Editor’s note: This is an update of a previous article by this author, published in HerbalGram issue 126, on COVID-19-related supply chain challenges and disruptions during the first few months of 2020. This update was first published in the November 2020 issue of HerbalEGram and is based on interviews conducted in fall 2020.
Many members of the natural products industry are reflecting on 2020 and the changes brought on by COVID-19. The pandemic has created challenges and perhaps some clarity that may not have come otherwise. Now, the questions are: What has the industry learned, and where does it go from here?
The impacts of COVID-19 have been unparalleled. Companies have faced unprecedented demand and ingredient supply shortages, ongoing logistical and transportation challenges, and pressure to adapt business practices to a rapidly evolving world while also ensuring employee safety and product quality. As companies grapple with continuing challenges and uncertainty, they also are finding better ways of doing business in this new “COVID normal.” Some are building stronger relationships, developing more nimble business strategies, and looking deeper for responsible solutions to carry them forward in a time of extraordinary possibilities.
In fact, the herb and dietary supplements industries have fared better than many others, with companies in this sector being deemed essential by the US government during the early stages of the pandemic.1 Interest in botanical health remedies is surging. In the first few months of 2020, demand increased for herbal products traditionally used for immune support, particularly in markets where traditional medical protocols like traditional Chinese medicine (TCM) and Ayurveda are prevalent, including Thailand, India, and Tunisia.2-4 There were also reports of panic-buying of herbal products in countries like Sri Lanka.5
Statistics show significant increases in the use of herbal products in Western markets as well. For example, US dietary supplement sales in March 2020 were 39% higher than in March 2019, with sales still up by 14% for the four-week period ending mid-June compared to the same period in 2019, according to SPINS and Nutrition Business Journal data reported in the American Botanical Council’s Herb Market Report in HerbalGram issue 127.6 Herbal supplements commonly used for immune health saw some of the most dramatic increases during the first six months of 2020 compared to the same time period in 2019. For example, products containing elder (Sambucus nigra, Adoxaceae) berry, which is known for its support of upper-respiratory function,7 saw triple-digit sales growth of 126% in the US natural channel and 241.4% in mainstream outlets in the first half of 2020.4 Well-known immune booster echinacea (Echinacea spp., Asteraceae) was another big seller during this period, with natural channel growth of 70.2% and a mainstream surge of 90.9%, according to the HerbalGram report.
Though this is a positive development for botanical products, industry stakeholders and researchers have expressed some misgivings about the effects of this growth. It has already had significant impacts on the herbal supply chain and could have consequences on the long-term availability of plant ingredients, unless stakeholders take action to address sustainable cultivation and harvesting of these plants.8 COVID-19 cases in the United States were declining at press time for this issue of HerbalGram (early February 2021), but the situation remains volatile, and herb supply companies and manufacturers are working diligently to understand their vulnerabilities as they look ahead.
Then and Now
Executives in the herbal and dietary supplement space who were interviewed for this article in fall 2020 point to overall uncertainty as the ongoing challenge. “The impact of the early days of the pandemic [was] unprecedented, … [and we did not know] what to expect from one day to the next,” wrote Ajay Patel, founder and CEO of Verdure Sciences, an Indianapolis, Indiana-based supplier of botanical extracts made in the company’s factory in India (email, September 29, 2020).
For suppliers, a ripple effect started with China and other Asian countries and then moved on to Europe, North America, and South America, Patel recalled. He noted that it was “extremely challenging” to operate a business in a global economy and “navigate and adapt to the variations in national and local mandates from country to country.”
Patel wrote that, comparatively speaking, “global logistics have improved significantly, although options for air freight in certain markets like India are still limited and very expensive.” While supply chains have improved, Patel did express new concerns about availability and soaring prices of several key botanicals like ashwagandha (Withania somnifera, Solanaceae), holy basil (Ocimum tenuiflorum, Lamiaceae), and bacopa (Bacopa monnieri, Plantaginaceae), due to increased demand for these adaptogens (generally defined as herbs and fungi used to help regulate stress). “Factories, for the most part, have resumed to full operational capacity,” he added. “However, we still see challenges with factory workers getting to work as a result of restrictions in communities where COVID infections are high.”
Shaheen Majeed, president of Sabinsa Worldwide, had similar observations. The manufacturer, supplier, and marketer of herbal extracts, cosmeceuticals, dietary supplements, and other products, headquartered in East Windsor, New Jersey, experienced difficult logistics and labor shortages, although he noted that both have improved since the early days of the pandemic. “The labor shortages we experienced early on … are now starting to taper off, and more people are coming back to work,” he wrote (email, September 24, 2020). “We did manage to keep our production going but are glad to have more people back. We are building our eighth and largest facility, which came to a complete stop for the first two months of the pandemic, but now it’s getting back on track.”
