Never Ignore the Building Blocks of Regulatory Compliance

Always being the bearer of bad news for those that ignore the building blocks of Regulatory Compliance.

Our team take many calls form entrepreneurs and Start-Ups who are seeking to launch their new brand in the UK and EU. Many of these are based in the UK but an increasingly significant number are form the USA and Indo-Pacific regions.

Regardless of their location, they all often share a significant similarity: The supplier of the ingredient has told them that it’s safe and they have taken that at face value and not raised any issues around regulatory hurdles, illegality or restrictions on sale in respect of the ingredient.

Clearly, there are some excellent manufacturers and suppliers who would not entertain the supply or production of ingredients they know a client cannot take to market, but there are probably a far greater number who themselves are blissfully unaware as to the regulatory requirements in jurisdictions, including their own.

The meteoric rise in consumers’ desire for “wellness” products and the next “new” supplement means many businesses see others selling and assume that it is lawful to do so. While it may be a fair assumption to make, in the food industry it is often incorrect, and with “new-horizon” ingredients it is almost always incorrect – because of the very nature of the introduction to these ingredients into markets in which they have not previously been exposed. Whether the ingredient is a Novel Food, is a banned substance or is subject to the Human Use Regulations 2012, overlooking the regulatory barriers to market entry can be brand fatal.

Take Slippery Elm Bark, a banned or restricted herbal ingredient which requires either a Traditional Herbal Registration or sale by a pharmacist, or Mushroom Mycelium (currently, only Shiitake and Cordyceps sinensis mycelia are authorised in the EU and UK) or a potential borderline product such as Saw Palmetto – these and many other products cannot lawfully be sold in the UK or EU.

Look at the disparate attitude to Ashwagandha in the EU – Root infusions are not Novel and can be sold in or as supplements, but that is not view in Finland or Sweden and other EU member states are currently seeking to restrict or ban its sale in the near future if “their” scientific concerns are not addressed (and how can a company achieve that?).

The fabled hangover cure Dihydromyricetin (DHM), whether as an isolated ingredient or an extract from fruit, is rising alongside Nicotinamide Mononucleotide (NMN) as the next compound to prevent aging. It is not only the permitted health claim regulations that are being breached (because there are no permitted health claims), it is the very legality of the marketing and sale of the product itself and absent anything said about its efficacy. “But everyone is selling it”, is the response and its hard to disagree but that misses the point.

Building a brand and a marketing plan is essential to a business, but so is understanding your supply chain, your manufacturer’s certifications, the regulatory requirements of the ingredients, the barriers to market entry by jurisdiction and ultimately the ability to scale.

High risk retailing has its benefits – as we see from a lack of regulatory enforcement in many areas – but the risk verses reward ratio of being challenged by the FDA, FSA, EFSA, Trading Standards, Police and EMA or MHRA are no longer the main dangers to a business: Your point of sale is becoming the main restricting factor.

Online retailers, such as Amazon, are beginning to ask questions and restrict listings. Yes, you can get lucky with an ASIN, but for how long – until a competitor complaint or compliance check results in a delisting? Merchant providers at Tier 1 are getting wiser and now Tier 2 as are the Due Diligence teams at the High Street retailers that sit behind the buyers.

Our clients often present with a problem because of a delisting, a letter from a regulatory authority or a flat “no” from a distributor. This hits at a time when all of their hard work and provenance (?) appears to be paying off and it is their time to hit the mainstream. Where it is a labelling, compliance, regulatory practice, or supply issue we can help in short order, but where it is a Novel Food, Regulated Product or a banned or restricted substance their business literally falls apart.

This is not just a Food Supplement industry problem – the media is full of the next cell cultured product, a new protein or the innovative sustainable food – and there is huge investment into these areas. It may surprise you that in the last 12 months we have had companies with a combined investment totalling £75m that had not considered or in some instance had been poorly advised about the ability to actually sell their products lawfully in the jurisdictions which they had already targeted. We help by accessing other markets which can be pivoted to while the regulatory authority is obtained in the initial jurisdictions, whether that be Singapore or the USA via the GRAS system, but these are still major hurdles and delays which make investors, shareholders and potential customers step back when they understand that the fundamental question of “Can we sell this?” is actually “Yes, but we (the manufacturer) need to do this, this and this before you can do so” have not been adequately addressed.

Functionality, Branding and Marketing are each essential building blocks, but a failure to add “Regulatory Compliance” underpins all of those and failures to ensure that compliance is leading to a graveyard of Brands.