and younger shoppers look for ways beyond diet and exercise to improve memory, energy, joint, eye and heart health, the vitamin and supplement category is poised for continued growth. U.S. consumers are taking active steps to prevent aging and age-related diseases. Indeed, 180 million consumers take dietary supplements in a year, reports the Dietary Supplement Education Alliance (DSEA), Sarasota, Fla.

According to Chicago-based research firm Euromonitor International, multivitamins were the largest single subsector of the vitamin and dietary supplement category in 2006, with 52 percent of adults in a federally funded study reporting they take multivitamins. As vitamins and supplements move into more channels, Euromonitor predicts the category will grow 14 percent from 2006 to 2011, reaching $18 billion in sales.

Focused on Achieving Growth

This fall, the DSEA tapped into consumers’ desires for a healthy lifestyle with its 2007 “Just Like Me” marketing campaign. The program publicizes the idea that smart, fun, active people take supplements to help improve their health. Marketing initiatives by organizations such as DSEA will help push the segment to expected sales-growth levels.

Hoping to make claims regarding calcium less wordy and confusing to consumers, last winter the FDA proposed amendments to its current health claims. The new proposed rule would allow companies to claim that calcium and vitamin D together have been shown to reduce the risk of osteoporosis. Also the rule would eliminate references to sex, race and age; the mechanism by which calcium reduces the risk for osteoporosis; and the limited benefit of calcium intake higher than 200 percent of the daily recommended value.

This rule was followed in August with the FDA’s new Good Manufacturing Practices (GMPs) for large manufacturers of dietary supplements. The GMPs require manufacturers to account for the accuracy of their products’ labeling, purity, strength, composition of ingredients and other quality-control procedures.

Despite the FDA’s intentions, some industry observers question whether the agency has the authority and resources to implement the new guidelines.

“Does the FDA have the authority to enforce these guidelines? Yes,” says Thomas T. Tierney, president of Vitatech International Inc., based in Tustin, Calif. “Do they have the resources? No. Will you be one of the unlucky ones selected for enforcement? Possibly. Do you have a big appetite for risk? Do your customers?”

Many contract manufacturers and supplement manufacturers already have been following these guidelines to comply with pharmaceutical GMPs, or began to once the proposed rules were announced.

The new rulings “are not nearly as ‘strict’ as we had expected and more closely resemble food GMPs than drug GMPs,” says Jeffrey L. Geil, sales and marketing manager for P.J. Noyes Co. Inc., based in Lancaster, N.H. “Given these reasonable new guidelines for supplements, I suspect that those companies now producing supplements will actively work toward implementing the dietary GMPs rather than lose current business to the competition.”

He notes that he has had only a few calls from people now looking for FDA-registered facilities, or at least those companies practicing cGMPs (current GMPs) as a result of the new guidelines.

Many contract manufacturers, however, say that the regulations do have teeth and will narrow the playing field by raising the bar for quality control. “The need for — really, not lip service — GMP-compliant contract manufacturers will grow,” Tierney says. “Marginal producers will fall by the wayside. The marketplace will eat them for lunch because a non-compliant manufacturer places a product line at regulatory risk.”

Those companies that are manufacturing out of questionable facilities will disappear or need to find a good manufacturer, notes Raymond Baribeau, director of private label sales and regulatory affairs, Confab Laboratories Inc., based in Saint-Hubert, Quebec.

“For consumers, though, it’s big,” he says, for increasing confidence in supplements. “Because they are sure of the product source, they will feel it is dependable and high quality.”

Smaller brand owners may decide not to invest in creating their own manufacturing facilities because of the investment now needed for equipment, time and resources to meet the GMPs, says Elliot Balbert, past president and current board member of the DSEA. It’s better for them to go to a company that specializes in manufacturing and is compliant with GMPs.

“The DSEA wholeheartedly supports and is delighted that the GMPs were adopted, and at the very least presented,” he says. “I do believe there could be some speed bumps with certain details that will be extremely difficult for some contract manufacturers to implement. But they are a real bonus to contract manufacturers who exceed them in a cost-efficient and effective manner.”

Effective in June 2008, the FDA’s Interim Final Rule (IFR) establishes a petition process for a manufacturer to apply for exemption from the 100 percent identity testing requirements for dietary ingredients used in manufacturing dietary supplements. If a manufacturer is granted an exemption, the manufacturer still would be responsible for ensuring the quality of the final dietary supplement product and demonstrating that less than 100 percent identity testing does not diminish its assurance that the dietary ingredient is the correct ingredient.

Although Vitatech is already fully compliant, Tierney notes that GMP compliance raises more procedural challenges than just identity testing.