The stories are similar across the industry. Everything has been a learning experience, wrote Beth Lambert, CEO of Herbalist & Alchemist, a Washington, New Jersey-based manufacturer of herbal extracts and formulas for the health practitioner and natural food channel (email, September 24, 2020). “Everything was changing quickly, and everyone was just trying to wrap their heads around this new situation without much information.”
Tracey Seipel, ND, CEO and head formulator of the Seipel Group, a Brisbane, Australia-based maker of herbal formulas, noted that as COVID-19 spread around the world, down-the-line effects became difficult to anticipate and, at times, were visible only in retrospect (email, October 2, 2020).
While some of the issues faced early in the pandemic have evolved or abated, others remain. “The good news is that business is strong across the industry because people are looking for products to support their health and immune systems, in particular vitamin C, zinc, echinacea, and elder berry. Those ingredients can at times be hard to come by,” said Travis Borchardt, vice president of regulatory affairs and quality control/quality assurance at Nature’s Way, headquartered in Green Bay, Wisconsin (oral communication, October 7, 2020). “So, an adequate quantity of quality material may be hard to find, making the supply chain still a bit challenging. Demand in March  was crazy for the whole industry. We now think of March as an extra month in the year — basically it counted for two months of demand. Even now, as supply is catching up, demand continues to be stronger than what we planned for, so we are still in catch-up mode.”
Global supply regions seem to be recovering, but anticipating the future is increasingly difficult. “China has bounced back strongly since the beginning of the pandemic, and things are relatively normal,” wrote Wilson Lau, vice president of Nuherbs, an Oakland, California-based importer of Chinese herbs (email, September 21, 2020). “I think the new challenge is projections — how much material will our customers, and their customers, need? We can’t just turn on the spigot, which is why forecasting is important. But no one really has any good projections because we don’t know what the demand will be for this winter. Will it be like March-May of , slightly elevated, or even more demand?”
These problems have caused many companies to second-guess their strategies. Tal Johnson, CEO of Herb Pharm, a Williams, Oregon-based manufacturer of liquid herbal extracts, noted that isolated ingredient shortages are a part of normal business, but along with the increased demand, it was more difficult for the company to maintain the inventory buffer over summer 2020 that it prefers as it headed into the fall and winter seasons (oral communication, October 1, 2020). “We could have some challenges anticipating how much we need to prepare for and how much we should flex up for COVID.”
Early on, “suppliers across the category struggled to get a clear understanding of their supply chains and potential risks, which led to material shortages and longer lead times,” noted Jose Feito, divisional vice president of strategic sourcing for Pharmavite, the West Hills, California-based parent company of leading dietary supplement and herbal brands such as Nature Made® and MegaFood® (email, October 5, 2020). “Today, suppliers have adjusted to the uncertainty and have a better understanding of risk,” he added. “Yet, they still continue to face challenges shoring up the supply chain to address short-term demand spikes, while at the same time, increasing lead time also presents challenges.”
Among the variables is the number of new people trying herbal products during the pandemic and how many will continue taking these remedies. “There will be some drop in demand, and it will probably settle somewhere in between,” Johnson suggested. “So, we are trying to decide what to do to build capacity temporarily [rather than] permanently.”
The evolving situation has left companies confronted with a new landscape in which agility and planning are key components. “Everyone had an abrupt learning curve when the pandemic began,” wrote Jim Emme, CEO of NOW Foods, a Bloomingdale, Illinois-based manufacturer of natural supplement products (email, September 21, 2020). The company has a solid system in place to safeguard the health of its team members, which is a top priority. “NOW has invested significantly in more manufacturing capacity, but it takes time to put this into operation,” he wrote. “Working with vendors and contractors in this COVID-19 environment means everything is slower and more difficult.”
To help manage inventory and ordering, Emme added, the company has taken care to be transparent with customers to proactively keep them informed about when specific items will be available and from which warehouse. On the raw material side, he said, supply has greatly improved, but NOW, like most of the industry, is still contending with some packaging material shortages.
Verdure’s Patel sees progress regarding risk mitigation, especially as the company’s business has grown with the increasing demand for several key Ayurvedic botanicals. “We’ve committed to expand our manufacturing footprint, both by adding new equipment to handle the growth in future demand, as well as adding new geographical locations,” he wrote. Verdure has engaged with growers to expand its farmer base and plantings in certain locations to mitigate risk of varying government mandates for pandemic-related shutdowns or interruptions. “As part of sustainability initiatives, we’re working with our growing communities to initiate programs for how best to support them post-COVID and the new challenges we face,” he wrote.
Prioritization and backup plans for the unexpected also have become critical. “We worked with David Winston, our formulator, on what we needed to prioritize to keep in stock during the early days of COVID,” Lambert recalled. “We now have very few out-of-stocks. Farmers and suppliers really responded to our requests to get more herbs to us quickly.”
