Gaia Herbs CEO: ‘Our biggest driver is to continue to control the supply chain because a quality herbal product requires a quality herb’

11-Mar-2014 - Last updated on 18-Mar-2015 at 09:22 GMT

Ric Scalzo, CEO of Gaia Herbs and inductee into the Natural Products Hall of Legends sponsored by New Hope Natural Media. Image courtesy of Gaia Herbs

The big three issues for botanicals of identity, adulteration, and solvent residue can be eliminated by controlling the supply chain from seed to shelf, says Ric Scalzo, CEO of Gaia Herbs

The company’s seed-to-shelf approach, all housed at its 250 acres of organic farm and 45,000 sq. foot manufacturing facility and analytical lab in the Blue Ridge Mountains of North Carolina, has enabled it to continue to control the supply chain, Scalzo told NutraIngredients-USA at last week’s Natural Products Expo West in Anaheim.

This vertical integration allows the company to control all aspects of the process, from seed selection to horticultural development, through extraction and manufacture of the finished products.

And by controlling the supply chain, the three big issues are eliminated, said Scalzo. Regarding identity, Gaia is using an array of techniques to ensure identity, including DNA characterization. “A lot of the adulteration in the industry can be ruled out with identity testing,” he said. “Since we control the supply chain we can detect adulteration.”

To eliminate the issue of solvent residues, the company only uses water and certified organic grain alcohol.

Quality

But the company isn’t complacent about its vertical integration model, and has invested heavily in an on-site state-of-the-art laboratory and processing facility, which includes an extensive QA/QC department, with 30 of its 200 employees in QA/QC.

“That’s 15% of the employees involved in quality.” Scalzo estimated the industry average to be 1-2%..

While Gaia Herbs does use some external analytical labs to support its QA/QC, including AuthenTechnologies for the DNA characterizations, its “very extensive R&D labs” perform the majority of the analyses, said Scalzo.

Robust

While walking the floor at Expo West, your correspondent heard about falling multivitamin sales, and about a potential slump or decline in omega-3s, much of which is related back to the waves of negative media reports in recent months and years.

“Through all of the challenges with the media, we see herbs growing robustly,” said Scalzo.

Ric walking in field with white flowers — Image courtesy of Gaia Herbs

Indeed, according to a report in HerbalGram, the publication of the American Botanical Council, herbal dietary supplement sales increased 5.5% in the United States in 2012. Overall sales reached $5.6 billion in 2012, according the report, which relied on data from Nutrition Business Journal, SPINS and Symphony IRI.

And for a quality producer like Gaia, the future is bright. A report from the North Carolina Global Learning Lab at the University of North Carolina, Chapel Hill, states: “Gaia Herbs places a very strong emphasis on quality control and has strategically chosen to target a high-end and specialized market niche for its product [...] Gaia Herbs has not experienced downward pressure from globalization because the products they manufacture are of premium quality and are not as susceptible to price changes [...] Customers support the firm's mission as an organic, high-technology, and high quality producer.”

Scalzo, who was inducted into the Hall of Legends sponsored by New Hope Natural Media last week, explained that the company has historically not done much in advertising.

“We’re the leading consumer brand for botanicals with a quality reputation,” he said. “Rather than put money into marketing, we put money into the issues. Our number one driver is the selection of the herbs.”

Trends

With so many products to choose from, Scalzo said that the company’s Turmeric Supreme (60 ct. bottle) is its current number one selling product, and the rise has been rapid. “There has been a shift over the last six months for turmeric to gradually increase to number one,” he said. The bigger sized 120 ct. bottle also sits at number three on that list, he said.

Recent data from the Nutrition Business Journal put turmeric in the top 10 best-selling supplements in the US, and sales of curcumin- and turmeric-based supplements are expected to grow 21.5% from 2013-2016 to $235 million.

Number two is the Adrenal Support product, formulated with Siberian Rhodiola (Rhodiola rosea), Holy Basil leaf (Ocimum sanctum), Ashwagandha root (Withania somnifera), Wild Oats milky seed fresh (Avena sativa), and Schisandra berry (Schisandra chinensis).

Founded in 1987, Gaia Herbs is now recognized as a leader in therapeutic-quality herbal extracts for health-conscious consumers. In addition to founding Gaia Herbs, Scalzo also founded the Gaia Herbal Research Institute, and its publishing arm Herbal Research Publications.