The dietary supplement market is expected to grow 3Ã¢ÂÂ5% annually. Natural and organic foods are forecast to grow 10%. Manufacturers large and small would love to capture bigger shares of these markets, but first they have to expand production capacity.
Ramping up isn't easy. In addition to careful planning, it takes money. Since most natural product manufacturers are small, caches of funds for capital improvements usually aren't laying around waiting to be turned into new machines and the personnel to service them.
So why do companies risk their capital to secure a bigger piece of an uncertain market? Nutritional Outlook asked four manufacturers to share their stories. All four willingly made a technological leap of faith because they believed a short-term investment would translate to long-term profits.
SunOpta (Norval, ON, Canada) is a vertically integrated maker of natural and organic foods. Last year was a breakout year; revenues grew more than 64%, to $199 million.
Nearly 90% of revenues were contributed by the SunOpta Food Group, a business unit specializing in non-genetically modified and organic grains, soy, sunflower, corn, rice, and oats, as well as specialty food ingredients. The Food Group also makes branded and packaged foods.
Soymilk is the best-selling consumer product. Sales of aseptic soymilk reached more than $9 million last year, or more than 10% of sales.
The Food Group would like nothing better than to see bigger numbers in 2004. To make it possible, the plant added more capacity. A new half-gallon aseptic filler capable of producing 5500 cartons per hour is scheduled to be installed in May.
'To serve more clients, we need more capacity,' says Neil Hammer, director of customer accounts and services. 'With the new filler, we can produce 100,000 cases weekly.'
The strategy was developed in 2001. 'Originally, the plant could fill 30,000 cases per week,' says Hammer. 'We decided to add capacity to drive us to 50,000, 70,000, and now 100,000 cases. Put another way, we can fill 75 trucks a week with cases of soymilk.'
The Food Group currently has a half-gallon SIG Combibloc (Columbus, OH) line and two Tetra Pak (Vernon Hills, IL) one-liter aseptic lines. The plant runs three shifts from five to six days a week. More than 62 people work in the facility. 'Staffing is very important with these systems,' says Paul Empanger, plant manager. 'We are overachieving because of our people.'
FIRST OF ITS KIND
The new half-gallon line will be the first Tetra Pak A3 filler installed in the United States. According to Empanger, A3 technology is advanced, and complicated. 'The new filler is brand-new technology,' he says. 'It puts us in a premium position.'
Like its aseptic cousins, the A3 is a closed filler that is sterilized with hydrogen peroxide prior to operations. Unlike other fillers, the A3 relies more heavily on computer controls and servomotors. Also, it accepts wider web stock. And it is more flexible. It's possible to change package volumes with the same cross section in 10 minutes.
The SunOpta Food Group's A3 accepts wide multilaminate web stock with pour-spout fitments for reclosable caps. The web moves inside the sterile filler where it is formed into half-gallon cartons, filled, and sealed. Cartons exit the filler and are conveyed to a recapper module where caps are screwed onto the fitments.
Few operators are required. Computer systems help manage the lines. 'Four active computer models monitor the processing lines,' says Empanger. 'Even clean-in-place is computer controlled.'
Which frees SunOpta's trained personnel to work on other things, namely: growing its soy and organic products business.
Established in 1985, Medical Ophthalmics (Tarpon Springs, FL) manufactures and distributes the MaxiVision and MaxiFlex lines of vision and joint-support products. The company also is a contract manufacturer of supplements in capsules, softgels, and liquids.
Medical Ophthalmics faced the capacity question last year after sales of its MaxiVision Whole Body Formula climbed faster than expected. 'We could not produce the product quickly enough to inventory the shelves,' says Gene Adamski, plant manager.
Time was not on Adamski's side. He needed capacity fast. Otherwise, sales would suffer.
To add capacity in a hurry, the company turned to a trusted vendor for help.
Over five years, Medical Ophthalmics had developed a relationship with a particular equipment company. The company had told them about the problem, and in a matter of months, two new capsule formers and two capsule polishers had MaxiVision Whole Body Formula heading out to physicians and retail drug stores.
Over the past five years, Medical Ophthalmics has upgraded its facility by purchasing GMP-compliant equipment. The company is also planning a new manufacturing plant.
Photos courtesy of Medical Ophthalmics.
Medical Ophthalmics now has two filling lines, including a complete liquid-filling line and one separate capsule-packaging line. Capsules are formed and filled on five Schaefer Technologies Inc. (Indianapolis) Model 10 semiautomatic encapsulation machines.
There were several reasons why Adamski chose the encapsulators. 'Schaefer Tech has a proven track record in this industry, in terms of quality equipment, dependability, good customer service, and excellent field service support,' he says.
Adamski also likes the fact that the machines follow all good manufacturing practices (GMP) guidelines, and are solidly built. 'They are one of the few out there with extremely thick stainless-steel table covers,' he says.