It is challenging, Lambert added, to establish a balance between overproducing and preparedness. She noted that the company is cautiously stocking close to its higher projection numbers and has good supplies of raw materials to work with. “Long ago, we learned that due to climate change, we had to diversify our botanical suppliers geographically as much as possible,” she wrote. “This has been helpful during this time.”
Before the predicted fall and winter wave of the pandemic, many companies were shoring up procedures in the workplace; continuing to work at home; bolstering projections for immune support, stress, and adaptogen products; and ensuring adequate supply, processing, and packing materials.
For example, Green Bay, where Nature’s Way is headquartered, was, in mid-October 2020, labeled a COVID hot spot.9 “So we are already in the second wave,” Borchardt said at the time. “We have been operating all along as if this is not a short-term pandemic, but will last a while, and so we must design a work practice and relationships and a supply chain with the thought that this will go on for some time.”
Given the rise in cases and the strain on local hospitals in the Green Bay area at the time, Borchardt said the company was working to ensure safety but also to continue to supply its products. “One thing we take very seriously is the ability to positively impact lives and health of people during this time. So, we have strict policies on social distancing, personal protective equipment, and employees entering healthy without symptoms. Our mission is to continue to provide products to the market.”
While preparing for the future has been a priority for many companies, other challenges have also represented a persistent grind. For most industry companies, whether they use internal manufacturing facilities or contract manufacturers, the available human resources and manufacturing capacity have impacted industry operations and production. Keeping people safe is the top priority.
Johnson noted that, early on, Herb Pharm was primarily concerned “about staying in operation and continuing to make anything in a pandemic. It was not whether we could get more supply or make enough, it was ‘can we operate in this environment?’”
“Overnight, we became public health officers with no training,” he added. This meant many late-night phone meetings, researching information from the Oregon Health Authority, networking with peers, and sharing protocols. “Many companies shared information with us, so there was a huge spirit of helping. People let down their guard, in our experience, and shared the work we were all doing to help us get up to speed and get better faster. One large company loaned us their company doctor to help us with protocols and [offered] many suggestions,” Johnson said.
Keeping employees safe has required many new procedures for suppliers and manufacturers around the world, including rigorous cleaning and sanitizing procedures, health screenings and daily temperature checks, and use of protective masks and social distancing policies. For Nature’s Way, these modifications impacted business operations, Borchardt noted. The strict social distancing between people in the factory, he said, led to reduced capacity and product in the face of higher demand, as well as some reduced service levels. “We’ve done the best we can to keep up while also managing our business and manufacturing facility in a way that says, ‘safety first.’ And we are continuing to do this,” he added.
Sabinsa also took serious measures to reduce the chance of infection and provide peace of mind in the workplace, all of which are still in place, Majeed noted. “The temperature of each employee is monitored every day before reporting to their workstations. The company has installed additional handwashing facilities and implemented other increased sanitation practices. Regular health check-ups are being conducted … to identify any infections early on to minimize the potential for virus transmission to others.”
Many companies anticipate that these procedures will be necessary for a while yet. “I do [anticipate] some of these being in effect for the long term or permanently, especially work-from-home or hybrid roles,” said Scott Benedict, vice president of supply chain operations of the Manchester, New Hampshire-based brand MegaFood (email, September 23, 2020). “I expect us to keep up with the additional cleaning and sanitizing protocols. I would like to see masks and social distancing relax once a vaccine is available and the threat of this subsides.”
Many Herb Pharm employees began working remotely early on and many still are, Johnson noted. “We improved our network infrastructure, bought a lot of laptops, and started using Microsoft Teams, which has been very helpful in the long run,” Johnson said. The company also made some physical changes in its facilities, such as relocating the shipping department to another building, to better enable social distancing.
Herb Pharm also made free flu shots available to all staff in September 2020 and installed high-efficiency particulate air (HEPA) filters throughout its facilities. The company anticipated some employees would develop flu-like symptoms in the fall and winter, and providing flu shots “would help reduce the number of false alarms,” Johnson explained. The HEPA filters, he added, give no guarantee, but represent an additional measure of protection. They were also beneficial because Williams was near the late-summer wildfires in southern Oregon, and the filters helped reduce the amount of smoke indoors, which allowed the facility to keep running during the worst of the fires.
Beyond making physical changes, it also has been important to communicate the reasons for the changes, Johnson explained. “These protocols are very [difficult] to maintain and very expensive, so we had to help [employees] understand why we were doing what we were doing to help them feel safe.”
It was important for Herb Pharm to safely limit disruptions so it could stay in operation. Because the company is the largest employer in Williams, this was crucial for the community, especially as the wildfires further impacted the region. People who need to quarantine can still work while in isolation, Johnson noted. “It takes everyone in the company following the protocols and understanding why they protect our ability to make [products]. Having that culture is important.”
