Efforts to reform the way dietary supplements are regulated in Japan and the ASEAN are proceeding with startling speed, attendees of an event in Salt Lake City were told yesterday.
The event, hosted by the United Natural Product Alliance, focused on regulatory aspects in various markets around the world. The afternoon session kicked off with a report from David Pineda about developments toward supplement regulation harmonization in the ASEAN alliance. The group of nations now stretches from Burma in the northwest to Indonesia’s border with Papua New Guinea in the southeast. It has a population of about 600 million and a market for dietary supplements market valued at about $5 billion.
“One pillar of developing ASEAN is establish one common market, which they decided to accelerate for completion by 2015,” Pineda said. “Traditional medicines and health supplements is one of the priority sectors of that integration. They meet two times a year, and the representatives of the governments sit around a table and actually take decisions. The are taking just a few years to work on harmonization, where in Europe it took decades.”
But the overall pace of regulations reform in Southeast Asia pales in comparison to the monumental undertaking in the region’s biggest supplements market, Japan. Last year Prime Minister Shinzo Abe gave a speech in which he sought to revitalize the dietary supplement market in Japan by reforming the way health claims are regulated. He specifically sought to model Japan’s overhauled system on the US method of regulating structure/functional claims.
UNPA president Loren Israelsen spoke on the Japanese situation using information passed on from Global Nutrition Group, a Japanese consulting agency. He said the hope in Japan is that reforming the way companies communicate with their customers will kill two birds with one stone, by helping companies grow and by helping consumers take more control of their own health.
“They want to adjust the terminology in Japan to align it with the United States, to make it more of a DSHEA-type of regulation, especially on health claims,” Israelsen said. “It’s a big market, but they have not been able to generate any growth from the plateau they have been on since 2004.
“DSHEA generally was designed to be a business friendly concept and it has delivered on that, with consistent 6% or 7% growth over the last 20 years, which is remarkable in a mature market like the United States,” he said.
The presentation laid out the many ways in which the market differs from that in the United States. One thing strikes a visitor immediately, Israelsen said, and that is the huge penetration of beverage brands in the market.
“Drinks in Japan are the single biggest category. In the train station the vending machines are lined up wall to wall filled with hundreds of brands,” he said.
Different market dynamics
The market differs strongly in its demographics, too. The biggest supplement users by a long stretch are older consumers, with younger groups participating in the market only peripherally by comparison. And the way the products are purchased differs, too.
In Japan, 76% of dietary supplement products are purchased over the Internet or via a multi-level marketing company (which usually implies a direct-to-consumer delivery). By contrast, in the US 65% of those products are purchased either in a mass market or health food store.
The breakdown of products differs, too. In the US, 48% of supplements sold are either a multivitamin or single vitamin product. In Japan, according to GNG, no single product category has more than 10% of the market.
That complicates communicating with customers, as few individual ingredients, outside of probiotics, have much in the way of consumer understanding, according to GNG’s figures. This creates a situation in which advertisements can talk about DHA as a ‘smoothing’ ingredient, whatever that might imply. (The strong understanding of probiotics can be attributed to the huge popularity of the Yakult beverage in Japan, Israelsen said.)
Lisa Thomas, general manager of dietary supplements and sports nutrition for NSF, also spoke on the subject, recounting her organization’s participation in one of the meetings the Japanese government has held on the effort to reform health claims.
“The point of this conference was to look at the US and what we are doing here with regards to our claims and GMPs,” Thomas said. “In Japan, manufacturers are making marketing claims based on unproven health benefits. There is a huge confusion among Japanese consumers, many of whom are not sure why they are taking certain products, so better education needs to be part of this.”
Both Thomas and Israelsen said the overhaul of the regulatory picture in Japan is happening with breathtaking speed. The proposal has been taking shape via a series of meetings that started in January with a meeting at which the final proposal will be presented scheduled for July. Will the revamped system and possibly reinvigorated market present an opportunity for US companies, few of which have been active in Japan in recent years?
“The real concern is how to improve domestic production and consumption, and new imports will not solve that,” Israelsen said. “I think the biggest opportunity will be for ingredient suppliers who might supply the ingredients for this wave of new products.”