Looking to start a supplement business? Supplement Analyst has compiled several recommendations on how to start a brand that will be successful in the supplement industry.
After you’ve established your company name, business plan and capital, the next step you need to consider is formulation. The number one factor to a successful supplement company is a quality product. Focusing on quality from the beginning can help your company grow brand loyalty, repeat customers and industry recognition.
To define formulation in terms of the supplement industry, a formulation is the composition of a customized supplement that contains various vitamins, minerals, stimulants, chemicals or herbal extracts.3,5
A formulation must undergo quality standards and abide by numerous regulations to ensure it is chemically and physically stable and meets good manufacturing practices.5 Customized supplements can be manufactured in powder, capsule, tablet, soft chew, liquid or ready to drink form.
In the last decade, the supplement industry has broken into the mainstream, generating $32 billion in revenue in 2012.6 With an increasing number of health conscious individuals and online retail platforms, you can now build your own supplements and join one of the fastest growing industries in the market today.
With such a low barrier to entry into this extremely competitive industry, the demand has never been higher for quality formulas. Product formulations are usually a determining factor for a supplement company’s success or failure.
Ready to sell supplements from home?
Thanks to advances in the industry and networks such as Supplement Analyst; starting a product line is easier than ever. Brand owners, contract formulation companies/private label manufacturers and fulfillment centers can simultaneously connect, drive customers, and gain loyal consumers based on credible products.
Starting a Supplement Company
The first step to creating a supplement business is to decide what type of supplements you want to sell. Whether you’re thinking of building customized supplements or starting a protein shake business, it’s important to clearly establish how you will differentiate from existing products.7
Formulate a business strategy that covers how you will receive funding; your target audience; a sales and distribution model; and a breakdown of various costs such as business permits, marketing expenses or any required research or development.4
Custom Supplements and Vitamins
If you’re considering selling custom made vitamins, choosing quality ingredients backed by scientific studies will create a formulation that both customers and distributors will want to purchase.
Proprietary vs. Non Proprietary Blends – While many supplements in the market today use some sort of proprietary blend, it’s important to understand the effects it will have on your product and customers.
Let’s say you want to build your own protein, the FDA requires that all of the product ingredients are listed on the label and the amount of each individual ingredient. Unless they are a part of a proprietary blend, in which case the total amount of each ingredient does not need to be included.10
Proprietary Blend Definition
Proprietary blends are a list of ingredients included in a formulation that are unique to a brand owner.12 According to the FDA, companies must use the term “Proprietary Blend” on the label and still list the names of active ingredients included in the mixture.10
What is a Proprietary Blend
Using a proprietary blend offers protection from competitors replicating your exact formula.
However, it’s possible for proprietary blends to have the identical ingredients as other products, just at slightly different doses. Without the ingredient amounts disclosed, customers may not always be able to differentiate between similar formulas.7
If you’re looking to build your own protein powder or workout product, you’ll need to create a product that stands out from existing supplements in the market.
Non Proprietary Blend – Using a non proprietary blend can increase transparency and credibility with consumers. Starting with your own formulation also allows you to improve existing formulas or create a niche supplement, such as one that adheres to specific dietary restrictions.2 With a non proprietary blend, you should expect higher startup costs for stability testing, research and development.
Whichever method is most suitable for your product, including custom vitamins, amino acids or unique ingredients will help your product stand out amongst the rest.7
Formulation Development & Technology
In recent years, formulation technology has expanded to make independent custom formulations more viable for independent owners.
In order for your product formulation to be successfully sold online, and join the ranks of other well-known brands, you’ll need to develop a well thought out, and strategic formulation.7 Working with formulation companies that stay on top of the latest scientific research can provide you with an edge against competitors, and provide ideas for unique ingredients to include in your formulation and development.
You’ll also need to consider the properties of the ingredients in your supplement formulation R&D. Variables such as water-soluble or oil-based ingredients may play an important role in whether they can be manufactured as tablet formulations and capsule formulations or are more suitable as liquid formulations.9 These considerations can affect everything from supplement marketing to delivery.
Some ingredients, although beneficial to the user, cannot be combined in the same supplement. For example, N-Acetyl-L-Cysteine cannot be combined with nitroglycerin as they are incompatible and could cause serious harm to the user.11
Manufacturing – When starting a supplement line, it’s imperative to do your research on supplement manufacturing companies as not all are operated equally, potentially effecting your formulation and development process.4
In our experience, it is not uncommon for less-than-reputable manufacturing companies to follow uncompliant practices in order to cut costs and compete for your business. Uncompliant practices include adding in cheap fillers and less active ingredients than the label claims state. These kind of actions can lead to mass product recalls, putting your brand and your customers at risk.
Reputable supplement manufacturing companies will:
- Provide a Certificate of Analysis for every product batch.