Changes in human resources have been prevalent throughout the supply chain and have required herbal companies to be more diligent to ensure proper herb identification and quality. “We have seen human error in areas that would have been extremely unlikely prior to the pandemic,” noted Seipel.
Seipel experienced an issue with material from a US warehouse that was short-staffed. “The warehouse could only have one employee in attendance, so the logistics manager was performing the role of the warehouse manager. They sent material to us that looked like it was correct to the logistics manager, except that it was the wrong plant part. It is these human errors that [may] not have happened pre-pandemic when all staff was working. Of course, it was detected at the next step and resolved, but it all adds further delays to our production,” she said.
The lack of human resources has had other impacts. For example, the pandemic delayed issuance of Native Plant Harvesting Permits for saw palmetto (Serenoa repens, Arecaceae) fruit by the Florida Department of Agriculture, as their offices closed and their staff worked from home, according to Guy Woodman, US-based general manager of Euromed S.A., a producer of standardized herbal extracts based in Barcelona, Spain (email, September 28, 2020). In addition, he said, banks in Florida were closed, reducing access to cash needed to purchase saw palmetto fruit.
Lockdowns and Logistics
Lockdown orders have impacted both interstate transportation and international shipping, with limitations on air and sea vessels and the closure or reduction of operations of ports. While some of these issues have improved, they are still challenging, especially for suppliers.
“Logistics and transportation remain the biggest challenge for [Sabinsa] during the pandemic,” wrote Majeed. “When India first went into lockdown, interstate transportation was closed off for several weeks. Each state had to act independently to meet the state population’s needs for food and everything else, for some time.” This was problematic for Sabinsa because much of its turmeric (Curcuma longa, Zingiberaceae) processing takes place in the southwestern state of Karnataka, but the turmeric raw material itself is largely from the state of Tamil Nadu, located on the southeastern coast of the subcontinent.
Some of these issues, Majeed explained, were resolved as the Indian government recognized “essential” businesses and granted permits for vehicles to cross state lines. Migrant workers were also hit hard during this time, and most had no choice but to return home to their villages, causing shortages of labor everywhere in India, Majeed recalled.
Even as some of these challenges eased, others took their place. Shipping prices increased, Majeed noted, but Sabinsa prioritized getting deliveries to customers during the early high-demand days of March and April 2020 and did not pass these costs along.
Ettore Milano, director of procurement for Indena SpA in Milan, noted that increasing sales of ingredients for immune health, which surpassed demand for other products, “created challenges with some of our raw material (biomass) suppliers,” he wrote, adding that he expected the trend to continue in 2021 — even with a vaccine (email, September 22, 2020).
Finished product manufacturers are changing their product development patterns, with some companies using approved ingredients to expand their pipelines and meet consumer demand or rapidly expanding their product portfolios with new offerings, Verdure’s Patel wrote.
Clinical trials and other research were also disrupted when some research organizations, medical centers, and universities either closed or focused on COVID-19 research. “Euromed has experienced delays in clinical studies for new products that were in development,” wrote Woodman. “The COVID outbreak has disrupted recruitment and participation of subjects for clinical trials, delaying new product introduction.”
Understanding the Supply Crisis
High demand, especially for immune-support ingredients, and logistical and labor issues have highlighted vulnerabilities — and the overall resilience — of the herbal ingredient supply. Many companies predict these issues are likely to continue for the foreseeable future and will have an ongoing impact on raw material prices, product development, quality, and the potential long-term availability of certain medicinal and aromatic plants.
Growing evidence suggests that some of these medicinal plants may be of value for treating COVID-19. According to a June 2020 report called “The Invisible Trade: Wild Plants and You in the Times of COVID-19 and the Essential Journey Towards Sustainability,” from TRAFFIC, a wildlife trade monitoring network, a combination of TCM and Western treatments were used in China to treat COVID-19 patients with varying levels of success. An official COVID-19 treatment protocol issued by the National Health Commission of the People’s Republic of China included 10 TCM formulations and 13 proprietary Chinese medicine formulations.8 More than 125 specific plants are used in these formulations, according to the TRAFFIC report, including licorice (Glycyrrhiza spp., Fabaceae) root, Asian ginseng (Panax ginseng, Araliaceae) root, and magnolia (Magnolia officinalis, Magnoliaceae), and many of them are protected either in China and/or listed in CITES Appendix II, which includes species that are not currently threatened with extinction but may become so without trade controls.10
For now, availability of Chinese herbs seems to have normalized. Subhuti Dharmananda, PhD, founder and director of the Institute for Traditional Medicine in Portland, Oregon, noted that March through May 2020 saw a depletion of Chinese herb supplies in the United States (email, September 9, 2020). Dharmananda noticed low summer availability of the Asian herb andrographis (chuan xin lian; Andrographis paniculata, Acanthaceae), for example, which has been shown to have antiviral properties.
