Popular Manufacturing Trends in Todays Global Economy

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Popular Manufacturing Trends in Todays Global Economy

Economic downturn of 2008 notwithstanding, the U.S. market for nutritional supplements is poised for healthy growth, with sales forecast to climb 39% from 2007 to 2012.

Packaged Foods
Apparently, all is well with the nutraceutical industry and it knows very little about recession. While many other industries are experiencing all time lows in profitability margins, some nutraceutical products are actually gaining wider popularity. It seems the recession is teaching Americans the value of low-cost, preventive healthcare. More people are lining up for vitamin supplements and various other health supplements to meet their health needs as an alternative to expensive conventional medicine. All said and done, in spite of the global financial crisis and its effects on our economies, the bottom line is that people still need to eat and keep healthy. So the nutraceutical industry manages to keep afloat in spite of all odds.

Global is the word for nutraceuticals. With many ingredients being imported from all parts of the world, contract manufacturers face a tough challenge keeping track of new research on herbs, nutrients, botanicals and formulating innovative products through in-house research in order to produce a superior, quality product that not only conforms to the newly installed FDA GMPs, but also meets rising demands of today’s consumer.

Upward Trend
Just how well is nutraceutical manufacturing thriving? Information Resources, a Chicago-based market research agency, reported an 8 percent growth in the sale of vitamins for the last quarter of 2008 as compared to the same period in 2007. During October 2008 to March 2009, Vitamin Shoppe noted that 20 percent of their customers were first time buyers of supplements like probiotics, glucosamine/chondroitin, probiotics, multi-vitamins, omega 3s, and herbal extracts.

Why are profits soaring upwards for health supplement companies when the economy continues its spiraling trend downwards? A story reported in the April 4, 2009 edition of New York Times may help us to understand why. It expresses the sentiments of most Americans today. Here is what 40-year old Jacqueline Kreiss, a presently unemployed hairdresser and make-up artist, said when asked why she was buying vitamin supplements:

“I don’t have health insurance, so I can’t go and see a doctor because it’s very expensive. The economy just really put me backward, so I started relying on the vitamins.” When asked whether the vitamins worked for her, she said she felt very energetic and strong. In her words, “I feel I’m in full form to go out there and get a job.”

A 42-year-old working in the financial sector of Los Angeles reports that she takes a combination of herbal ingredients to support “calmness”. And the list goes on. There is definitely a growing interest in herbs and nutritional supplements as seen in the rising sales of nutraceutical products against a backdrop of economic uncertainty.

According to the U.S. Department of Commerce, personal care products registered a 5.65 percent rise in sales in December 2008, when compared to the previous year. Consumer preference was towards natural personal care products.

Global sales of nutraceutical drinks have risen by 9 percent according to Zenith International’s 2009 Global Nutraceutical Drinks Report with North America having the largest share, 47 percent in volume, followed by Japan.

Another sector that has seen upward growth is sports nutrition, with energy drinks and high-protein formulas being the most popular along with proteolytic enzyme formulas. More people are seriously turning to preventive health measures such as diet, exercise and health supplements in an effort to avoid conventional medical treatments with its skyrocketing costs.

Not all sectors have experienced such jubilant growth, however. Organic foods and functional foods that are higher priced have seen a slump. Trends show that consumers would rather pay for natural/herbal supplements which target their specific health needs, rather than pay extra for organic or functional foods. The general perception is that health supplements provide more health value than organic or functional foods. It’s a matter of taking health into your own hands and being penny wise rather than pound foolish in these difficult times. Health supplements are seen as being penny wise against a doctor’s visitation which could prove to be pound foolish in hindsight.

Private Label Contract Manufacturing Stays on Top

We see more sales in private label manufacturing especially as the public continues to perceive private label brands as equal in quality to major selling brands which are often more expensive. Many chain stores have introduced innovative products that help people bite the economic crunch and stay on top of health issues. It is interesting to note that private label’s unit market shares rose 1.8 percent in the recession of 2001-2003, according to the Private Label Manufacturers Association. Current statistics are likely to show even more favorable results for private label manufacturing.

Popular private label supplements include multi-vitamins particularly Vitamins C, D, E and K, probiotics, fish oil, anti-aging agents, green tea, diet and weight management products, anti-stress, sleep aid products, eye-health products, personal care products, fiber-based products, bone health products, sugar-control products, glucosamine/chondroitin and coenzyme Q10. “Free from” products are also being received well by consumers. For instance, gluten-free, or “free from bovine sources” are in popular demand, as are kosher and vegan products.

More Trends
Trends are moving towards products that are more convenient to use and eco-friendly. Individual sachet packaging, or easy-to-swallow gel capsules instead of tablets. Over-packaging of products can be seen as being wasteful in an economy that is sensitive to good stewardship of our earthly resources.

Global competition is a key concern. With countries like China and India aligning themselves to cGMPs and selling quality products at a fraction of the price, small and large key players in the nutraceutical industry may be forced to move their operating plants to third world countries in order to stay competitive.

What’s Cooking in the Nutraceutical World?
Hemp-derived supplements are creating a buzz. Hemp oil is believed to be a good source of omega 3 and omega 6, amino acids and antioxidants. Use of hemp supplements may benefit diabetics, those with respiratory illnesses, or suffering from arthritis. They are also believed to provide a sense of mental wellness.

According to the April 2009 edition of the American Journal of Clinical Nutrition, research shows a combination of fish oil and walnut can help to reduce the risk of heart disease.

In December 2008, Rebaudioside A (reb A), a natural sweetner made from stevia plants, received a status of generally recognized as safe (GRAS) by the FDA. Reb A has very little calories and is ten times sweeter than normal sugar, and now can be used as a general purpose sweetener at 95% purity or above. This is great news for nutraceutical companies who can now formulate sweeter products with very little calories.

The recession has brought in a sense of global competitiveness. Start-up companies have bore the worse brunt. Albeit, many companies have cut down on controllable costs and lowered their prices to benefit the public, but at the end of the quarter, there is still a silver lining surrounding a dark cloud for the nutraceutical industry. Backed by scientific research, both the medical profession and consumers are now finding nutritional supplements are a better option for health. Unhealthy lifestyles and an aging population all contribute to the global growth of this industry. A new ray for an even better future awaits nutraceutical manufacturing as new healthcare reforms from the Obama administration, seek to encourage the use of complementary and alternative medicines.

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