Supplement brands that follow procedures to ensure adulterated materials aren’t circulated to other companies will help clean up the industry, create better products and safeguard consumer loyalty. However, shifting operations to reject and destroy ingredients without paying vendors can be scary and risky, especially without these details outlined in supplier agreements. In this podcast, Jim Emme, CEO, NOW Foods Health Group, discusses how brands can help reduce adulteration with help from the Botanical Adulterants Prevention Program (BAPP). With Sandy Almendarez, content director, Informa Markets, Emme covers:

Emme will be speaking on this topic at SupplySide East trade show in Secaucus, New Jersey, June 23-24, 2020. 

Podcast transcript:

Sandy Almendarez, content director, Informa Markets: Hi and welcome to a Healthy Insider Podcast. I'm Sandy, and I'm excited to have Jim Emme on the phone. He is the CEO at NOW Foods Health Group. Hi, Jim!

Jim Emme, CEO, NOW Foods Health Group: Hi, Sandy.

Almendarez: We're going to be talking about challenges in the botanical ingredient supply chain, and how manufacturer manufacturers can help create change to help improve the supply chain. Jim will be speaking on this topic at our SupplySide East trade show in Secaucus, New Jersey, June 23-24, 2020. So, we are going to preview that presentation. I'm sure many of you know Jim, but he has been a member of the NOW management team since 1995, initially as chief of operations, an as president since 2014. Jim has a food science education, and decades of experience in the design and management of food manufacturing and distribution operations. Jim’s industry leadership positions included the Natural Products Association (NPA) board of directors, Alliance for Natural Health, and the Economic Development Authority of Western Nevada. Before all that Jim, was a farm boy from Indiana.

So Jim, in your experience, how much of a problem is botanical ingredient adulteration in the health and nutrition industry?

Emme: Well, thank you for the opportunity today, Sandy. I really appreciate it. Botanical ingredients have always had an element of adulteration and the 25 years that I've been in this industry, and also at the prior food companies where we did use botanical ingredients. I just don't think we all as manufacturers understood how prevalent it could be. As standards of identity for testing improve, as testing methods improve, as the ability to detect the sensitivity of the equipment improves, the problem becomes more and more prevalent. We certainly see it popping up now, more than ever, but it could be directly related to the fact that we're better at what we do in our testing capabilities.

Almendarez: Currently, what is the process that most manufacturers follow when they reject raw materials due to adulteration?

Emme: Typically the process is as followed: one can get a pre-shipment sample of an ingredient and test it, but you always have to test each lot that comes in to meet the requirements of DSHEA (the Dietary Supplement Health and Education Act of 1994) in the cGMP (current good manufacturing practices) set forth from that. And typically, what happens is it meets your specifications, it meets the criteria, it passes identification testing, and once it does, that, then the lot can get released to be used and the compounding or blending or dosage of a product. What will happen, though, if it is rejected or doesn't meet specs, typically what companies will do is you'll retest just to make sure that there wasn't a mistake made in the testing. However, if it does fail to meet the specs, typically what happens is the vendor will be notified about it, and some vendors accept the test results, others don't. Then a discussion is done, and an agreement is made to return the material to a vendor.

One challenge to that is if it's if it's a product that’s not adulterated, but just doesn't need the physical characteristics of a spec, or it's not at the level of biochemically that is in a specification sheet, it typically isn't a problem to return it. It may meet the specs of another manufacturer. The challenge comes into it ethically: is it proper to return a product that we know has been contaminated, counterfeited or any other means misrepresented? The challenge is, and this has been discussed for years, that if a manufacturer does that, what if it sent to another manufacturer who doesn't have the testing capabilities or isn't using it? As vigilant as many companies are, the challenge is that consumers are eventually going to get exposed to something that is not what it's claimed to be. The problem statement today and the challenge that we're we've asked ourselves internally, but also working with the American Botanical Council (ABC), the Center Of Excellence at Old Miss (University of Mississippi) with Ikhlas Khan’s [director, National Center for Natural Products Research, and director, FDA Center of Excellence, University of Mississippi] group as well as you UNPA [United Natural Products Alliance], AHPA [American Herbal Products Association], CRN [Council for Responsible Nutrition] and NPA is what should we do? Our point of view is that it's time for a change. It's going to be a difficult change for us as a company, but also probably for the industry as well. That's the problem statement we see: If one finds a product—sure you need to report the adulteration—but should we be returning those materials in place?