“There remains a high demand in the US for Chinese herb formulas that are deemed immune enhancing or antiviral or [beneficial for] treating lung disorders, and some companies have come out with prepared forms of formulas mentioned in reports as being used in China for [COVID-19],” Dharmananda wrote.
Other herbal ingredients and formulas also are seeing interest. Sabinsa, Majeed wrote, saw high demand for ingredients including curcuminoids from turmeric rhizome extract, amla (Phyllanthus emblica, Phyllanthaceae) fruit extract, andrographis leaf extract, ashwagandha, frankincense (Boswellia serrata, Burseraceae) gum extract, ginger (Zingiber officinale, Zingiberaceae) rhizome extract, holy basil/tulsi extract, rosemary (Rosmarinus officinalis, Lamiaceae) leaf extract, and spirulina (Arthrospira platensis, Microcoleaceae) extract, as well as various vitamins and minerals.
It has been a big challenge, Verdure’s Patel wrote, “to get consistency in the quality of raw botanicals, which we use to produce our standardized extracts. In addition, due to increases in demand for several botanicals [at the beginning] of the pandemic, coupled with the pandemic-related harvesting and logistical challenges, we’ve seen a steep increase in cost of several key botanicals like ashwagandha, holy basil, bacopa, and tinospora [Tinospora cordifolia, Menispermaceae].”
Similarly, Gaia Herbs faced a large spike in sales for its immune-related products, which stressed its supply chain early, wrote Chase Millhollen, global sourcing manager for the Brevard, North Carolina-based herbal formula manufacturer (email, October 2, 2020). The company, he noted, experienced ongoing shortages of Echinacea angustifolia and E. purpurea root because of the massive global demand. “Even though we grow echinacea on the Gaia Farm, we must also work with key partners to keep up with demand, as we currently cannot grow the quantity needed for all our products with just the yield from our fields,” he wrote. “Since our biomarker specification for these echinacea varieties is very high to produce a therapeutic finished product, it has been challenging to find enough suppliers that can meet these stringent standards.”
These shortages, he added, have prompted some out-of-stocks and backorders for Gaia’s echinacea-based products, because the company would rather be out of a product than use inferior ingredients. “Fortunately, the harvest for echinacea root is just around the corner, and we expect the situation to greatly improve as we harvest from both the Gaia Farm and procure additional material from our trusted partners in North America and Europe,” Millhollen wrote.
Availability of these plants and logistical issues in some countries are leading many companies to seek new supplier partners. The situation in India has prompted Gaia to pursue ingredients in other parts of the world that have similar climates and can grow the same herbs, such as South America. “This risk mitigation practice was already part of our supply chain risk assessment before COVID, but it is now an even bigger focus during the pandemic and beyond,” Millhollen wrote. For example, the company will now source critical supplies of turmeric not only from India, but also Indonesia and Nicaragua to ensure reliable sources for its Turmeric Supreme® line.
Adulteration and Other Concerns
With supply chain issues around the world and ongoing shortages, many companies are concerned about adulteration. As the largest brand holder of an elder berry product, Nature’s Way has been particularly concerned about elder berry raw material. “[W]e have had significant out-of-stocks due to unplanned demand,” Borchardt said. “That is where we have seen challenges around quality and testing that we have done.”
As part of an effort to find additional elder berry supply, Nature’s Way tested 25 bulk elder berry extracts and eight finished products available in the market and released concerning results in September 2020.11 Borchardt explained that the company developed specific methods to detect Sambucus nigra, the European elder berry species used in the Nature’s Way product, as well as another method to detect other anthocyanins that might be added to impact a product’s potency, such as from black rice (Oryza sativa, Poaceae), black soybean (Glycine max, Fabaceae), and blueberry (Vaccinium spp., Ericaceae).
“Once we developed these methods, we tested 25 sources and found that about half were adulterated, containing sources of anthocyanins other than from elder berry — 20% actually contained no elder berry at all. So, this is a very concerning set of findings,” Borchardt said, adding that the most common adulterant was black rice.
These concerns are well founded, according to Elan Sudberg, CEO of Alkemist Labs in Garden Grove, California, writing in an August 2020 blog post. He noted that “as supply chains are strained and compromised, the frequency of testing is up, which speaks to the wisdom and integrity of our clients. Perhaps unsurprisingly, though, given the unprecedented circumstances, we have noticed some emerging trends and the failure rate is on the rise.”12
Sudberg provided a list of 29 botanicals that are failing more consistently than normal. Other than the herbs previously noted as in short supply, Alkemist’s list includes barberry (Berberis aristata, Berberidaceae), cannabis (Cannabis sativa, Cannabaceae), garcinia (Garcinia cambogia, Clusiaceae), garlic (Allium sativum, Amaryllidaceae), red clover (Trifolium pratense, Fabaceae), and stevia (Stevia rebaudiana, Asteraceae).
