Expo West was once again a huge success. The number of financial firms, including major Wall St. firms, holding receptions or events struck me. Fifteen years ago, bankers and investors coming to the show could have taken one cab from the airport. Today, it’s a different story. This interest by the financial community in our industry could only mean good news.
 
Immediately following Expo West, New Chapter announced P&G was acquiring the company. This is another important validation for the supplement industry coming so soon after the Alacer/Pfizer deal. New Chapter has a reputation for making excellent products, paying close attention to all aspects of its supply chain and commanding a premium price in the natural channel. The company is a pioneer in whole food supplements, a segment that is attracting much more interest from consumers. Some years ago, P&G in-licensed an organism and created the product Align GI, one of the fastest growing probiotics in mainstream channels. Now New Chapter, with a strong direct sales force, will give P&G access to the natural channel. A more vexing question is whether the New Chapter products can make the leap into food, drug and mass without losing their aura and premium price positioning.  
 
2011 marked a remarkable change for the big food and beverage companies in the U.S. For the first time since the widespread adoption of scanning, the volume of food and beverage sold in supermarkets actually declined. In previous economic downturns, volume growth would at least keep up with population growth, but this drop has industry experts puzzled. Some people think consumers are wasting less food, while others attribute the drop to a channel shift from grocery to dollar stores. In previous years the industry would roll out additional price promotions and consumers would buy products on deal. This undoubtedly led to pantry stuffing for some categories that have been in long-term steady decline and it is likely in the current economy that consumers simply do not have the spare cash to stock up on items even when they know they are well priced.
 
Whatever the cause, a volume decline should be good news for entrepreneurs. The industry will be forced to scout out new high-growth products more aggressively and be more open to partnering and investment. Businesses that have already reached scale will be attractive targets for acquisition.
 
The efforts to make it easier and legal to raise capital from many small investors that could fill the current gap in early-stage funding for nutraceutical companies has taken another step forward. The House and Senate have passed legislation, embedded in the Jobs Act, permitting “crowdfunding” and the President has indicated he will sign the bill. But criticism is mounting, especially from former and current regulators who say it will open the floodgates for fraudsters to scam unwary investors on the Internet.