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Nutritional Outlook spoke to Chase Shryoc, vice president of sales and business development at Gencor, about challenges his company has observed with ingredient sourcing and supply, transportation, lead times, and more, in the time of the COVID-19 pandemic.
As the COVID-19 pandemic hits its fourth month since the first confirmed case, the ingredient supply chain continues to be greatly impacted. Nutritional Outlook spoke to Chase Shryoc, vice president of sales and business development at Gencor (Irvine, CA), about its challenges with ingredient sourcing and supply, transportation, lead times, and more.
NO: Where do your ingredients come from? Are you seeing an impact on ingredient supply as a result of the COVID-19 pandemic-anything specifically related to imports and exports?
Shryoc: We source our branded ingredients from many countries, including Switzerland, Italy, Spain, Korea, Australia, and India. We are definitely seeing effects from COVID in all of these areas, but it can be different from country to country. The issues range from limited staff allowed in manufacturing facilities because of social distancing, which has led to increased lead times at warehouses and labs, to India being in a complete shutdown, where even dietary supplement and pharma production were not considered essential.
NO: What other challenges are ingredient suppliers experiencing as a result of the pandemic?
Shryoc: The most common problem we see across all countries is transport. Passenger aircrafts account for the majority of air-cargo volume in the world. So, with numerous airlines grounding the majority of their passenger fleets, there is an unprecedented shortage of cargo capacity. The major airlines cancelled all long-term contracts with freight operations companies, so the market is determining the rates and it fluctuates hourly. In the beginning, in some cases, costs were 50 - 100 times the normal rate, which meant hundreds of dollars per kilogram to ship. It has started to stabilize now, but the new normal is 2 - 6 times the historic costs for air transport.
NO: What concerns and questions have your customers expressed?
Shryoc: Almost every customer has expressed some level of concern. The two main categories are supply chain security/continuity and knowing what precautions are being taken for safety and to limit the spread of COVID-19.
NO: What questions should customers be asking their ingredient suppliers during this time?
Shryoc: The global supply chain is facing extraordinary pressure from a multitude of completely unprecedented angles, and nutritional products are not immune from this pressure. Buyers should be evaluating their actual demand for the short and mid-term, and then have direct conversations with their suppliers to determine if product is available in the required quantity. They should also ask if there are new lead times and transport costs. There are definitely solutions to the supply-chain pressure, but we all have to work together.
NO: What are your concerns, if any, on the long-term impact of changes in supply, due to COVID-19, on the supplement industry?
Shryoc: Long term, there shouldn’t be much concern for supply. We will always find a way to manufacture, and transport will normalize, or we’ll make necessary adjustments. I am more concern over the demand for products in the long term.
NO: During the 2008 U.S. recession, dietary supplement continued to sell well. Do you expect the same market resilience if there is a recession due to COVID-19?
Shryoc: In comparing the impact on supplements between the 2008 crisis and COVID, I absolutely think supplements will perform better now. I say that because the current recession is directly caused by a health pandemic, not a financial crisis. This is causing people to really think about their health and focus on how they can improve it.
NO: Do you anticipate certain supplement categories will perform better than others in the coming years-perhaps because some are considered more essential?
Shryoc: Everyone is going to say immunity because that category is already through the roof, but in the long term, I think all the supplement categories will outperform other industries. I believe this crisis will cause people to take better care of their health and, in turn, will cause them to consider all healthcare supplements a necessity rather than a luxury.