The demand may not only affect cultivated botanicals but also lead to overharvesting of wild plants. “As medicinal plants receive increased scientific and commercial attention, there is increasing pressure on the wild plant populations from which many medicinal plants are harvested,” wrote Majeed. He noted that a good example is Indian kino tree (Pterocarpus marsupium, Fabaceae) heartwood, which has been shown to support healthy blood sugar levels and is extracted from trees grown for more than 30 to 40 years. As modern research validates the traditional uses of these plants, growing demand leads to increased harvesting.13
“We began a pioneering reforestation program for this species several years ago, but that’s just one botanical,” Majeed wrote. “Overharvesting has placed many medicinal species at risk of extinction. Commercial exploitation has also sometimes led to traditional medicines becoming unavailable to the indigenous peoples that have relied on them for millennia.”
The time for suppliers to act is now, Majeed added, citing that boswellia, or Indian frankincense, the resin from the B. serrata tree, is under increasing pressure, so planting boswellia trees is now a priority. He added that ashwagandha supply is also strained and suggested that large-scale cultivation should be taken up by private companies to ensure global demands are met.
Extra Due Diligence
“In times of high demand for certain herbal materials, there is always a risk of getting substandard raw materials,” Majeed reiterated. “However, our screening and [quality control] team are well trained to protect us, and our customers, from this happening with any Sabinsa products.”
Although they do not have confirmed reports of adulteration, Verdure is concerned about the increases in demand for botanicals sourced in India, such as ashwagandha, holy basil, shatavari (Asparagus racemosus, Asparagaceae), and tinospora. “We are closely following these trends and being extra cautious with our purchase of these botanicals,” Patel explained.
Nuherbs’ Lau wrote: “We are constantly monitoring ingredient purity to ensure that our ingredients are not adulterated. Our systems are quite robust and we are confident in our ability to ensure identity, quality, and purity of all of our materials.”
Lau added that Nuherbs is constantly learning and looking for ways to improve its systems. “Adulteration is like a living evolving being, with people constantly trying new things to fool customers, so you have to be constantly learning and keeping vigilant,” he wrote.
Euromed’s Woodman echoed that thought. “Producers of adulterated botanical extracts have become more sophisticated in their mixing of species and addition of synthetic compounds to emulate the natural product,” he said. “This requires a level of analytical expertise not present at typical US contract laboratories. As pricing pressure on … herbal raw materials has increased, and subsequently the price of standardized extracts, the attractiveness of adulterated lower-cost extracts has increased.”
There also is concern within the industry that adulteration could escalate as the products remain in the spotlight. “We are seeing the dietary supplement category, from a business perspective, continue to be attractive,” said Borchardt. “The pandemic opened the eyes of consumers who prior to the pandemic were not participating in the category…. With increased business opportunity comes the risk of opportunistic players — those looking to take advantage of the category … by selling [inferior products].”
Furthermore, vetting of suppliers and even US Food and Drug Administration (FDA) inspections often are being done virtually to protect the health of workers and inspectors. This, Sudberg wrote, is like giving adulterators a free pass.11
Though the challenges are significant, they also present opportunities for the industry to reflect, learn, and mature. “I am always concerned when there is change, and especially when you weren’t prepared for it,” wrote Lau. “However, the digital tools that we have access to today have helped overcome a lot of problems. We know [our suppliers] and their facilities well, so for us it is less of an issue than for [companies] that had to bring in new vendors under virtual inspections.”
According to Gaia’s Millhollen, before the pandemic, his team regularly visited the farms, fields, and even local communities to see how everything is done, make sure that positive business practices are followed, and look for suppliers that adhere to environmentally and socially responsible business practices and natural resource conservation.
“[In 2020], due to the pandemic, our sourcing team [was] not able to travel to do these in-person inspections,” Millhollen wrote, adding that this is where long-standing relationships with trusted suppliers become even more important. “To become an approved Gaia Herbs supplier, a company or farmer must go through a rigorous qualification process where we test initial batches of herbs to ensure the material’s safety and potency. In addition, Gaia Herbs has created our own DNA-validated botanical reference library that we use to confirm identity of our raw materials, and all materials … must meet our strength claims, such as biomarkers, and also meet our specifications for pesticides, microbes, and heavy metals.”
Even though Gaia Herbs works with long-term suppliers, the company still verifies every ingredient used and shares the results at meetyourherbs.com, an herb traceability platform.
Such programs take time, commitment, and investment. Over the years, Patel wrote, Verdure has emphasized the chain of custody, which “is a complex process and involves the development of validated analytical tools, investment in analytical instruments, technical expertise, agricultural programs, and establishment of a reliable grower/supplier base for raw botanicals, with intrinsic focus on sustainable initiatives. Additionally, as the industry evolves and matures, so must we, and we must be willing to embrace the sheer challenges of not only events such as the COVID-19 pandemic, but also climate change and sustainability.”
