Pharmanex’s cholesterol-lowering herbal remedy Cholestin was marking time on Tampa retail shelves until disc jockey Jack Harris started treating himself with the yeast-fermented red rice on his radio show.
Every four weeks in The Cholestin Challenge, a doctor read Harris’s cholesterol as the deejay told listeners about Pharmanex’s herbal remedies. Harris got excited as his cholesterol count dropped from 240 to 200 after 12 weeks. Listeners trooped off to Walgreen and Eckerd drug stores for free cholesterol testing, and sales of the proprietary cholesterol product quadrupled in the market, says Tom Hall, senior vp sales at the Simi Valley, CA-based company.
“This dramatically brought our message to consumers and gave them the education they needed to buy the product,” says Hall.
Consumer awareness of herbs and supplements has flourished like kudzu in the four years since Congress ruled that manufacturers could make health claims for nutritional supplements and the Food and Drug Administration couldn’t treat them like drugs.
Sales of the natural remedies in the U.S. have grown 25 percent annually in the last two years to $3.5 billion in 1997, according to the Council for Responsible Nutrition, Washington, D.C.
Still, many consumers are confused or put off by the category, which has long consisted of a mind-boggling array of product choices and no deep-pocketed marketer to fuel consumer education and shelf management. And a steady flow of skepticism from the medical establishment has succeeded in casting a pall over burdock root or ginkgo biloba as herbal panaceas.
Pharmanex’s market-specific, guerrilla-style promotion helped its retail partners move product by drawing consumers into the category with an event and providing them with critically needed product education. It highlighted the brand in a category where 900 manufacturers are elbowing for space.
“Consumers are asking for a lot more information on these products. Even those who are familiar with one herb don’t necessarily know about others,” says Bill Atchinson, general manager of Celestial Seasonings in Boulder, CO.
The big brands are coming Major marketers like Celestial Seasonings, which is brand-extending into herbals, will help focus the category for consumers with a slew of ad and promo spending. Celestial is leveraging its herb-infused teas with loyal customers this fall and through next year to sell a 17-item line launched in April.
Bayer’s One-A-Day vitamin brand presents herbal supplements as part of product blends including vitamins and minerals that address speci1/2c disease conditions or health attributes.
“We’re making it a lot more convenient for consumers. We’ve done the homework so they don’t have to,” says Bayer category director of nutritionals Jim Kindel.
The eight-item Specialized Supplements line, which began shipping in August, features, for example, a cold season formula with vitamin C, zinc, and echinacea. A remedy aimed at tension and mood control combines St. John’s wort, Kava kava, and B vitamins.
TV ads by Tatham Euro RSCG, Chicago, were set to break in October, with an Oct. 4 FSI drop, and cross-couponing with the vitamins, a Bayer spokesperson said.
Bayer and Celestial promise to bring standardized formulas to an industry beset by reports of wide variations in product quality among supplement providers.
The nation’s other leading vitamin brand – American Home Products’ Centrum – will launch herbal products in the fourth quarter, a company spokesperson said.
Even traditional pharmaceutical companies are jumping into the market, lured by forecasts of continued 20-percent-plus annual growth. And the category spells incremental sales for drug companies: Supplements are by-and-large used as preventative remedies.
Warner-Lambert rolled out ginkgo biloba and saw palmetto items under the name Quanterra last month. Promotional support includes a dedicated Web site, 10 million newspaper brochures to targeted households and, in February, an educational insert with a $2 coupon to 23.5 million magazine subscribers.
Herbal supplements are “the fastest growing, biggest opportunity in the HBC category,” says Cannondale Associates partner Don Stuart, Wilton, CT.
Today’s $3.5 billion market will double by 2001, he predicts.
Mass marketers are grabbing distribution from nutritional supplement chains as the category grows. Their share of herbal and botanical sales in 1997 was 14 percent versus 10 percent in 1995. Health food stores’ share stayed the same at 36 percent, according to the Nutrition Business Journal, based in San Diego. Mass merch stores are on a 25- to 30-percent growth rate in the 1/2rst half of 1998, outpacing all-channel growth of 16 percent, says editor Grant Ferrier.
The new brand entries won’t crowd out existing players since there is plenty of room for market growth, some observers maintain. Though surveys have shown that 25 percent more Americans have taken an herbal product in the last year, only four percent of adults were frequent users, spending $20 a month, says Ferrier.
A dozen companies from Twin Labs to Pharmavite to Rexall Sundown do over $50 million sales.
“It’s all positive. These are quality companies bringing out quality products. Their ad dollars will drive customers to stores’ shelves,” says Pharmanex’s Hall.
Predicts Ferrier: “The rising tide will rise all ships for at least the next 1/2ve years.”