Almendarez: Is there a way to know, or to even estimate, how many times a botanical ingredient could be returned? I mean, I'm not in the manufacturing space, so I'm not sure, but I imagine that these ingredients would degrade over time and lose their effectiveness because they are botanical products. They can expire, so to speak, so can things just be rejected and sent back and rejected and sent back until someone finally accepts it?

Emme: Yeah, so that's certainly is probably the norm today in the supply chain and from the supply side to manufacturers. We can only speak for ourselves, but our perspective is that was our process up until about a year ago, when we started challenging ourselves on that and really being one of the early adopters of ABC’s Botanical Adulteration Prevention Program.

Estimating it, I would probably say that perhaps one or two times a month out of the thousands of ingredients that we use if we return them in years past. Typically, it's not the case. I've found that vendors rise to the expectations you set for them. And once they learn that you're not going to accept the substandard product, they typically will reputable ones will come around and take care of the problem, so that you don't end up having rejections, and you don't end up during returns. However, for whatever reasons a vendor or the original processor of a botanical product to either doing an extraction method or doing the pure herb or the aerial part or the root part, there's certain motivations. It clearly economic motivations are the biggest ones, so they'll be a change in a component of a botanical ingredient. From our own experience, it could be anywhere from 15 to 40 products a year that we would return in such a manner. It's definitely not the norm. We do 16,000 tests a month, so the good news is our supply side is typically working with us on things, but when it comes to an adulterated product, I'd say it's on the lower side per year. In years past that we've seen anywhere from 10 to 15.

Almendarez: And I imagine as NOW has stopped sending materials back that it's getting lower.

Emme: Yeah, and we're in a transition process right now. One of the challenges is, especially if a vendor as a broker and not the original processor or sourcing agent, as we set up our standards with Geo-Spotting for were the botanical was grown, as we set up our standard for the proper processing and materials and also the test  methods, and we've had a lot of help with Roy Upton [president] at the  American Herbal Pharmacopeia on looking at our methods, we do see that we are finding it more and more. One of the challenges is typically, and we viewed as adulteration—some may want to debate this topic—but for example, what we recently had a peppermint oil that had a replacement contaminant in it, and the component showed up in our testing. We doubled tested. We sent it out to a third-party lab, and we found out they had replaced part of the peppermint components with a lower quality, lower cost an almost like an aggressive weed that would emulate the peppermint oil, but it was not true peppermint oil. To us, that's pure adulteration, so that's probably one of the most recent ones that we've been through. We are planning on destroying that; we can't sell it to anybody else, it's a pretty big number into six figures.

You've got to choose to do the right things for the right reasons. Vendors get very nervous when we talk about this, and really, it's a training process that has to take place internally within our company as well as with our vendors. One of the big things that companies will have to do as they head this way is setting up supply agreements. It’s key to communicate up front. We don't want to catch a vendor off-guard and say, “Oh, wow. We've just changed her rules. What was good before is no longer good anymore.” We want to communicate expectations.

Recall earlier I mentioned that we found that vendors will rise to the expectations we sat for them, and that does hold true in the majority of cases. The key thing is to set the expectations up front that if we come across adulteration, we will at some point destroy the product. We're not going to send it back, and we will bill you for that, or we just won't pay for the invoice. That is the one that some vendors are having a tough time wrapping their arms around, but you know what Sandy? Most vendors are saying “OK. Tell me more about this? How can we work together on this? Gee, I really understand the value of it and it's great, What is the process that gets us to this point? Can we appeal? Can we do our own test to make that we’re convinced that it's improper as well.” And that communication is really where a lot of good things come out oven, so far. We're having a good experience with it, but it does take time.