“Our industry peers have to do some rigorous soul searching about conditional release, shipment of product under quarantine and finding false comfort in Certificates of Assay, which are not actually accomplished by raw-material brokers but by their suppliers in another country,” he says. Physical audits of raw-material suppliers will be challenging for manufacturers, as will be any complete redesigns of manufacturing facilities, he emphasizes.

Boomers Drive Category

Without tighter FDA regulation, the volatility of the vitamin and dietary supplement market would only continue, notes Euromonitor’s August 2007 vitamin and supplement report. Media coverage of good and bad scientific evidence can hold great sway on supplement sales. For example, after a November 2006 study found that the compound resveratrol in red wine showed anti-aging properties in mice, sales of supplements based on this red-wine extract and red wine itself spiked.

Aging baby boomers likely will drive most of the vitamin and supplement category growth, particularly as the number of individuals 50 and older is expected to grow 13 percent between 2005 and 2011, says David Daniel, director of contract packaging for Progressive Laboratories Inc., based in Irving, Texas. And they will clearly be interested in heart and brain health, obesity, cholesterol, joint health and bone density, he points out.

Naturally, these consumers are drawn to omega-3 fatty acids found in fish oils, also known as marine lipids, because they may reduce cardiovascular risk, support healthy joint function and improve mobility; help maintain healthy brain function in children and aging adults; and may support immune response and prevent asthma. This product class has shown dramatic growth — more than 30 percent per year for the past five years, according to Kenn Israel, vice president of marketing at Santa Ana, Calif.-based Robinson Pharma Inc., a contract manufacturer of nutritional products and a soft gel encapsulator of fish oils.

In addition to omega-3 oils, consumers continue to request probiotics and evidence-based science to back up products’ health claims, says Tierney. And products with added protein also seem to be a leading innovation. “With the increase in consumer knowledge of the health benefits of protein, hence the increase in demand for protein, companies are starting to respond,” says Nicole Lemus, director of sales, contract manufacturing, Century Foods International, based in Sparta, Wis.

Younger consumers are not paying as much attention to vitamins and supplements as boomers, but are showing more interest in quick energy pick-me-ups through capsules and drinks, Daniel says.

“Clearly, there are omega-3 products oriented toward almost every segment of the population,” Israel says. “This trend shows no signs of abating with continued growth expected in both dietary supplements and functional foods.

“Children’s nutrition is also a fast-growth segment with specific focus on improving attention and learning,” Israel adds. “The primary application and demand driver continues to be cardiovascular wellness. Women continue to be the dominant purchasers of dietary supplements, so women’s health receives lots of attention from marketers.”

Delivering Quality Products

The delivery systems used for supplements and vitamins continue to receive a lot of attention, with soft gels, effervescent and stick-pack products gaining in popularity, particularly in Europe. “We’ll also see more blurring of the line between functional foods and dietary supplements,” Israel says. “Dietary supplements will need to be more functional and better tasting.”

These improvements in delivery systems are driving sales. “Over the past three to five years, omega-3 supplement manufacturers have significantly reduced fishy smells and the products are easier to digest,” Israel adds. “This has driven the increase in customer acceptance and has helped recruit new users and maintain existing customers. The whole category has improved because of delivery-system improvements.”

The DSEA’s Balbert notes there aren’t as many new products being launched in today’s market, but there is stronger scientific support for existing categories and new formats for delivery systems. Delivery systems such as effervescent products, time-release capsules and vitamin water (although he notes vitamin water is more of a marketing ploy than a delivery system) have really impacted the current marketplace, as have products that cross over into the food segment such as bars and drinks with value-added vitamins and supplements.

Yet, what’s imperative with new guidelines, increased consumer exposure and continued growth in the delivery method of vitamins and supplements is the team that produces and sells them. A quality contract manufacturer should allow brand owners the ability to focus on sales and marketing of their product, Lemus says. “Choosing a contract manufacturer who offers full turn-key solutions, adheres to the new GMPs and is financially stable is the key to success,” she says.

Moving forward, brand owners and contract manufacturers will continue to address ingredient quality and ingredient sustainability. “We still see wild fluctuations in pricing of key ingredients, primarily due to boom-and-bust cycles driven by reckless competition from suppliers based in China,” Israel says. “Currently vitamin C, a number of B vitamins, and many botanical ingredients are tight. Furthermore, there is growing concern about adulteration of important high-value botanical ingredients such as palmetto berry extract and bilberry fruit extract.”

Industry observers note that until four years ago, the vast majority of vitamin and mineral ingredients came from European sources at reasonable prices, with sound science and validation. Those European companies were considered part of the industry, and re-invested in U.S. science and industry to help grow both ends of the business. Chinese companies may offer a quality product at a low price, but they are not investing in science and industry, industry observers say.

“In our quest to be price competitive, we have wrestled with overhead costs,” says Balbert. “But don’t sacrifice quality for price alone. Science will be critical going forward.”