Maybe. Most mass merchandisers will carry only a fraction of the skus found in nutrition stores, producing a 1/2erce 1/2ght for shelf space. Plus, manufacturers have to involve skeptical consumers in alternative health and in their brands if they are going to grow.
SmithKline Beecham pulled its four-item Abtei line from shelves after only a six-month test this year when heavy advertising and FSI drops failed to move the needle in its trial markets.
“They took a traditional consumer product marketing approach and neglected to treat it from an educational view point. Their packaging was very poor,” says one observer.
“Establishing a new brand name and consumer franchise takes longer than six months,” says another insider, noting that the pricing was on the high side, at $2 or so above the average price for 30 capsules.
Look for the 1/2rst flood of herbal supplement advertising and promotion, then, to focus on consumer education. “I might build you awareness of brand, but you still don’t have a knowledge base that makes it a credible product. There is very little consumer knowledge,” says Dave Williams, executive vp at Ryan Partnership, Dallas, which handles Pharmanex promotions.
Apple-polishing Atchinson, at Celestial Seasonings, compares the herbal market to the personal computer market of 15 years ago.
When PCs came out, people wanted them, but feared they were too complicated.
“Our vision is to do for herbs what Apple did for PCs: make them simple to understand and relevant to people. People can chose it if it 1/2ts their lifestyle,” Atchinson adds.
Initial mass marketing of herbal remedies needs to have more resonance than cents-off coupons to build trial.
“We will see a much higher level of promotional spending and more sophisticated sales and marketing. Category management isn’t really practiced,” says Spencer & Associates principal Bill Spencer, a Fox Island, WA-based consultant in nutraceuticals.
The challenge for category captains will be to merchandise shelves in a manner that encourages consumers to make the leap from vitamins to herbals. Garlic is often snuggled next to ginseng in alphabetical schematics, when the widely-used bulb could be strategically placed on the shelf to help consumers transition from vitamins to herbs.
In its $25 million ad and promo effort, Celestial Seasonings is taking a “balanced approach between driving information and price incentives,” says Atchinson. “Everything from our packaging to our promotions is information-laden.”
The company targets its 14 million loyal tea users, suggesting herbs as an alternative. Two-thirds of Celestial’s consumer base uses herbals already. The 1/2rst wave of print ads and advertorials in women’s health and news magazines starting in April worked off of the teas’ lifestyle positioning.
With the tag “what you do for you” the ads put over the idea that the products help you feel your best, says Campbell Mithun Esty senior vp Roxann Goertz. CME handles advertising and promotions for Celestial.
In a second wave of print that broke this fall, ads feature individual supplements and pair them with corresponding Celestial teas to extend the teas’ brand identity to the herbals. Celestial’s Tension Tamer supplement blend with kava kava will be teamed with its popular Tension Tamer tea. Its Mood Mender herbal blend teams with a new Mood Mender tea that debuted this fall.
Celestial last month began selling into retailers a free tea promotion with teas shrink-wrapped with corresponding supplements. Consumers can buy a $9.99 supplement and geta $2.50 box of tea free.
TV breaking last month is non-informational, building on the feel-good imagery of the print.
But education kicks in in January with a proof-of-purchase mail-in offer for a special Prevention Magazine Healing Herbs publication. Celestial Seasonings bought out the supplement for January. Coupons and cross coupons will also target the tea drinkers.
Media spending is shooting up, partly because the category’s early pioneers like Pharmaton Natural Health’s Ginsana and Ginkoba are responding to the newcomers. The two brands from the Ridge1/2eld, CT, company spent $28 million on media in 1997, 62 percent more than the previous year, per Competitive Media Reporting. Media spending on vitamins/nutritional supplements grew 16 percent in 1997, and in the 1/2rst six months of 1998 is continuing upward at a 14-percent rate, says CMR.
Promotional spending has been sparse, but is ramping up as manufacturers seek to involve consumers in the category and their brands.
The Challenge vs. the FDA Pharmanex turned to its market-speci1/2c approach after a year-earlier national ad and print campaign failed to resonate with consumers. The four-year-old manufacturer was impressed enough with the test in Tampa – plus similar events in Providence and Minneapolis – that it planned to take the Cholestin Challenge across the country this year into 17 markets.
Pharmanex put the promo blitz on hold when the FDA ruled in May that Cholestin is a drug, not a dietary supplement. Since a preliminary ruling two years ago the company had been prohibited from shipping the product into the country, says Pharmanex vp marketing Paul Heising.
The company today is awaiting a 1/2nal ruling from a Utah Federal Court judge who in June overturned the FDA decision, saying the product is not a drug and can be imported.
“If the 1/2nal ruling is positive we plan to reinstate a lot of the promotion activity, and add a media component beginning in January,” says Heising.