Even some of our own procurement people have been challenged with this. They've got vendor relationships that—some of them—for 30 or 40 years said, “Wow, I've been working with the supplier for so long. I’ve never had a problem, now you're telling me it could be a problem,” so it makes everybody uncomfortable when we talk about this. But as we find common ground through the expectations, it actually isn't that tough and isn't that difficult.

The challenge of it is getting other companies to sign onto this, and we're so fortunate that we’re in a business that we're trying to help people support their personal goals. We as a company at NOW believe for nutritional purposes, there's exercise, there's good nutrition in your diet, and then, by the way, you can supplement to help with things to support your goals, but there are no bad magic bullets. The problem of it is even when consumers want to buy a natural product or dietary supplement to support their goals, they have to be able to trust us as an industry that what's on the label is really what's in the product. That's so fundamental to anything that we're doing. When we make that case to the supply side and the vendors, we get no pushback at all on it. Everybody that we've seen has an agreement on it, and those who aren't, well, we just don't want to do business with them.

The challenge of it is if there are manufacturers who aren't being vigilant, who aren't putting a stake in the ground, there will always be an outlet for the unscrupulous vendors to sell substandard products to. We feel as an industry that we ought to all work together to address that, and once we get fully aligned then all of a sudden, the supply chain will get fully aligned because they’ll understand that that's the bar that they have to get over to provide high-quality ingredients star industry.

Almendarez: So, speaking of that alignment, what work is the Botanical Adulteration Prevention Program (BAPP) doing to prevent adulterated materials from re-entering the marketplace, and how can brands help achieve this initiative?

Emme: Well, the first thing of it is, there's been a lot of great work on it. About three years ago, Mark Blumenthal, a longtime head [founder and executive director] of the American Botanical Council, got a group of manufacturers together at the NBJ [Nutrition Business Journal] Summit and said, “We really need to put a stake in the ground on this.” Mark talked to me about it and several others, such as Christine Burdick-Bell [vice president and general counsel] of Pharmavite, who's done some outstanding work. Michael as well as from a consulting side. They've really worked hard to put together some document—that we've also reviewed and others in the industry had reviewed—to set up templates for these supplier ingredients and to set up the rules from which this process would work. That became quickly The Botanicals Adulteration Prevention Program. Now, the documents aren't fully complete, yet they’re still being worked on, but we as a company adopted many of the principles to incorporate into our supply agreements we've established and are rolling out. That that is one way I would urge other manufacturers to get involved in this and look at what the BAPP is all about.

There's some really good work that's gone into this, and if it’s a standardized method that people can at least adopt the main principles of, even if they don't want to use these documents, all of a sudden, we've got some pretty good alignment in place in our industry. And the other thing that they can do is to help fund this and the industry efforts through the BBAPP

The biggest place is to be curious, ask questions, see what this is all about, learn from it, and then look at it and talk to other companies like ourselves and other participants in the BAPP. They can find out how they can make a difference to really support the entire industry’s goal of being authentic, truthful transparent, as well as helping consumers meet their goal through supplementation, along with their other personal efforts to improve their lives and to lead healthier lives. It's a great opportunity for everybody, and it may seem scary at first to have such a drastic change. But again, as we communicated and as we rolled out with our own experience, it's been easier than we thought it would be. That said, though just as ourselves as a company, we have thousands of vendors with thousands of ingredients, so it's a lot of work for our supply chain and quality people to get in place. But we feel it's worthwhile, and it's going to make our industry better, and it will make all our brands better.

Almendarez: Great well. Thank you so much. I really applaud the work that you and your colleagues are doing at the BAPP, so thank you for that.

Emme: Well, you're very welcome Sandy and thank you for the opportunity today

Almendarez: For those listing who want to hear more from Jim, he will be speaking on Tuesday, April 21 at 12:30 to 1:00 p.m. at SupplySide East in Secaucus, New Jersey.