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Navigating the branded-ingredient partnership
What’s in a name? To hear suppliers of branded ingredients tell it, you might think it’s the key to a supplement’s very success. And while that may overstate the case by half, there’s no denying that nutritional ingredients with a recognizable brand name bring a lot to the table-not the least being their enthusiastic suppliers, who offer everything from premarket concept development to postmarket support.
But the benefits of branding don’t come without conditions. Hitching your own brand to that of your supplier means entering into a professional and legal relationship that requires extraordinary give and take. “The strength of a successful formulation comes down to the partnership between the branded-ingredient supplier and the supplement marketer,” says Shaheen Majeed, marketing director, Sabinsa (East Windsor, NJ). “A clear understanding of the marketer’s expectations and the deliverables for the ingredient supplier is necessary to walk this tightrope.”
What’s in It for Suppliers
It’s a balancing act more manufacturers are attempting as they turn to the branding advantage in a crowded marketplace. And at the topline level, their expectations run from “finding the best in quality to easing movement in the market and being well noticed among other brands,” Majeed says.
The branded-ingredient supplier, on the other hand, wants “a reasonable margin on the profits from the formulator,” he continues, as well as the visibility that comes from being the marquee player in a commercial supplement. “Ingredients get noticed more widely with more formulations on the market using them,” Majeed says. “An ingredient supplier knows that his brand gains recognition only when he finds the right supplement marketer to carry it forward.”
It’s in narrowing down those candidates that the supplier/manufacturer relationship dynamics really come into play. David Hart, vice president of marketing, Qualitas Health (Jerusalem, Israel), whose algal-source EPA-rich omega-3 oil branded as Almega PL debuted in its first commercial launches late last year, looks for “strong cooperation and collaboration” with formulator and retail partners. Coordinating R&D, marketing, and supply-chain efforts while leveraging distribution channels and marketers’ retail audiences will all help expand the company’s market reach and provides stability for both parties, he says.
Laying the Groundwork
But stability is only the start of what supplement makers get from the deal. As the number of moving parts needed to put a product on the shelf multiplies apace, a branded-ingredient supplier can act as a sort of Virgil to its marketer-partner Dantes, guiding the marketer through the various circles of development as they travel toward the daylight of a full-scale launch.
In the absence of such a guide, contemporary supplement makers face a more complex commercialization task than they might be prepared to assume. As Majeed notes, just bringing an ingredient-let alone a finished product-to market is a Herculean feat. “It involves the selection of raw materials, innovation in process development, scientific validation, regulatory guidelines, formulation compatibility, and the creation of an image as an effective nutraceutical.” Determining safety and efficacy while making sure proper doses are practical in finished formulations is another “intellectual challenge” the supplier takes on, he says.
By dispatching all this groundwork before the marketer even enters the scene, a brand-focused supplier makes it easier for a marketer to “establish scientific parameters for a final product,” Majeed says. Simply defining nuts-and-bolts parameters like solubility profiles and optimal storage conditions “saves a huge amount of time for the marketer.”
Mike Bush, senior vice president, Ganeden Biotech Inc. (Mayfield Heights, OH), has probably saved his customer-partners years’ worth of toil. “We’ve literally worked with in excess of 1,000 companies worldwide,” he says. And in doing so, he and his company-known for its spore-forming probiotic Ganeden BC30 (Bacillus coagulans GBI-30, 6086)-have demonstrated that having a supplier with skin in the game subtracts significant guesswork from the development process.
For example, Bush says, marketers’ R&D staffs aren’t always as familiar with specialized functional ingredients as their suppliers are-and that’s particularly the case when the supplier is dedicated to promoting that specialized ingredient. As Bush puts it, “We’re a probiotic company and a biotechnology company, and that’s all we do.” So when his partners inquire about processing, temperature tolerance, cell viability, and the like, he’s ready with answers that “really cut lots of time off their cycles.”
Such was the case with The Cookie Department (Berkeley, CA), which uses Ganeden’s probiotics in its products. According to CEO Pam Marcus, “Any functional ingredient we use has to be able to take high heat and be baked without breaking down.” After collaborating on several test batches, lab tests, and formulation tweaks, they got the cookies’ probiotic dose just right and “were able to claim that by adding the probiotic, it could support digestive and immune health,” she says.
Giving suppliers this kind of inside peek at formulation details can be off-putting for marketers used to keeping such information under wraps. But when a supplier’s own reputation is inextricable from its brand’s, the marketer can rest assured that the supplier is looking out for the best interests of both parties and will share advice that’s candid, thorough, and honest. Carina Ayden, founder and executive director of EFFi Foods (Los Angeles)-another Ganeden partner-says “there is definitely an adjustment period as you become more trusting and dependent on your supplier, but there’s no mistaking the true value they can be as an asset to your company.” For example, when EFFi needed to find an organic carrier for its probiotic, Ganeden was able to “make that happen for us,” she says, leading her to conclude: “A supplier can make all the difference in the world.”
Even beyond the bench, branded-ingredient suppliers prove their value with marketing support and consumer outreach. Bush says that with some customers, his team is effectively “an extension of their marketing departments, so we’ll make media calls to help promote the products that they’re trying to promote themselves.”