Plus, the machines rarely go down during production runs, an important consideration for a company that believes that the human body absorbs dietary supplements better if they are in capsule or softgel form. 'We purposely stay away from tablet pressing due to the extensive heat and the amount of fillers needed in this process,' says Adamski. 'I cannot stress enough how dependable these machines are,' he says. 'Downtime is something a good dietary supplement manufacturer never wants to have.'
With the exception of softgel capsules, Medical Ophthalmics does all of its own manufacturing.
Quality is the primary objective, says Adamski, and it begins in the purchasing office. 'We purchase all of our raw materials, bottles, caps, labels, and other materials for our own products and all contract-manufactured products,' he says. 'An extensive quality control department reviews all raw materials and products before they enter the manufacturing step.' The company follows FDA's (Rockville, MD) proposed GMPs for dietary supplements, and expects ingredient and machinery vendors to comply as well.
Documentation is important. For example, individual work orders, generated from a cost-based computer software program, have individual lot numbers assigned to each batch for quality control purposes.
Batch weighing is another example. 'The weighing process includes detailed documentation of all materials and lot numbers used in the manufacturing work order,' says Adamski. 'This whole process falls under GMP standards to ensure all safety measures are followed.'
After weighing, all products are mixed thoroughly to ensure a homogeneous blend for the soon-to-be-encapsulated product. The blending time depends on the product being manufactured and raw materials included.
In the capsule rooms, the product determines which size capsule will be filled. MaxiVision WBF, with 45 ingredients at 100% concentration, needs a larger capsule than other products. 'We fill Capsugel size 00 capsules, due to the number of ingredients in our MaxiVision WBF product,' says Adamski. An extensive weight-check program is in place to ensure all products meet label claims.
Immediately after encapsulation, the capsules are cleaned using the Schaefer STI CP-4200 capsule polishers to ensure a clean, fresh-looking polished capsule. 'We currently use one polisher per machine to ensure the cleanest product possible,' says Adamski.
Bottling and labeling are performed and documented according to GMP protocols. The packaging lines include counters, labelers, and sealers from New Jersey Machinery/CLI (Lebanon, NH), Enercon (Menomonee Falls, WI), and Pharmafill (Wall, NJ).
Finished products are checked by warehouse personnel, entered into inventory, and shipped out accordingly. Medical Ophthalmics ships worldwide to more than 100,000 active customers in its database.
Medical Ophthalmics distributes professional samples to doctors. MaxiVision Whole Body Formula is sent primarily to ophthalmologists, optometrists, physicians, and cardiologists. MaxiFlex Joint & Cartilage Multinutrient sample products are sent to chiropractors and orthopedists. Doctors are encouraged to give samples and informational brochures to all patients. Individual consumer orders are placed on the company Web site or by telephone.
The MaxiVision product line was formulated by company founder Rodney Horton. The products are based on being a complete multivitamin used to combat macular degeneration.
All formulations are based on current medical research. 'An extensive amount of research is done to ensure the best products are being manufactured at all times,' says Adamski. 'The latest study, the Veterans LAST study (lutein antioxidant supplementation trial) is a perfect example.'
The MaxiVision line is an elemental antioxidant formula with 400 mg of FloraGlo lutein from Kemin Foods (Des Moines, IA) per serving.
In anticipation of continued strong sales, the company is in the midst of planning a new manufacturing plant. 'A new manufacturing building will double current manufacturing capacity,' says Adamski. 'Of course, the building will meet the upcoming GMPs.'
DESERT STREAM INDUSTRIES
Contract manufacturer Desert Stream Industries (Nephi, UT) waited until orders were regularly coming in before it took its leap of faith.
Jason Brooks, president, started the business to help small companies launch products. 'You can not just purchase small items in our industry to build your formulas,' he says. 'You must purchase going minimums from the suppliers of herbal powders and extracts. Small companies can't purchase minimum amounts of expensive powders up front and carry the inventory.'
Recognizing that his services were well received and re-orders were coming in at a steady clip, he decided that he wanted more control of manufacturing. He also needed to produce more on demand, and keep certain costs down.
Brooks purchased a semiautomatic encapsulation machine from Tradimex Equipment & Supply (West Orem, UT). 'With a start-up, it's tough to get financing and capital,' says Rita Haupt, president of Tradimex. 'But he did it, and ran that machine day and night. Seven months after he bought his first machine, he added a 900 automatic, due to the increased volume and growth that Desert Stream had achieved.'
The company made enough within the first seven months to pay off the first machine and obtain financing for the second.
Eventually, Desert Stream needed more space and another Tradimex automatic. The company also added packaging machinery. Brooks is currently working on adding a fourth encapsulator, a Tradimex 1800, the supplier's largest machine. When installed, it will essentially double Desert Stream's production capacity.
