The perks of the modern world have come at a cost: people in industrial countries around the world are succumbing to diseases of overconsumption. People are eating too many foods with man-made chemicals and too few nutrients. As a result, many have adopted a more Hippocratic approach to their diet. They’re turning – in increasingly large numbers – to nutraceutical products.
The word nutraceutical was coined in the late 1980s and is a union of the words “nutrition” and “pharmaceutical.” In general, nutraceuticals are defined as either foods or parts of foods that provide medical or health benefits, including the prevention and treatment of disease. Nutraceuticals can include natural and organic foods, beverages, personal care products and supplements, among other things. They come in pill form, powder packets, convenience food packages and others.
Because of increased consumer interest in nutraceutical products, there has been a significant increase in the number of nutraceutical companies in recent years. Additionally, many smaller companies are putting out limited numbers of a wide variety of products, leading to shorter runs and an increase in segmentation. For example, one company may sell a product designed for weight loss, and others for heart health, increased energy, mental clarity, improved digestion and so on.
Joel Carmany, president of Consolidated Label in Longwood, FL, USA, says that technology has played a large roll in the establishment of these companies. “The internet has allowed many new entrants into this market, so there are many small players, but also larger companies who continue with strong growth rates,” he says. “These larger companies do private brand products as well as their own line of nutraceuticals. The orders from large and small accounts are very repetitive because of the fact that most people who take a certain product stay on it for long periods of time, and this creates a constant reorder cycle for the labels.”
According to Terie Syme, operations manager at Atlantic Printing & Graphics in Burgaw, NC, USA, approximately 25 percent of her company’s business is in the nutraceutical market, and that has increased recently. “Private label branding continues to grow in the nutraceutical industry, increasing the need for smaller runs and a larger number of SKUs (stock keeping units),” she says. “Segmentation pushes the companies to focus on their target customers and customize their marketing to meet those needs. Many times, the only marketing the customer is utilizing is the label and packaging. Having the capability to adjust the look of the product to market needs is key. Not only for vitamins and supplements, but nutraceutical foods and beverages.”
Chris Freddo, vice president of New York Label and Box Works in Islandia, NY, USA, says that his company’s location has significantly influenced his business. “Approximately 20 percent of our work is on nutraceutical labels and cartons,” he says. “This market grows about 3 percent per year for us. Because Long Island is one of the capitals of nutraceutical companies, our customers range in size from very large market leaders to smaller specialty product companies.”
To meet the growing demands of a growing market, Freddo says his company made the strategic decision to expand their offerings. “In addition to an extensive array of label constructions and types, we now offer folding cartons. We expanded into this market because many products require a folding carton and a matching label. Dealing with one vendor for both saves time and money and also increases quality by providing the customer with boxes that match the labels without variation.”
Carmany of Consolidated Label adds: “there are new products every day, which are trying to segment the segments.”
As consumers continue to deal with health problems, many have made efforts to become educated about what’s in their foods, drinks and supplements. However, research indicates that the majority of people have struggled to keep up with the terminology and meaning on product labels.
Nielsen, a global provider of insights and analytics on what consumers watch and buy, conducted its 2011 Global Survey, which involved 25,000 participants in 56 countries. The study’s results indicate that nearly half of all respondents were trying to lose weight, and that approximately 80 percent were trying to lose weight through diet. Ironically, 59 percent of respondents indicated that they have difficulty understanding labels on food and supplements.
“Consumers around the world have healthy eating on their minds, and consumer packaged goods (CPG) marketers have an opportunity to help,” says James Russo, vice president of global consumer insights at Nielsen. “Consumer-friendly nutritional labeling can be a powerful marketing tool as consumers are hungry for easy-to-understand information.”
Nielsen’s Global Survey also indicated that consumers are skeptical about the accuracy and believability of health claims on food packaging. “Consumers have difficulty trusting more ambiguous attributes compared to the concrete, ingredient-based information,” Russo says. “Clearly there is a need and an opportunity for more education to help reduce the skepticism that is apparent around all parts of the globe.”
A recent report by Mambo Sprouts Marketing unveiled similar sentiments. According to the report, consumers are not only interested in things like natural and organic foods, but also skeptical. They look to the label for confirmation of claims. Specifically, they look for a third party’s verification that products provide the health benefits and maintain eco-friendly practices as claimed on their labels. The report even found that six out of ten consumers would be willing to pay up to 10 percent more for a product if it was certified by a trustworthy agency.