He notes that a fringe benefit he’s seen accrue to his company’s marketer-partners is that working with a well-known branded ingredient like Ganeden’s has “made it much easier for them to get their products on shelves at retail”-where, not coincidentally, he says they sell.
Hart adds that his company’s “focused consumer marketing and outreach” aim to educate and “activate” consumers with programs that communicate the benefits of omega-3 supplements-and of Qualitas’s ingredient. “All of this creates value for the Almega PL brand and builds a win-win relationship with our partners,” he says. “At the end of the day, healthier and happier consumers are important for the retail brands, and we strive to provide them with support in all the areas they require.”
Rules of the Road
One more area to think about is that of safety and regulatory authorization. While never straightforward, it’s growing more convoluted as marketers set their sights on overseas markets. As Majeed points out, “Different parts of the globe follow different regulatory guidelines, and it would be a time-consuming task for a supplement marketer to get clearances from the various governing bodies. However, with a standardized ingredient supplier having received all the clearances themselves, the marketer is spared this process.”
Todd Johnson, director of marketing, Albion Minerals (Clearfield, UT), is keen to reassure his marketer-partners that Albion’s chelated minerals are made in the USA in cGMP, ISO 9001:2008, kosher, halal, and EFSA-compliant facilities. “Working with branded ingredients can help ensure quality, traceability, and regulatory compliance,” he says. “Formulating with proven branded ingredients helps manufacturers validate their high standards for sourcing and helps reinforce their commitment to quality.”
And how do you validate those high standards and commitment to quality-not to mention the actual functional benefits that a branded ingredient claims to deliver? By testing them. As Johnson says, “While branded ingredients are valuable, it’s essential to ensure that they’re backed by scientific evidence and research.” That’s why his company has collected more than 125 published research papers “pertaining to our properly chelated minerals, their absorption, and their effects on different body functions,” he says.
As Bush points out, “There’s a significant investment to bring these ingredients to market, and as part of that we want to make sure that the consumer understands that not only does this ingredient do what it’s supposed to do; it’s been well researched and studied and sets itself apart from others in the space, as well.”
He notes that it’s important to test the finished products that contain those ingredients. His company ran over 10,000 tests in its labs last year investigating everything from the effects of reformulation to quality of supplements already on shelves. And they’re sticklers about encouraging their partners to use qualified independent labs for their own release testing. “We’ve literally trained outside food labs on how to enumerate Ganeden BC30,” he says, adding that theirs was the first probiotic to get a United States Pharmacopeia monograph: “We actually published our enumeration and identification protocols” so that others could put them to the test.
Ganeden spot tests customers’ products, too, picking up items at stores and bringing them back to the lab to check that the numbers on the labels match the results of analysis. And he insists his customers appreciate it. If Ganeden uncovers a product below spec, it helps the marketer bring it back into line; alternatively, by alerting partners when it finds products above spec, it helps cut both inclusion rates and formulation costs.
Spot testing can also unmask “bad actors,” as Deanne Dolnick, vice president, Next Pharmaceuticals (Salinas, CA), explains. The company supplies a stress-reducing botanical ingredient branded as Relora, and when it found six years ago that a marketer was printing the Relora patent number on the label while including no apparent ingredient in the product itself, “we took this very seriously,” she says, “demanding that the product be taken off the shelves and restitution made.”
The response, she said, was in the interest of protecting consumers, which is a big part of what the brand advantage is about. As Bush says, “Launch one bad product,” and the blowback can be catastrophic. “We certainly don’t want one rogue company to go ruining that for everybody.”
Your End of the Bargain
Which, of course, brings us to the marketer’s end of the branded-ingredient bargain. Dolnick says that Next Pharmaceuticals requires its partners to sign a customer agreement establishing dosage requirements that “they must adhere to,” she emphasizes. Insisting on this provision “means that the manufacturer or marketer is going to be putting out an efficacious product” to the benefit of all. “We also require that our customers use our logos, trademarks, patent numbers, and so on,” she says, “to ensure that others don’t violate our trademarks and patents.”
Hart believes “we make it easy for customers to cobrand their products.” Qualitas uses a royalty-free trademark licensing agreement that spells out quality standards for any product that bears the Almega PL trademark. “This guarantees that the products including our branding are of the highest quality and enables our retail partners to be on a level playing field,” he says.
And who would argue with that? Apparently, not many supplement marketers. “We rarely get pushback,” Bush says. And if that pushback ever came to shove, he’d rather terminate the engagement than jeopardize the ingredient’s reputation or consumers’ trust.
Perhaps that’s because “the brand image that the ingredient carries speaks for itself,” Majeed points out, “particularly today when consumers have access to so much information right there in the store or on their smartphones.”
As occasional controversies roil the industry, that image assumes even greater gravity. “With the New York state attorney’s unprecedented actions and the resulting deluge of negative media coverage,” Majeed adds, alluding to the investigation of dietary supplements launched by New York Attorney General Eric Schneiderman this year, “now more than ever an emphasis on products with a track record of safety and efficacy is essential.”
Photo © iStockphoto.com/Warchi
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