'We feel we have greatly enabled Desert Stream to grow in the direction that Brooks wanted,' says Haupt. 'After we sold him his first machine, a semiautomatic, and trained him and his staff, he has not looked back.'
Today, the business produces custom blends for customers all over the world. Brooks feels that, sometimes, contract manufacturing makes more sense than spending money for production lines. 'Most GMP and FDA guidelines are hard to keep up with,' says Brooks. 'Just training personnel and developing procedures are painstaking tasks.'
There's also maintenance to consider. 'Mechanics are difficult to find,' he says. 'They have to be properly trained, or a $100,000 machine can crash in seconds.'
Ingredients can also cause problems. 'Powders do not always come in the same manner as they did in the past,' he says. 'Machines may run differently from powder lot to powder lot. Materials may come in at different percentages of actives. We test these before use,' says Brooks.
Ultimately, Brooks believes, contract manufacturers remove the burden of ordering minimums and upfront payments for ingredients, packaging, and other stock. 'We have machinists that train monthly on the machines that produce capsules and bottles,' says Brooks. 'We set a small price for this service, and take care of the needs of our customers.'
Jarrow Industries (Santa Fe Springs, CA) is a two-year-old company that provides formulation, manufacturing, and packaging services for both its parent, Jarrow Formulas (Los Angeles), and private-label customers.
An environmentally controlled state-of-the-art contract manufacturing and packaging facility makes safe, uniform, high-quality products batch to batch. The facility manufactures hard gelatin capsules and tablets, including clear, color, and enterically coated tablets, and softgels.
Jarrow Industries stocked its environmentally controlled facility with state-of-the-art manufacturing equipment.
Photo courtesy of Jarrow Industries.
Services include formulation, blending, encapsulation, tablet manufacturing, tablet coating, and bottle and blister packaging of vitamins and nutritional supplement products. The company is also active in governmental regulatory affairs, vigorously promoting the right to access dietary supplements.
Although unusual for a two-year-old firm, Jarrow Industries recently went through a growth phase. The company soon will be expanding into regulated markets such as over-the-counter medicines and value-added products and services under Current Good Manufacturing Practices (CGMPs) and ISO and TGV standards.
To support growth, the company also added state-of-the-art tablet-manufacturing, tablet-coating, and powder-filling lines. The equipment completes the full spectrum of services from raw materials to finished dietary supplement products.
The company recently upgraded its Bosch TLT-1200 blister-packaging machine (pictured) to the faster TLT-1400, which can produce up to 400 packages per minute.
Photo courtesy of Jarrow Industries.
One of the latest additions was a GKF-2000 high-speed capsule-filling machine from Robert Bosch Packaging (Minneapolis). The company also upgraded its Bosch TLT-1200 gear-driven blister-packaging machine to a state-of-the-art, servo-driven, faster Model TLT-1400 blister-packaging machine with in-line printing and other improvements.
The GKF-2000 is highly automated, with automatic fault elimination and gravimetrically based integrated 100% capsule weighing. Only acceptable capsules leave the machine; during the capsule-filling process, the GKF-2000 automatically detects and eliminates errors caused by faulty capsules.
A V blender is used to mix raw materials in the Jarrow Industries facility.
Photo courtesy of Jarrow Industries.
The TLT-1400 blister machine produces up to 400 blister packages per minute. Size parts are small and light for quick, tool-free changes. The linear infeed is easier to operate, clean, and change. Typically, only one operator is necessary. Training requires a comparably short time due to an ergonomic and largely self-explanatory touch screen display and operation panel.
Bosch equipment has a reputation for quality, but it isn't inexpensive. Jarrow Industries bought the machines to help maintain high standards. 'They pay special attention to quality, consistency, reliability, ease of use, and changeover times,' says Siva P. Hari, PhD, president and CEO of Jarrow Industries. 'Quality and price go together. As the clichÃÂ© goesÃ¢ÂÂyou get what you pay for.'
Packaging downstream of the blister former includes bottling hard gel and softgel capsules, powders, and tablets; canning powders; labeling; and cartoning bottles and blister cards. Blister-card packaging of tablets and hard gel capsules, as well as blister-card box packaging, includes literature inserts.
Jarrow Formulas opened its contract manufacturing division, Jarrow Industries, in 2002 in Santa Fe Springs, CA.
Photo courtesy of Jarrow Industries.
Quality assurance is performed from raw-material sourcing to actual production, packaging, transportation, and storage. The company offers lab testing and third-party services for microbiology, chemistry, disintegration, dissolution, and stability studies, along with regulatory compliance services for product labels, as well as graphic design and printing.
These four companies took risks when they bought equipment to increase their production capabilities. All feel certain that their efforts will be rewarded. While there are no guarantees, the rewards seem to outweigh the risks.