The Cholestin Challenge survives in an account-speci1/2c effort with Shopko Stores in three markets, where Pharmanex has sold in its 30-item line of herbals.
Starting last month, celebrity deejays and direct mail helped alert consumers to the in-store testing at Shopko pharmacies.
The testing draws 200 to 300 people through a store on an afternoon, says Ryan Partnership’s Williams.
“There’s a huge growing demand. But if you just put the product on the shelf, it will not sell,” says Williams.
Indeed. Just as a believer ingests beta carotene and wonders whether it will prevent him from getting cancer, big corporate players in the herbal arena will have to wait to learn whether brand names can make an impact on a category that’s viewed skeptically by most consumers.
The 1994 law that energized the supplements market was floated on a wave of citizen letters and phone calls not seen in Washington since the Vietnam War.
Consumers and manufacturers have driven the herb market ever since. New products, new distribution channels, and television advertising and programming have made names like ginseng and St. John’s Wort as familiar to many people as parsley and oregano.
An aging populace has reveled in the chance to practice preventative medicine and disease treatment using botanical and herbal remedies with centuries-old pedigrees. In a consumer survey, Celestial Seasonings found that 37 percent of adult Americans said they had used herbal remedies in the previous year.
Many in the medical community have joined their ranks, dabbling in alternative cures if not becoming wholehearted proponents. One in three doctors recommend herbs regularly, according to a national survey of 153 doctors that was sponsored by Pharmaton Natural Health Products, Ridgefield, CT. Nearly two-thirds of U.S. medical schools teach alternative therapies, including herb use, says another report.
Despite the rising tide of support, alternative medicine remains a burr under the lab coats of medical traditionalists and of the Food and Drug Administration, four years after the enactment of the Dietary Supplement Health and Education Act (DSHEA).
But in September, one of the mighty ships of the medical empire fired a broadside at herbals. The editors of the New England Journal of Medicine called on scientists to stop giving alternative medicines a “free ride,” saying they are unproven and under-tested.
“There cannot be two kinds of medicine – conventional and alternative,” the editors wrote.”There is only medicine that has been adequately tested and medicine that has not; medicine that works, and medicine that may or may not work.”
Closer to the trenches, the FDA in April issued a proposed rule that opponents say will disallow many of the product claims DSHEA seemed to guarantee.
DSHEA put herbs and botanicals into a new category – nutritional products – for which nutritional claims can be made without prior FDA approval. The products can’t claim to prevent or treat disease, and must contain a disclaimer to that effect. Companies can make claims on the product’s effect on the body’s structure or functions.
Marketers, then, can say an herb protects the body against oxidative damage, but not claim it prevents cancer. Retailers and manufacturers can distribute literature summarizing product lore.
The FDA’s new proposal broadens the definition of what a disease is and in so doing narrows the field of claims that can be made. The rule names “natural” states such as aging, pregnancy, menopause, and headaches as diseases, making claims on these conditions more difficult, say alternative remedy proponents.
“This will gut DSHEA. It changes the intent of the bill. Many manufacturers have based their marketing plans on the structure/ function claims,” says Citizens For Health president and ceo Susan Haeger at the Boulder, CO-based consumer advocacy group.
“DSHEA had ground rules, and those rules seem to be changing,” says David Robinson, president of Amrion, Boulder, CO. Bought last year by Whole Foods Markets, the Austin, TX-based 86-store health foods chain, Amrion has developed a 250-item private label line for the stores.
Power grab “It’s an FDA grab to restrict the scope of statements of nutritional support. They have gone a little overboard here and are proposing to prohibit some claims we feel should be permitted under DSHEA,” says Annette Dickenson, director of scientific and regulatory affairs at the Council for Responsible Nutrition in Washington, DC.
Where do structure function claims end and disease claims begin? “It’s a word game,” says Dickenson, a PhD. nutritionist.
A natural cholesterol drug can carry a name or label that says the product helps maintain a healthy heart or healthy cholesterol level. The labeling cannot say the product “lowers cholesterol” because that is an implied disease statement that the product helps prevent heart disease.
“Our argument is that cholesterol is not a disease. It is a structure or function of the body that can be changed,” Dickenson adds.
The new major marketers entering the category will bring badly needed product standardization and quality control, which should at least help to focus the debate. Herbs today, with wide variation in quality, are a moving target to scientists. A study commissioned by the Los Angeles Times found that seven of the 10 leading brands of St. John’s Wort had less than 90 percent of the listed potency, three of them less than half.
“Meeting standards for biological and chemical composition will be a major competitive tool for these brands. We are going to see a redefinition of what constitutes quality over the next few years, to include scientifically valid standardization,” says Dickenson.
Let’s hope so for the sake of bilberry poppers everywhere.
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