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Are Branded Ingredients Worth It?

Updated: Apr 23, 2020

When formulating dietary supplement formulas, there are thousands of ingredients to choose from. It’s hard to narrow it down. You know of key ingredients to use, but should you use the branded version or the generic version? Does it make a difference? The answer: it depends. Here are a few tips on when to use branded ingredients or not.

 

Consumer Awareness

Consumers rarely know of a specific branded ingredient. Yes, it is becoming more prevalent, but it's not a market-wide acceptance yet. Look for ingredient suppliers that are doing a great job marketing to end-users. Are they relying on your brand to promote them, or are they creating the demand themselves? Consumer awareness is more important when some of the other reasons to use a branded ingredient aren't met. Often, branded ingredients require their logo to be on your product. Remember, it's a two-way street. If the ingredient doesn't provide the necessary support, don't do their heavy lifting. The best way to evaluate this is if the branded ingredient "hangs out" where your target demographic does. For example, does a weight loss ingredient or muscle building ingredient have a solid presence on Instagram? Do they attend the expos and conferences that your target demographic does? If not, find another viable option.


Co-Marketing

This ties back into consumer awareness. If the ingredient of choice has great consumer awareness, ask to take advantage of this. It could be as simple as doing a giveaway on social media, having your brand's logo on their website, or as in-depth as sharing the costs of a booth at a major expo. Again, this needs to be a symbiotic relationship. Work together with the ingredient supplier to help each other grow.


IP Protected and Claims Substantiation

This is one of the major reasons to use branded ingredients. There should be, at the bare minimum, human clinical research to substantiate the claims associated with a specific ingredient. If the claims are IP protected, even better. However, the ingredient supplier should have structure-function claims vetted through their legal counsel. You should request for indemnification of lawsuits that involve the specific claim, so long as you only use their structure-function claims. This doesn't get you off the hook should a suit come against you if you made incorrect claims associated with the ingredient. This indemnification would limit your risk associated with the research and substantiated claims they are marketed by an ingredient supplier. If the supplier is unwilling to comply, I'd be leery of the substantiation they are utilizing.


Supply Chain Stability

Once you've committed to a branded ingredient, you have now limited the available suppliers to a single company. It is critical to ask their capacity and how much volume they can handle. The last thing you want to happen is your finished product becomes wildly successful and the supplier cannot fulfill your future production runs on time. Check to see if the supplier is producing on a per need basis. Do they only do production runs when they receive orders or do they hold adequate supply on hand? Make sure they can meet your needs as your company grows. The more transparent you can be about your forecasts, the better the supplier can be at meeting those needs down the road.


Cost Implication

This is the make or break point for a branded ingredient. It baffles my mind when branded ingredients charge such a premium, that their ingredient becomes the sole ingredient of the formula. All this does is commoditize their premium ingredient and provide brands no room to build around. There are substantial costs involved with all of the above, so charging a higher markup is acceptable. Commonly, branded ingredients are the cornerstone of formulas, however, they shouldn't absorb all of the raw material costs. It's unacceptable when the cost of that ingredient exceeds $3-4 per unit at the clinical substantiated dose. If this is the cost implication, chances are the supplier doesn't understand the market's price elasticity for the category of products they are in.


Do you use branded ingredients in your formulas? What do you consider when determining if a branded ingredient fits in your product or not?

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