In addition to looking for ingredients that will improve health, many are also consulting labels to confirm that certain ingredients are not in a product. The Food and Drug Administration (FDA) has strict regulations regarding the acknowledgement of common allergens in a product, but according to a Leatherhead Food Research report, there are a “growing number of consumers who do not have a diagnosed food allergy but do believe that their general health improves with the omission of certain foodstuffs (for example, excluding wheat or gluten to avoid bloating).”
In an effort to make labels more understandable for consumers, the FDA regularly updates its regulations and specifications regarding requirements for nutrient content claims, health claims and statements of nutritional support for dietary supplements, among others. To put it simply: nutraceutical companies have to inform their customers about what’s in their product, and converters have to make it possible for them to do that.
So, how do converters do that? Don Earl, president of Overnight Labels in Deer Park, NY, USA, says that the increase in required information on labels has prompted some of his nutraceutical customers to think outside the box. “Labels have become more crowded. Many of our customers are switching to shrink sleeves to accommodate the extra copy. Since we print shrink sleeves and pressure sensitive labels, we can help our customers with either direction they choose.”
Freddo, of New York Label and Box Works, says resealable labels give nutraceutical customers the opportunity to increase the amount of information on a label without increasing the label’s footprint.
“They’re the cost-efficient answer to the problem of having a lot to say in a small space,” he says. “Whether our customers are trying to comply with extensive regulatory demands or are placing their product in multilingual markets, our resealable labels provide up to three times more space for additional copy or languages. We also offer a lower cost alternative by printing on the adhesive of the label and by applying a special coating that allows the label to peel and reseal for added copy area.”
Atlantic Printing & Graphics’ Terie Syme says: “The regulations and continuous changes further drive the needs for smaller runs in order to reduce customer inventory and risk purging stock. Digital printing is a huge benefit to the nutraceutical industry because of multiple SKUs, minimum inventories and so on.”
Carmany says that the consequences of not complying with FDA regulations has put internal pressure on nutraceuticals manufacturers, which eventually effects the converter. “The approval cycle is getting longer because more people at any given account want to sign off on the label look and copy content,” he says.
“There is a trend towards cost-effective labels and packaging with a more perceived value,” Freddo says, adding that his company accomplishes this by using specialty coatings, special effects and glow-in-the-dark inks, and various other specialty coatings that help customers separate their brand from competitor’s products. “We now have a Product Innovation department staffed with trained personnel who specialize in engineering and testing innovative products that help solve our customers’ problems and needs,” he says.
The increase in popularity of nutraceutical products has not only allowed companies to flourish, but has forced them to compete. Joel Carmany says that “the generic pharmaceutical look is gone, but remains for under-the-counter drugs that are not driven by retail eye appeal.” Nutraceutical labels, he says, are getting more sales oriented with high impact graphics and colors that pop.
“Many are going to silver and gold foil to get that premium look,” Carmany says.
Don Earl, of Overnight Labels, says his nutraceuticals customers – approximately a third of his overall business – have gone in a similar direction. “Years ago, the trend was to print more and more colors in order to stand out on the store shelf,” he says. “Now, the focus is more on decoration. We’re printing more foils and tactile-varnished labels.”
The next step in nutraceuticals
Unfortunately for most, the health problems of modern society aren’t going anywhere anytime soon. In all likelihood, consumers will continue to purchase – whether because of desire or necessity – products that are intended to enhance health and wellness. Fortunately for converters, that means this segment of the industry will likely provide steady work.
James Lowry, general manager of Lightening Labels in Denver, CO, USA, says that in his experience, many nutraceuticals labels have stayed the same in form and construction. However, “we anticipate customers starting to use QR codes for added content and marketing opportunities. With these changes, the labels would become more static and the site would be updated.”
Syme, of Atlantic Packaging & Printing, says that her research indicates hearty growth for this segment. “Preventative medicine and holistic options are attractive alternatives to traditional and expensive treatment and pharmaceuticals,” she says. “The market is expected to go from $151 billion in 2011 to $207 billion in 2016 (according to BCC Research). The ‘functional beverage’ industry is expected to grow quickly. I think this will continue to expand the label market, but we’ll see the need for shrink sleeves possibly grow faster than that for pressure sensitive.”
Do Earl believes that the industry as a whole will continue to grow, but more stringent regulations will cause the number of companies in this market to dwindle. “The fact that nutraceutical manufacturers now need to be GMP-certified will narrow the playing field,” he says. “Becoming GMP certified requires a lot of time, money and effort. Therefore, the barrier to entry in this field will be greater, and not as many people will venture into the marketplace.”
Carmany says, “The future of this market continues to be bright because the customer dollars flowing into it are increasing nicely.”