More recently, Verdure has put more focus on mitigation and maintenance of its supply chain with dedicated teams to oversee compliance of not only its manufacturers, but also all aspects of its supply chain. “Most importantly, in this new COVID era, we’ve enhanced our supply chain oversight via virtual audits as frequently as on a weekly basis,” Patel wrote.
Ramping up Resilience
The good news, according to Millhollen, “is that problems that have always been in the supply chain have now been brought to the surface and are being analyzed and corrected.”
However, the answers are not clear cut and many issues should be considered, such as changing weather and environmental conditions and their impacts on crop performance and quality, as well as the evolving global trade situation and variable relationships with specific supplier markets, all of which might make the case for more and varied supply. However, said MegaFood’s Benedict, too much variety is not always good. “You end up with a lot of products with very small amounts of lots of ingredients.”
It is likely that solutions will require both individual company foresight and broad industry coalition.
Gaia Herbs is looking at how to improve the variety and resilience of its North American supply. “With continued international supply chain issues, dual sourcing has become even more important,” Millhollen wrote. “Our goal is to try and dual source all of our key herbal ingredients. We look for multiple suppliers from different parts of the world and prioritize trying to find a North American source as one of our approved vendor options.”
This strategy, Millhollen explained, helps minimize risk in the supply chain, especially if there is a bad harvest in one part of the world and one of the company’s suppliers cannot produce the supply of materials needed. “It also helps when dealing with a situation like the current COVID pandemic, where there have been government lockdowns in other countries causing lengthy shipping delays, so having a North American supplier option may be critical to getting the ingredients needed to keep products on the shelf,” he said.
“The negative is that sourcing from multiple vendors from around the world typically comes with increased costs,” Millhollen added. “However, we have been willing to accept these increases to build stronger variety and resilience into our supply chain.”
Lau added: “I think we can increase our inventories as an industry to create a buffer against issues in the supply chain, whether that be a pandemic or some other natural disaster. We need to work with each other in a collaborative fashion, so we can build in buffers, grow or source enough material, and move away from just-in-time ordering, which seems more capital efficient but [can lead] to out-of-stock situations.”
The herbal products and dietary supplements industries were fortunate in 2020, despite many challenges. Gaining a better understanding of the supply chain, becoming more open to broad collaborations, and working differently and more efficiently are just a few examples of the how the industries progressed in 2020.
“During what has been an unprecedented year for all manufacturers, we have gained a much deeper understanding of second- and third-tier supply chains,” wrote Pharmavite’s Feito. “In addition, we are collaborating more closely with our suppliers, which has been critical to ensure our supply. For instance, we are providing sourcing assistance to support our supply partners and contract manufacturers.”
A top takeaway for Milano at Indena is that companies with strong organizational models perform well even in difficult times. “The other important message is that customers’ education on the quality of products is very important as the visibility of single ingredients is [increasing].”
Patel added: “The onset of the pandemic has reminded us of the importance of supply chain alignment and mitigation and the impact of climate change, which has been more evident in recent years than ever before. This, coupled with the [projected] post-pandemic growth of our industry, signifies the need for checks and balances across our supply chains and is also a reminder to brand owners that continuous investment and support in ingredient supply partners is necessary to ensure growth and sustainability of the industry as a whole.”
Companies are working smartly and using technology more efficiently, but most are also realistic. “We are all in the same boat, and we have all had to appreciate that some delays are unavoidable,” wrote Seipel. “My experience is that open and frank communication is essential, and the result is we have an even better working relationship with our suppliers, manufacturers, and business partners.”
“We have a great team that has done some amazing things to help keep us connected as coworkers,” Benedict added. “A big challenge that has not been overcome yet is the sales force returning to the field and having direct connections with customers and retailers. We have seen a significant uptick in our direct-to-consumer business as consumers will come directly to us looking for product if retailers are out of stock and also, more consumers are shopping from home.”
Though the business environment may have been irrevocably altered, there are also reasons to be optimistic. More than 80% of the Nature’s Way team is now working from home and lack of face time initially was a concern, but the company equipped staff to work effectively at home. “We’ve learned we don’t need to be face to face or in the same office to work effectively,” said Borchardt. “And now people get more quality time with family and kids and have the flexibility to log in and log out as needed.”
Nature’s Way also has increased its efforts to assist its community in these tough times. In the Green Bay area, the company is sponsoring meals for children who are not getting school meals and care packages for health care workers. “Our industry has been fortunate in that we have stayed open, and we are thriving,” Borchardt said.
Ultimately, for most herbalists it comes back to the mission. “It’s been interesting and kind of wonderful to experience how many people immediately turned to herbs to keep themselves healthy when a medical crisis hit,” wrote Herbalist & Alchemist’s Lambert. “And it’s been gratifying to provide products that meet that need.”
