Do You Have What it Takes to Scale Up your Nutraceuticals Business? Industry Vets Weigh In
10.27.2015  |  by copperpeak

The nutraceuticals industry is growing rapidly these days; one study predicts that nutraceuticals will grow to be a $250bn market by 2018. And whereas many of the early players were smaller companies, nutraceuticals companies with over 500 employees and millions in revenue are no longer unusual.

This fast growth means that nutraceuticals companies are facing all sorts of new challenges, many of which have to do with scaling up their businesses. To get a feel for precisely what some of these challenges are, we talked to business owners who were in, or contemplating new business in, the nutraceuticals industry. Some of their answers were enlightening. For example, we found:

Shelf life for nutraceuticals was a big issue.

“Getting our processes in order happened fairly quickly. But once those were set, it was shelf life that kept us up at night,” said Cathy, a small business owner. “We would make big batches [of product] and worry whether half of it would go bad before a consumer ever touched it.”

“We heard a lot about GMP [Good Manufacturing Practices],” said Thomas, COO for one company. “It was shocking that there were so many fly-by-night places that didn’t have the basics down. For us, getting a product to market that could last a month on the shelf was key.”

Shipping concerns and environmental control for nutraceuticals was important too.

 

“I do worry about shipping,” Cathy said later. “Some of our products can’t get too warm or the separate or spoil. So we need to know that the environmental control is there every step of the way.”

“We once had lost about a pallet’s worth of product because the truck they were on made an unscheduled stop. The truck got hot, and the stuff got oily and chunky,” says Eloise, who started a dietary supplement and “cosmaceuticals” company. “Now we ask  a lot more questions about routes, and drivers, and controls.”

Many companies were unsure how to market themselves.

Jill, a marketing manager for a growing brand, admitted: “We would see so many questionable people trying to get into this business. But the sleazy tactics they were using seemed to be working. Did we want to follow suit? No. But proving quality and effectiveness in the minds of potential customers… that was a challenge.”

She added, “…and I know that proving this to government agencies will be an even bigger challenge.”

Rules and regulations were increasingly an issue.

“When we started, none of our stuff was regulated,” says Karen, who did compliance for one company. “But laws change. Just keeping up with labeling requirements was tough.”

“If you ship internationally, beware: different countries have different rules and regulations,” cautions Bill, a logistics veteran. “It pays to have local people who know the rules. Otherwise, some greedy distributors might ‘insist’ on product tests you don’t actually need. Or you might accidentally traffic in a banned substance. You need ‘feet on the street’ so to speak.”

Finding logistics partners that could be trusted was an issue.

“After working with one outfit for almost a year, we found out that some of their warehouse workers were stealing product,” fumed Nathan. “Turns out they were selling some of our pricier supplements under the table. They were stealing from us and competing with us at the same time.” He adds, “This was supposed to be a reputable company. But they didn’t do a good job vetting their people or keeping track of inventory, apparently.”

What can we learn from these veterans?

Altogether, there are some common themes we hear from this industry: product quality, shelf stability, regulations, competition. We were also surprised (and a little delighted) to learn that many of these issues could be addressed by partnering with an expert, and ethical, logistics partner.

If you are looking for a logistics and shipping partners for your nutraceuticals or cosmaceutical business, talk to us. We would be happy to answer questions or help you form a distribution strategy.

(Note: To protect confidentiality, we are using first names only, and have changed some names.)