The State of the Supplement Industry in the Wake of COVID-19
COVID-19 is a temporary intrusion on our lives. My hope is that life will return to "business as usual" once this is over. But right now, COVID-19 could be the biggest challenge your supplement business faces.
COVID-19 stands for “Coronavirus Disease 2019”. It is the name given by the World Health Organization (WHO) for the disease that surfaced in Wuhan, China in late 2019 caused by novel coronavirus SARS-CoV-2. [i]
While scientists are still trying to find out more about this disease, what we do know is that it has already wreaked havoc on world economies in unprecedented ways. What might the situation look like in the coming weeks and months for the supplement industry?
What Challenges Does COVID-19 Present to the Dietary Supplement Industry?
The supplement industry, like any other industry, has had its share of challenges in the past and has proved to be powerfully resilient even when faced with operational challenges. What is so different about the COVID-19 situation? What’s the impact of this crisis on your supplement business?
Let’s take a dive into how COVID-19 has affected the supplement industry and then look at some of the steps you, as a supplement business owner, can take, to ride through these rough times.
COVID-19's Effects on the Supplement Industry Supply Chain
Nearly 75% of businesses in the United States are experiencing supply chain disturbances due to COVID-19 [ii] because of their reliance on outside markets like China, France and more, for ingredients and raw materials like Vitamin C, stevia, Vitamin B1, aspartame, garlic, ginger, fruit concentrates, pea protein, and other botanical ingredients. [iii]
While some brands are trying to find secondary supply sources, others may not be as badly affected. Anticipating the Chinese Lunar New Year when factories and businesses in China are closed for 7 to 10 days (factories may close for two weeks), some brands have already stockpiled on raw materials and are ready for full production. [iv]
Even as China lifts its lock downs and begins its return to normalcy, it may be prudent for business owners looking to buy ingredients from secondary suppliers to ensure ingredients meet the requirements of the Food Safety Verification Program (FSVP) for foreign materials and have clear knowledge of the original supplier. [v]
What Are the Key Challenges?
In these times, supplements formulated to support immune health, offer condition-specific health benefits, and help support emotional well being may witness a spike in demand. In the past, the supplement industry has risen to the challenge, increased its efforts and met consumer demands. In the case of COVID-19, curfew bans may have affected the manufacturing and selling of supplements. This brings us to the following questions…
Are supplements part of the "essential" services?
Supplement manufacturing facilities may be ready to start production lines but are under lock down as some authorities consider supplements a “non-essential” commodity. Many retail establishments specializing in natural products are being shut down or have been told to restrict their hours of operation. So, what exactly are “essential” services? There is much controversy over the interpretation of the term “essential”. [vi]
The United Natural Products Association (UNPA) and the Council on Nutrition, along with a long list of other stakeholders, have called on the federal government to exempt human, animal and pet food manufacturing facilities from the COVID-19 curfew bans.
The petition also called for lifting bans on manufacturing facilities that produce consumers goods that may have a strong role to play in minimizing the effects of COVID-19. This would allow health food stores selling nutritional supplements to remain open as these items would then be recognized as aiding the well being of the general public. [vii]
Are the domestic delivery systems overwhelmed?
With most businesses working with only essential workforce on the field, delivery and fulfillment may be affected and supplement business owners may find it hard to deliver their products to customers.
For instance, Amazon, overwhelmed by the number of orders it has been receiving, has stated that it would prioritize shipment of items such as household staples, medical supplies, and other high-demand products. It has therefore temporarily stopped the shipment of other items. Shipments of third-party sellers (which may include supplements) who use Fulfillment by Amazon (FBA) may be on hold if they are not considered essential or in high demand. [viii]
How soon will China be able to resume shipping raw materials for the dietary supplement industry?
Although China is starting to lift its lock downs, their businesses too may not have enough staff to begin full-fledged operations, affecting the flow of goods.
Logistics is another concern. When China resumes shipments, high-value cargo will take priority. China’s domestic consumption may also come first, creating lag times on shipments of up to 60 days or longer. Complete recovery of the supply chain may take four to six months.
There is also the worry that China may undergo a second wave of COVID-19 disrupting the supply chains once again. [ix]
Possible Solutions for Dietary Supplement Brand Owners
How prepared is your brand to handle a crisis like the COVID-19? This may be just the time to reevaluate your business and make changes. Here are some tips to help you get started.
Diversify your ingredient supply chains
Loren Israelsen, president of the United Natural Products Alliance (UNPA) stated in a webinar hosted by TraceGains, a supply chain software provider, that industry players might want to reassess their supply chains and adapt to new systems quickly, as a permanent move away from the heavy reliance on China. [x]
It’s the proverbial adage: don’t put all your eggs in one basket. A multitude of source options for key ingredients can avoid dependence on one source. Options can include countries in Southeast Asia, and Latin American countries, and even indigenous suppliers in the United States. [xi]
Use social media platforms wisely
Figure out ways you can help your customers through the COVID-19 crisis using your social media platforms. Communicate thoughtfully and be caring. This can go a long way in building customer morale, not to mention earning their loyalty as they perceive the values your brand stands for.
Engage with your customers frequently and consistently during this time. Mix your posts with information that can be helpful for protecting themselves, ways to spend time at home, a bit of humor [xii], and even pertinent warnings such as the one from the Council for Responsible Nutrition asking consumers not to fall prey to false advertising by supplement brands regarding COVID-19. [xiii]
Needless to say, capitalizing on this event to promote your products may backfire on your business.
NutraScience Labs, like most of us, expect there to be challenging times ahead. However, our facilities are fully operational and our team is available to assist you, whatever your business needs may be.