A business reboot
Even with an appealing business opportunity, nutraceutical companies see enormous challenges ahead and now express an increasing exigency about climate change and addressing sustainability. The urgency is driven by the fact that supply chain disruption due to climate, fire, floods, etc., will affect the ability of companies to get the things they need, said plant-based medicine expert Chris Kilham, founder of Medicine Hunter Inc. He noted that heavy rains in India ruined the ashwagandha crop two years ago, causing higher prices, hardship and disruption. “I think we will see a lot more of this,” he said.
Deep dive Q&A: Is sustainability financially feasible?
The nutraceutical industry is facing direct impacts from climate change at almost every point of its supply chain, noted Rushva Parihar, a sustainability consultant in Mumbai who heads the Improving Lives Foundation, which exemplifies OmniActive’s vision to support not just its customers but also those who are making its products.
Until now, Mattern noted, “we’ve been a take-make-waste industry (grow now, clean up later). Today, we understand that this is no longer a viable strategy going forward as, in the long context, we are eating ourselves alive.”
Underscoring these concerns, the International Alliance of Dietary Food Supplement Associations recently issued guiding principles on sustainability for the supplement sector, noting that a shift toward more sustainable systems in the space cannot take place without the involvement of a majority of the sector. Many industry thought-leaders agree and believe that achieving true sustainability will take a transformation of a business model built on high growth and low price. “We live on a planet with finite resources. Endless growth is not possible. Everyone is now called upon to pay attention to sustainability in their own area,” said Dr. Andreas Biller, consultant and interim manager of Dr. Biller Biosulting and Pharma in Hamburg, Germany. We need to rethink the way we do business, Bensadon said, adding, “It’s time to acknowledge that we have gone too far in the name of profit and that, in our path to exponential growth, we lost our purpose, and now is the time to reclaim it. Our purpose is to accompany people in their path to wellbeing to help them live a fuller life.”
6 Ps for a regenerative business model
For Kilham it boils down to one identifiable thing. “The market is at a poverty wage,” he said. “We know that poverty means that environmental concerns cannot be dealt with. In a sustainable system, every part of the system survives and thrives, and that’s not what we have going on.” Kilham believes the answer is equally simple: “Companies simply need to pay more for their raw materials.”
He cited kava as a case in point. In 1995, he said, kava was selling for $6 a kilo of dry powder, which might take a grower 10 years to tend and harvest. “Now thanks to market demand they are getting $40 per kilo. The difference is these communities now have thriving schools, better nutrition, and more access to medicine …. All of that came about just because, over time, we were able to drive a higher price for kava. And that’s great, when you consider at the end of the supply chain it doesn’t mean supplements are particularly expensive.”