business news in context, analysis with attitude

In response to yesterday’s story about the US Food and Drug Administration (FDA) working on new guidelines for the supplement industry, we received the following email from MNB user Jem Welsh, president of Pacifica Health Marketing:

“As one who has worked in the supplement industry for ten years, you would expect me to object to your statements on culpability. I don't; I think they are right on. The industry has grown so much since the passage of the last regulation on supplements, the Dietary Supplement Health and Education Act (DSHEA). There are so many products in the market, it is seemingly impossible to know what products are of quality, are really good for you anyway or which products have the potential to interact with medications. The industry promised self-regulation with the DSHEA, but have only succeeded in failing at agreeing on anything! As a result, unscrupulous distributors and manufacturers make products that often don't pass muster or make claims that are outlandish.

“Anyone who has read “The Jungle” knows the dangers of foods not being regulated for purity, sterility or quality. Yet, this year, more people got sick off beef than supplements. The statistics don't stack up against the oft-cited problems within the industry. In general, people taking nutritional supplements are healthier than those that don't. In particular, the adverse events reported with nutritional supplements are incredibly lower than those of poisoned food and medications.

“Most of us doing business in this industry hate to see the good companies implicated with the poor companies. We hate to see bad press because of ephedra. And we really wish that dangerous supplements on the market and poor supplement companies making them would disappear.

“Proponents of ephedra warn that regulation could establish a dangerous precedent in a consumer products industry. That may be true. Because this industry isn't regulated, it really is a good example of free trade. Double-digit growth when we are talking billions means that someone is buying this stuff! There is excellent global trading within the industry and we contribute great increases in taxes each year. AND...people are healthier when they take their supplements. Even though there are two sides to each story, intrusive regulation based on our industry problems is like the case of a couple of bad apples stinking up the apple barrel, so the apple inspectors want to run the entire apple store.

“Kevin, good companies in this industry are more than prepared to accept and adhere to standards as set by the FDA or anyone capable of putting them together. I think the government should ask them how to set the standards and work in collaboration. Unfortunately, the FDA doesn't have the manpower to even visit most of these plants, let alone establish consensus.

“Unscrupulous health claims, blatantly misleading advertisements and products with lousy quality make the news in our industry, but at the same time there are also a lot of people committed to helping people with their nutritional needs and doing so with high ethics. Physicians, pharmacists and other healthcare providers are learning more about supplements and have begun to endorse them in their practices. The American Medical Associations also endorsed them. All we can do is wish good luck to the FDA in its establishment of standards and work as a partner with them in promoting free enterprise and better health.”

MNB user James Curley agreed:

“As a 25 year veteran of the food industry and a former ‘health food store’ owner, I completely agree with FDA Commissioner Mark McClellan regarding the proposed regulation of dietary supplements. I just returned from Natural Foods Expo West, where I walked the show with a new client who is unfamiliar with the ‘health foods’ industry. He was really overwhelmed by the assortment of products in the show; so to help simplify his research, I advised him that there were only three types of companies exhibiting products at the show. I referred to these three types as ‘olive oil’, canola oil’ and ‘snake oil’ companies.

“Confused about this, he asked me to explain. I told him that ‘olive oil’ represented companies selling good quality, wholesome food or beverage products, some of which are organic, some not. ‘Canola oil’ represented companies selling ‘functional’ foods or beverages, or ‘nutraceutical’ foods, beverages, supplements, body care, etc. that have well-understood benefits and make honest claims regarding them. ‘Snake oil’ represented companies selling products by making claims that could not be substantiated in any meaningful way.

“When we finished walking the show, he commented that he was surprised by the large assortment of snake oil being sold. Unfortunately, he was right. There are many firms spending valuable research dollars to open the frontiers of functional nutrition research. They shouldn’t have to compete with companies who are not required to substantiate their claims; and consumers shouldn’t have to be detectives to figure out the difference.”

Boy, did we got a lot of email about our story yesterday relating how a niche catalog retailer we know sources his velour towels from Wal-Mart. One MNB user wrote:

“Don't you find it odd that a person can purchase a product at Wal-Mart retail and turnaround and sell it for 100% markup?”

Odd, maybe. Surprising? Not anymore.

Another MNB user wrote:

“How many small, independent gas stations buy their quart motor oil from a wholesaler?

“I don't think you'd find many if there's a Wal-Mart near-by. A good friend of mine, and an independent service station owner, said he started buying the oil he used in changing the oil in customer's cars shortly after Wal-Mart opened its first store in our home 1989.”

And another member of the MNB community wrote:

“Here's an idea for your friend in the niche towel business. I just got back from Italy and both my 13-year old daughter and I said "we gotta have those towels!". They are all over Italy, and so I assumed I could find them
easily via the web here in the States. Not so!! What is sold here is way overpriced and not available in any color selection. They are 100% cotton waffle weave towels, light, thin, very soft and highly absorbent, coming in several sizes, including a bath sheet size (larger than the typical American bath towel). They are sold over here as "spa towels" in white or beige only at ridiculous prices ($55 and up). I saw them in Rinascente (dept. store) for under 30 euros in many beautiful colors. I wish I had bought them when I was there! They are manufactured in Belgium, Italy, and probably other places too. If your friend can track these down, give him my email address!”

Okay… (We think it is a pretty good bet that someone will read this email and know where to source these towels.)

And several people suggested they would be able to supply towels to our friend…and we’re passing along your names and email addresses.

We got comments on McDonald’s decision to test wireless Internet services in some of its New York outlets. MNB user Karen Techeira wrote:

“I think many would share the opinion that all McDonald's really has to do to attract additional customers is to improve the menu. ‘Free’ wireless Internet service isn't going to make their food more appealing or healthier.”

In our commentary, we said we hoped supermarket retailers were considering the same sort of wireless setup for their consumers. MNB user Gail Ginther responded:

“I'm not sure I follow you on this one. At McDonald's the customer buys their meal, sits down and logs on while eating. (Of course, we may see McD's having a problem with table turnover-which impacts profitability. But if the seats are empty anyway, what the hay?)

“At Borders there are chairs, tables, probably a café, some sort of seating opportunities. Not to mention that browsing was a bookstore activity long before the web.

“Where is a supermarket going to house these bodies? Are we thinking of browsing the web while we cruise the aisles? I suppose you could have your grocery list on line, or IM someone about what to choose as you study the shelves. But it's this kind of thinking that makes you The Content Guy…”

We’re blushing.

Actually, we were thinking that more supermarkets ought to be creating community centers for coffee and doughnuts, a place where people could congregate and yes, even browse the Internet to check their email.

It’s the bigger picture of how retailers should be differentiating themselves in a competitive environment. And we think it goes back to creating community.

On another subject, we got the following email:

“I almost choked on my coffee when I read your report that Trader Joe's was considering the Twin Cities market. Oh, could it be true? Be still my heart! There is nothing like the 21-Seasoning Salute to spiff up any dish.

“Now, if you can find out if IKEA or Peet's are coming into this market, my life will be rich beyond my wildest imagination.”

We think you need to get out more…(just kidding.)…

And finally, because we love irony, we offer the following email from a member of the MNB community:

“Just seemed so funny to see this article about Kroger's bidding on Dominick's. Although, not any more, I was in the grocery business for 35 years, and I think that at least twice a year for that length of time we had at least 1 or 2 rumors that Dominick's were coming into our home town of Peoria,IL and buying out Kroger.

“Isn't it funny how things have changed...or is it?”
KC's View: