HerbalEGram: Volume 17, Issue 11, November 2020

By Karen Raterman

Editor’s note: This is an update to a previous article by this author, published in HerbalGram issue 126, on supply chain challenges and disruptions owing to the COVID-19 pandemic during the first few months of 2020.

As 2021 approaches, many members of the natural products industry are beginning to reflect 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, more than eight months after the outbreak was declared a pandemic, 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 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 HerbalGram Market Report.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 are rising at the time of this writing (late October 2020), 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 point to the overall uncertainty of these times as the ongoing challenge. “The impact of the early days of the pandemic were 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 both have improved since the early days of the pandemic, he wrote (email, September 24, 2020.) “The labor shortages we experienced early on…are now starting to taper off, and more people are coming back to work,” he wrote. “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 the coronavirus 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 their immune systems, in particular vitamin C, zinc, echinacea, and elderberry. 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 this year, 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 has been more difficult for the company to maintain the inventory buffer over the summer that it prefers as it heads 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, but it is also ramping up. “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. We are still out of stock on many products and our fill rate is lower than usual.”

The company, Emme added, has taken care to be transparent with customers to proactively keep them informed about when specific items will be available and from which warehouse, to help them manage their inventory and ordering. 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 with regard to 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 various 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. As the growing season has progressed, she wrote, “we now have very few out-of-stocks. Farmers and suppliers really responded to our requests to get more herbs to us quickly.”

Now, she added, a new concern is the potential impacts of the US wildfires in August and September on Herbalist & Alchemist’s West Coast farming community. “We are assessing that impact now, so it’s too soon to say what that impact will be, but it likely will affect the herb industry.”

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.”

Perhaps the biggest unknown looking ahead is the predicted fall and winter wave of the pandemic, with many companies 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.

It is already a reality for certain companies. Nature’s Way’s headquarters location of Green Bay, for example, was, in mid-October, labeled a COVID hotspot.⁹ “So we are already in the second wave,” said Borchardt. “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, 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, 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.”

Persistent Problems

While anticipating and preparing for the future has been a high priority for many companies, a number of other challenges have represented a persistent, daily grind. The one that seems to supersede all other issues is the human factor.

For most industry companies, whether they use internal manufacturing facilities or contract manufacturers, the human resources available in these facilities and their related capacity have had an impact on industry operations and production. Keeping people safe is priority one.

Johnson noted that 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 and 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 now requires 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 had an impact on business operations, Borchardt noted. The strict social distancing between people in the factory, he said, has 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 still continuing to do this,” he added.

Sabinsa also took serious measures to eliminate 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 on an ongoing basis to identify any infections early on to minimize the potential for virus transmission to others.”

Many companies anticipate that these procedures will be in necessary for a long while yet. “I do see some of these being in effect for the long term or permanent, especially work-from-home or hybrid roles,” said Scott Benedict, vice president of supply chain operations of the Manchester, New Hampshire-based brand MegaFood. “I expect us to keep up with the additional cleaning and sanitizing protocols,” Benedict said. Echoing the attitude of many people, he added, “I would like to see the mask 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, we bought a lot of laptops, and we started using Microsoft Teams, which has been very helpful in the long run,” Johnson said. The company also made some physical changes in its plants to better accommodate social distancing, such as moving shipping to a second building.

Herb Pharm also made free flu shots available to all staff in September and installed high-efficiency particulate air (HEPA) filters throughout its facility. “People will get [flu-like symptoms] this fall and winter and we will have to decide what it is, so we felt this would help reduce the number of false alarms,” Johnson explained. The HEPA filters, he added, give no guarantee, but do represent an additional layer of protection. They were also beneficial as Williams was near the late summer wildfires in southern Oregon. The filters proved useful in reducing the amount of outdoor smoke that would have moved indoors, which kept the facility running during the worst of the fires.

Beyond making physical plant changes, it has also been important to communicate the reasons for the changes to staff, Johnson explained. “These protocols are very hard to maintain and very expensive, so we had to help them understand why we were doing what we were doing to help them feel safe.”

The critical motivator for Herb Pharm was to carefully and safely limit the disruptions so it could stay in operation. As the largest employer in Williams, this was crucial for the community, especially as the wildfires further impacted the region. The reorganized operations now allow people who need to quarantine to 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.”

The lack of or shift in human resources has been prevalent up and down the supply chain. These changes also required extra diligence on the part of herbal companies 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. Even with adequate steps throughout the supply chain, issues like mislabeling of material sometimes did not get noted until further along in the process, she explained.

One issue Seipel experienced was 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 impacted other supply chain cogs as well. 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 in Barcelona, Spain (email, September 28, 2020). In addition, he said, regional banks in Florida have been closed, reducing access to cash needed to purchase saw palmetto fruit.

Lockdowns and Logistics

As noted earlier, lockdown orders had a rolling effect on countries, markets, and companies. These orders impacted both interstate transportation as well as international shipping, with limitations to both air and sea vessels and the closure or reduction of operations of ports. While some of these issues have gotten better, it is still a big challenge, especially for suppliers.

“Logistics and transportation remain the biggest challenge for us during the pandemic,” wrote Sabinsa’s Majeed. “There are only a few transporters available and it’s taking longer for cargo to reach its destination. Many flight routes have changed due to airport closures. And transportation costs are higher,” he added.

India saw particularly tough challenges from the beginning. “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,” Majeed recalled. 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 extreme southeastern coast of the subcontinent. (The two states are separated by about 350 miles.)

Some of these issues, Majeed explained, were resolved as the Indian government recognized “essential” businesses and granted permits for transportation 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 did increase, Majeed noted, but Sabinsa prioritized getting deliveries to customers during the early high-demand days of March and April and did not pass these costs along.

Product development has also been impacted beyond just the huge demand for immune products. It has affected the pipeline from which new products are created. For example, sales of immune ingredients greatly accelerated this year, surpassing the demand for products with other indications, noted Ettore Milano, director of procurement for Indena SpA in Milan. “This created challenges with some of our raw material (biomass) suppliers,” he wrote, adding that he expected the trend to continue in 2021 — even with anticipated approval of 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 fill consumer demand while others are rapidly expanding their product portfolios with new offerings, Verdure’s Patel wrote.

Research and clinical trials were also disrupted with some research organizations, medical centers, and universities that either closed or focused on COVID-19 research. “Euromed has experienced delays in clinical studies for new products that were in development and those that were already in progress,” wrote Woodman. “The COVID outbreak has disrupted recruitment and participation of subjects for clinical trials, delaying new product introduction.”

Understanding the Supply Crisis

Arguably the biggest ongoing challenge for companies in the botanical and dietary supplement space is the impact on the availability and quality of supply. The high demand, especially of immune support ingredients, added to logistical and labor issues have highlighted not only shortages of certain plants, but also vulnerabilities and 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.

There also is ongoing research and growing evidence that some of these medicinal plants may be of value in 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, the 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. The seventh edition of an official COVID-19 treatment protocol issued by the National Health Commission of the People’s Republic of China noted 10 TCM formulations and 13 proprietary Chinese medicine formulations.⁸ The report states that more than 125 specific plants are used in these formulations, including licorice (Glycyrrhiza glabra, 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 on the CITES Appendix II, a list of species that are not currently threatened with extinction but may become so without trade controls.¹⁰

For the present, availability of Chinese herbs seems to have settled. Subhuti Dharmananda, PhD, founder and director of the Institute for Traditional Medicine in Portland, Oregon, noted that March through May saw a depletion of Chinese herb supplies in the United States, but that the situation has normalized since summer from his perspective (email, September 9, 2020). Dharmananda additionally noticed low summer availability of the Chinese herb andrographis (chuan xin lian; Andrographis paniculata, Acanthaceae), which has been shown to have antiviral properties.

Still, the situation bears watching. “There remains a high demand in the US for Chinese herb formulas that are deemed immune enhancing or antiviral or treating a lung disorder, and some companies have come out with prepared forms of formulas mentioned in TCM reports as being used in China for coronavirus,” Dharmananda wrote.

Many other herbal ingredients and formulas also are seeing notable 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, rosemary (Rosmarinus officinalis, Lamiaceae) leaf extract, holy basil/tulsi extract, frankincense (Boswellia serrata, Burseraceae) gum extract, ginger (Zingiber officinale, Zingiberaceae) rhizome extract, and spirulina (Arthrospira platensis, Spirulinaceae) extract, as well as various vitamins and minerals.

As a result of the thriving trade, maintaining herb quality and consistency is an ongoing concern. 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 following the start of the pandemic, coupled with the pandemic-related harvesting and logistics 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 has faced a massive spike in sales for its immune-related products that 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, has experienced ongoing shortages of Echinacea angustifolia and E. purpurea root because of the continued 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 in order 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.”

Availability of these plants as well as the logistical issues in some countries is 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 prior to 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 Alert

With so many supply chain issues around the world and ongoing potential shortages, concerns about adulteration have many companies on alert. As the largest brand holder of an elderberry product, Nature’s Way has had particular concern about elderberry raw material. “Because our Sambucus product is the largest product in the market, we 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’ve done.”

As part of an effort to find additional elderberry supply, Nature’s Way began testing 25 bulk elderberry extracts and eight finished products and released concerning results in September 2020.¹¹ Borchardt explained that the company developed specific methods to detect Sambucus nigra, the European elderberry 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 blueberry (Vaccinium spp., Ericaceae), black soybean (Glycine max, Fabaceae), and black rice (Oryza sativa, Poaceae).

“Once we developed these methods, we tested 25 sources and found that about half were adulterated, containing sources of anthocyanins other than from elderberry — 20% actually contained no elderberry 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 Elan Sudberg, CEO of Alkemist Labs in Cerritos, 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 in this article, the Alkemist list includes garlic (Allium sativum, Amaryllidaceae), barberry (Berberis aristata, Berberidaceae), cannabis (Cannabis sativa, Cannabaceae), garcinia (Garcinia cambogia, Clusiaceae), stevia (Stevia rebaudiana, Asteraceae), and red clover (Trifolium pratense, Fabaceae).

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 Indian kino tree (Pterocarpus marsupium, Fabaceae) heartwood, which supports healthy blood sugar levels and is extracted from trees grown for more than 30 to 40 years, as a good example. As modern research confirms the traditional usage 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 Boswellia 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

Many suppliers and manufacturers are not only aware of the adulteration concerns; they are doubling down on quality processes to address them. “In times of high demand for certain herbal materials, there is always a risk of getting substandard raw materials,” reiterated Majeed, “However, our screening and QC 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 sharp increases in demand for botanicals sourced in India, such as ashwagandha, holy basil, shatavari (Asparagus racemosa, Liliaceae) and tinospora. “We are closely following these trends and being extra cautious with our purchase of these botanicals,” Patel stated.

“We are constantly monitoring ingredient purity and to ensure that our ingredients are not adulterated,” wrote Nuherbs’s Lau. “Our systems are quite robust and we are confident in our ability to ensure identity, quality, and purity of all of our materials.”

It is a never-ending proposition, he added. “We are constantly monitoring and learning to make sure there isn’t something new to add to our systems or keep an eye out for. 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.”

Euromed’s Woodman seconded 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 available limited supply of herbal raw materials has increased and subsequently the price of standardized extract, the attractiveness of adulterated lower cost extracts has increased.”

There also is concern within the industry that the adulteration could escalate as the products remain in the spotlight. “I think it is a good possibility that this is only the beginning,” said Borchardt. “We are seeing the dietary supplement category, from a business perspective, continue to be attractive. The pandemic opened the eyes of consumers who prior to the pandemic were not participating in the category with their dollars…. With the increased business opportunity comes the risk of opportunistic players — those looking to take advantage of the category to make a quick buck by selling products not of good quality.”

Further complicating the picture is the emergence of a COVID-induced virtual era in which both vetting of suppliers and even US Food and Drug Administration (FDA) inspections are often 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 point to 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 a company that had to bring in new vendors under virtual inspections.”

It is difficult, admitted Gaia’s Millhollen. Prior to the pandemic, his team regularly visited the farms, fields, 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.

“This year, due to the pandemic, our sourcing team has not been able to travel to do these in-person inspections,” Millhollen wrote. This is where long-standing relationships with trusted suppliers become even more important, he added. “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 on our raw materials, and all materials that are sourced must meet our strength claims, such as biomarkers, and also meet our specifications for pesticides, microbes, and heavy metals.”

Even though Gaia works with long-term suppliers, the team still verifies every ingredient used, every time, and shares the results at meetyourherbs.com, an herb traceability platform, where Gaia provides complete transparency for all of its ingredients with customers.

Such programs do take time, commitment, and investment. Over the years, Patel wrote, Verdure has put a lot of emphasis on the chain of custody, which, he noted, “is a complex process and involves the development of validated analytical tools, investment of 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 the importance of 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.”

Ramping up Resilience

Though many companies have been thinking about sustainability and resilience in the procurement ofherbal raw materials for quite a while, the pandemic has exposed vulnerabilities up and down the supply chain and within the industry as a whole, which is prompting further questions about the overall supply and whether it is as resilient as it needs to be. “The good news,” wrote 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 there are many issues to consider, such as looming concerns over changing weather and environmental conditions and their impact 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 a good thing. “You end up with a lot of products with very small amounts of lots of ingredients.”

It is likely that solutions will take both individual company foresight and broad industry coalition.

In such a globalized world, Milano continued, “it’s difficult to believe that to counteract such events, we might adopt the strategy to internalize the production of either raw materials or intermediates. We deem that the outsourcing activity is still an important and essential part of our operations, but we have to give value to the outsourcing and make it ready to support the partners, even if in special cases like this one. The selection of reliable and robust partners has definitely been an added value for Indena in this tough period.”

Gaia Herbs is taking a deeper look 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 our 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.”

Dual sourcing does have a downside. “The negative is that sourcing from multiples vendors from around the world typically comes with increased costs,” Millhollen added. “However, we have been willing to accept these increases in order to build stronger variety and resilience into our supply chain.”

“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,” wrote Lau. “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 with the least hiccup leads to out-of-stock situations.”

Lessons Learned

As a whole, the herbal products and dietary supplements industries have been fortunate in 2020, even if they have faced many challenges. Gaining a better understanding of the supply chain, being open to broad collaborations, and working differently and more efficiently are just a few examples of the how the industry has progressed this year.

“During what has been an unprecedented year for all manufacturers, we have gained a much deeper understanding of second- and third-tier supply chain,” 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 take-away for Milano at Indena is that solid companies with strong organizational models have a good performance even in stormy times. “The other important message is that customers’ education on the quality of products is very important as the visibility of single ingredients is getting higher and higher.”

Millhollen noted that diversified sourcing might also help with current and future crises like the pandemic and the rolling impacts on governments and logistics. “In these types of situations, having additional supplier options may be critical to getting the ingredients needed to keep products on the shelf,” he wrote.

“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,” added Patel. “This, coupled with the 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 about the coming months. “We are all in the same boat, and we have all had to appreciate 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 partnerships.”

“We have a great culture 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.”

Even though the business environment may have been irrevocably altered, there are also plenty of reasons to be optimistic for the future. More than 80% of the Nature’s Way team is now working from home and lack of face time initially was a big concern, but the company has worked to equip staff with equipment to work effectively in the home environment. “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 to get work done.”

Nature’s Way has also amped up its responsibility to assist its community in these tough times. The company is providing much-needed help in the Green Bay area by sponsoring meals for children who are no longer getting school meals and care packages for health care workers and those in emergency rooms. “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 about 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. Until it’s done, those are the priorities that will remain.”

Image credits

All photos ©2020 Steven Foster

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