- Test raw materials for identity before putting them in your product.
- Perform or outsource finished product testing, to ensure accurate label claims.
- Perform or outsource stability testing, to validate expiration or best before dates.
If your budget doesn’t allow for hiring a professional formulation research and development team to design a custom supplement, it may be in your best interest to work with a Private Label Manufacturer instead. These manufacturers offer stock formulas that you can market as your own, using your company’s labelling and branding.
If you’re just breaking into the sports supplement industry and don’t have a nutritional background, starting with a private label formula may be a more time and cost effective route. By using a contact formulation, you have more time to focus on building your business.
What are the rules and regulations on supplements? – Supplement formulas are regulated differently depending on the country they are sold in.
Every year hundreds of products are recalled for various reasons including: illegal/ unapproved ingredients, unsafe ingredient dosages and poor R&D formulation.
According to a study conducted by Washington State University in 2006, the estimated average cost of a product recall is $540,000.8 Product recalls don’t just taint a brand’s reputation, they often lead to complete bankruptcy.
Unlike in Canada, dietary supplements sold in the United States are not subject to pre-market approval or evaluation.1 This means practically anyone can begin selling custom supplements – which may not necessarily be a good thing, possibly putting both customers and the reputation of the industry at risk.
Working with a formulation scientist or expert helps ensure that your products are safe and legal in the countries you intend to sell in. An experienced professional can keep you informed on any country-specific regulations for formulated supplements. Experts can also advise on the proper protocols for getting your supplement line approved by regulatory bodies such as Health Canada.
Whether you have rough formula improvement or a completely custom formulation in mind, it is strongly recommended to work with an expert in the sports supplement industry if you plan to build your own supplement.
Last updated: October 19 2016
Scientific Research Referenced in this Article
- Federal Trade Commission. (2014, January 7). Companies pitching genetically customized nutritional supplements will drop misleading disease claims [Press release]. Retrieved October 12, 2016 from https://www.ftc.gov/news-events/press-releases/2014/01/companies-pitching-genetically-customized-nutritional-supplements – View reference
- United States Department of Agriculture. (n.d.). FAQ: Becoming a certified operation. Retrieved October 12, 2016 from https://www.ams.usda.gov/services/organic-certification/faq-becoming-certified – View reference
- Conference series Ltd. (2016, October 11). Drug formulation & drug design conference. Retrieved October 12, 2016 from http://drugformulation-bioavailability.pharmaceuticalconferences.com/ – View reference
- Truex, L. (1026, January 5). How to start a dietary supplement company. Livestrong.com. Retrieved October 12, 2016 from http://www.livestrong.com/article/536787-how-to-start-a-dietary-supplement-company/ – View reference
- Hwang, R., & Kowalski, D. L. (2005, December 1). Design of experiments for formulation development. Pharmaceutical Technology, 7. Retrieved from http://www.pharmtech.com/design-experiments-formulation-development-0 – View reference
- Lariviere, D. (2013, April 18). Nutritional supplements flexing muscles as growth industry. Retrieved October 12, 2016 from http://www.forbes.com/sites/davidlariviere/2013/04/18/nutritional-supplements-flexing-their-muscles-as-growth-industry/#468f654f4255 – View reference
- com. (2015, April 10). Starting your own supplement line! Retrieved October 13, 2016 from http://www.bodybuilding.com/fun/startyourownline.htm – View reference
- Hunter, L. (2010, September 10). Product Recall Insurance: Why Insureds Should Consider Purchasing Coverage. Retrieved October 13, 2016 from http://www.mynewmarkets.com/articles/112905/product-recall-insurance-why-insureds-should-consider-purchasing-coverage – View reference
- Private Label Nutraceuticals. (2014). Your nutraceutical manufacturer for all product types. Retrieved October 13, 2016 from http://www.privatelabelnutra.com/nutraceutical-manufacturer/ – View reference
- U.S. Food and Drug Administration. (2005, April).Dietary Supplement Labeling Guide: Chapter IV. Nutrition Labeling. Retrieved October 19, 2016 from http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/DietarySupplements/ucm070597.htm#4-44 – View reference
- Health Canada. (2014, March 7). N-Acetyl-L-Cysteine. Retrieved October 19, 2016 from http://webprod.hc-sc.gc.ca/nhpid-bdipsn/atReq.do?atid=n-acetyl-l-cysteine&lang=eng – View reference
- Human Performance Resource Center. (2014, April 17). What does the term “proprietary blend” on supplements mean? Retrieved October 19, 2016 from http://hprc-online.org/dietary-supplements/opss/operation-supplement-safety-OPSS/opss-frequently-asked-questions-faqs-1/what-does-the-term-proprietary-blend-on-supplements-mean – View reference