The biggest thing for Herb Pharm, Johnson said, has been protecting the health of their employees, especially vulnerable employees. “The idea that someone might get sick because they come to work is not acceptable. Our measures were designed to prevent and protect against that and protect jobs and operations so people can take care of their families and stay healthy. That is what we’ve worked on, in that order and priority.”
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SIDE BAR: Tea Supply during the COVID-19 Pandemic: A Resilient but Challenging Landscape
Botanical ingredients are used in a variety of different products beyond dietary supplements and herbal extracts, and each market segment has faced specific supply chain challenges because of the COVID-19 pandemic. The tea (Camellia sinensis, Theaceae) industry is a case in point. Like suppliers of botanical dietary ingredients (including herbal extracts), tea ingredient suppliers also provide high-quality, dried botanicals from producers around the world. And just like in the supplement category, suppliers, brand manufacturers, and private-label packers of tea ingredients confronted many challenges in 2020, including unpredictable demand and disrupted supply channels.
The tea plant is the source of one of the most widely consumed beverages in the world, second only to packaged water.1 Because large processors tend to hold significant inventory volumes to guard against, for example, a plant harvest failure, many suppliers had about a year’s worth of inventory to meet the early spikes in demand, noted Richard Enticott, president of Boulder, Colorado-based Meridian Trading Company, which imports bulk ingredients for retail tea companies, private-label packers, and multinational coffee (Coffea spp., Rubiaceae) chains, like Dunkin’ Donuts and Starbucks, which also sell tea (oral communication, November 18, 2020).
But the tea segment did experience uncertainty. Early in the pandemic, retail outlets like Starbucks closed. However, the good news for the tea space, Enticott said, “is that fruit and herbal tea consumption mostly happens at home. What we saw early after the March lockdown was good for business.” There was some panic buying early on, he added. “Whether it was toilet paper or tea, people felt the need to stock up.”
After about two months of pulling inventory forward to meet demand, Enticott said, the concern became that people would realize there would not be tea shortages and so they would drink their existing supply rather than buying more. “But that is not what we saw,” he said. “People were drinking more tea than ever, even in the summer months, which are not typically big for tea consumption.”
Enticott expected to see another spike in demand as parts of Europe, particularly the United Kingdom, Germany, and France, announced new lockdowns in late 2020. “These are significantly larger markets for tea than the US, so we expect demand will go up. Plus, the winter months are traditionally heavy demand months for tea.”
Because larger processors maintain about a year’s supply in case of localized weather issues or crop failures, high-volume tea ingredients (e.g., medicinal herbs and botanicals used for flavoring) experienced few shortages. The impact of the early spike was greater on botanicals that are wild collected. For example, Enticott explained, the harvest season for rosehips (Rosa canina, Rosaceae) in Chile is in February and March. “So, the trouble there is if you don’t get them off the plant in time, they fall off and spoil. It is the same in the Balkan states, where a lot of medicinal botanicals come from. Getting people organized to do the collections has been the big problem,” he said.
Looking ahead, the botanical tea supply may become more problematic, with continued high demand and less inventory buffer now available, Enticott predicted. “Growing [herbs] to produce industrial tea cannot be done overnight, so I expect we will see a very challenging 2021.”
Other botanicals may also experience supply shortages, such as echinacea (Echinacea spp., Asteraceae), lemongrass (Cymbopogon citratus, Poaceae), tulsi (Ocimum spp., Lamiaceae), and ginger (Zingiber officinale, Zingiberaceae), some of which are already in high demand and popular during the cold and flu season, Enticott said.
While the tea industry has been resilient through previous crises, including economic downturns, Enticott believes there are some takeaways from 2020. “We do see companies making longer-term commitments to safeguard supply — not just because of COVID, but climate change, which is an even bigger threat.”
Just changing suppliers, however, is not always a practical option. The tea industry is very sensory based, Enticott noted. “In the tea category, taste is important, so if you are used to chamomile [Matricaria recutita, Asteraceae] from Mexico, it would be very difficult to accept chamomile from somewhere else and accept that difference in quality and taste.”
With some exceptions, the tea segment has been fortunate in its continuity of supply during the pandemic and managed to satisfy the sharp increase in retail demand for tea in 2020. The initial panic about expected supply chain interruption helped many tea companies better appreciate that they would not have a business without farmers and processors, Enticott said. After years of having a “just-in-time” approach to deliveries, companies in the segment are recognizing the value of maintaining larger inventories of botanical ingredients.
Historically, companies that have been successful in the tea space have used marketing, storytelling, and packaging to increase the perceived value of the raw materials they use, Enticott explained. “I think they are realizing the best stories in the current market environment are the true ones about origins, farming communities, and the countless people involved in bringing these ingredients to market,” he said.
- Bolton D. Tea consumption second only to packaged water. World Tea News. May 1, 2018. Available at: https://worldteanews.com/tea-industry-news-and-features/tea-consumption-second-only-to-packaged-water. Accessed November 18, 2020.