Leading global suppliers of vitamins and raw materials report a rebound in sales over the past year, driven by increased demand for fortifi cation of products ranging from functional foods to skincare creams. Heightened demand, coupled with increased cost of raw materials from China and a weakened U.S. dollar, has led to price increases that are likely to continue in the coming year. Global demand will continue to rise as consumer awareness of health benefits associated with vitamins and minerals grows, experts predict, potentially leading to shortages of some ingredients in the near future.

NBJ interviewed several top industry representatives to obtain their views on the vitamin/mineral marketplace over the past year, as well as their predictions for 2008 and beyond.

DNP International
"The vitamin and mineral market is very hot this year, and we predict that it will continue to grow," said David Ji, president of DNP International in Whittier, California. "This has been an amazing year with a third quarter sales increase of more than 66% over this same time last year."

Ji cites several factors fueling recent growth. Baby boomers reaching retirement age are choosing healthy lifestyle choices, including daily regimens of vitamins.

More vitamins and minerals are being added to beauty and skincare products, as the industry moves away from artifi cial colors and fragrances to market products from a health benefi t stance. In addition, beverage and food industries are adding more health value to their products.

Hottest items and popular applications include Vitamin C (antioxidant), ribofl avin (energy and skin), folic acid (maintenance of new cells), inositol (stress, nervous system), D-Calcium pantothenate (a coenzyme for skin disorders), biotin (synthesis of fatty acid and glucose), and cyanocobalamin (brain function). "These vitamins are used in a wide variety of products in many different industries, such as food, beverage, pharmaceutical, and
personal care," Ji noted. While perennially popular, these ingredients have escalated in status due to changes in product formulation and health awareness, he added.

DNP ranks among the top players in the U.S. vitamin and mineral supply market, along with BASF, DSM, Premium Ingredients and Univar, according to Ji's assessment. He estimates that currently 15-20% of the vitamin and mineral supply is being utilized in natural personal care products, with 35-45% in foods and 25-35% in nutritional supplements.

"I would estimate that 90% of the U.S. vitamin and mineral supply that goes to U.S. wholesalers is from Chinese manufacturers," Ji observed. "The same is true for personal care and food."

Asked to name the major challenges faced by his company over the past year, Ji cited "maneuvering around the melamine crisis and assuring our customers that our supply from China was rigorously monitored for quality issues. We still have great confi dence in our supply from China and we stand by its quality." A majority of DNP's products did "surprisingly well this year," he said, adding that DNP is far ahead of the industry average in growth. "The hard work over the last two years has really paid off for our company," Ji concluded. "Now that we're more focused and on track we can expect a lot more to come."

The company undertook several initiatives to build excitement and trust in its products. "Our fi rst was announcing our proactive approach to the melamine crisis by allowing our customers to test any products they purchased from us for free," said Ji.

The company is also looking at forging relationships with new laboratories in China. "Like all suppliers of raw materials, we are concerned with the quality of materials that we buy," said Kim Larsen, marketing coordinator. "What my boss has been doing is traveling throughout China for the last four to five
months to make sure that their products meet current standards and are up to code."

DNP also partnered with Starmark Laboratories to distribute Starmark's patented DiCreatine. In addition, DNP was among the fi rst companies to offer a fermentation grade of glucosamine, an important ingredient in products for vegans and vegetarians.

"We see an increase in prices in the coming year due to several factors, including the fact that the cost of raw materials from China is increasing," Ji predicted. He cited the rising Chinese currency against the U.S. dollar and the looming possibility of the Chinese government canceling the export rebate, which has historically been helpful in reducing the cost of exporting goods from China, as key factors behind the price hikes.

Supply has also been affected by China's implementation of a new energy-effi ciency policy, which has caused shutdown of many smaller manufacturers unable to meet the new codes. Demand is now outstripping supply,
further fueling price increases.

"With the population growing, the demand for vitamins and minerals has produced a worldwide shortage and will have a major impact on prices next year," predicted Ji.

Over the past year, competition has increased- including direct competition from DNP manufacturers. The latter "forced us to work more closely with our clients and our existing competitors," said Ji, who views competition as a double-edged sword. "On the good side, it keeps us on our toes. On the bad side, it may undercut our bottom line. DNP has always welcome competition as it keeps us working hard to fi nd the best ingredients at the most reasonable prices for our customers." He anticipates competition will become even fiercer in the coming year.

Looking ahead, DNP foresees opportunities to work on several strategic partnerships with vendors and customers as steppingstones to reach a higher level. "Our quality control measures will also play an increasingly important role in expanding our customer base," said Ji. "We look forward to 2008 as a year full of exciting challenges and opportunities."

He anticipates growth in 2008 will result from increased sales of vitamins, amino acids and nutritional supplements.

"The nutritional supplements industry is growing by leaps and bounds," he said, "and there will be many hot new products that will be added to the market next year, thus increasing the expected growth rate." Growth will also come from value-added services that DNP provides, such as cutting edge technology solutions including water soluble, grinding, granulating and blending, as well as tasteless, odorless and colorless options for the company's customers. "Other value-added services will also be announced next year," Ji revealed. "We want to help our customers every step of the way and we want them to be creative with their products. The possibilities are endless and we're ready."

*It can not be republished without the written consent of that magazine.