The ownership issue in the natural and organic sector tends to swing in and out of view. It swung back into view recently with news that Nestlé had bought the core supplements brands – Nature’s Bounty, Solgar, Osteo Bi-Flex and Puritan’s Pride among them – of The Bountiful Company in a deal worth $5.7 billion.
In recent years the ownership of organic food firms has been more of a live issue than M&A activity in the supplements arena. Here, Phil Howard’s ‘Organic Industry Structure’ infographic is probably the best known visualisation of what has been called the ‘corporatization of organic’.
While some argue that the sale of organic disruptor brands to multinationals is simply a feature of the brand life cycle (sometimes with the additional claim that organic brand owners are ‘selling in’ their values, rather than selling out), others warn that the process has damaging cumulative consequences.
The Dutch organic commentator Ronald van Marlen has warned that a “silent takeover” of organic pioneers is leading to a “shrinking of organic ambitions” as part of a mainstreaming of the organic food industry. He argues that food multinationals want to reduce organic to a box-ticking exercise, and water down organic principles (“basically getting rid of the difficult ones”).
There are different ways too to look at consolidation in the supplements sector (in 2018, pharmacist and supplements advocate Dr Neal Smoller, produced a graphic to show the extensive ownership of US supplement brands by major corporates). For many, the biggest concern is the moral compromising when independently owned natural products brands are subsumed into pharmaceutical conglomerates, especially around issues such as animal testing and unethical investments (acquisitions by private equity companies raise different questions). For others, ‘corporate capture’ of multiple specialist supplement brands is a way for the pharma industry to control the category, limiting the natural health sector’s ability to impinge on drug makers’ profits and lucrative patents.
“For others, ‘corporate capture’ of multiple specialist supplement brands is a way for the pharma industry to control the category, limiting the natural health sector’s ability to impinge on drug makers’ profits and lucrative patents”
But some financial commentators offer a more prosaic explanation for the pharmaceutical industry’s acquisitiveness around supplements brands.
They say that increasing costs of drug research and growing uncertainty around regulatory approval for new medicines is forcing pharma companies to look for new opportunities. Pharma firms see acquiring vitamin and herbal businesses as playing to their strengths (they already operate GMC practices and have full testing facilities), as well as offering healthy margins. So goes the theory. Food multinationals, meanwhile, view the supplements sector in the broader context of nutraceuticals, having identified ‘medical foods’ as a lucrative, patentable route to new markets.
“Whatever the whys and wherefores, says Lynne Parramore, a senior research analyst for New York think tank the Institute for New Economic Thinking, ‘big pharma and big herba are increasingy indistinguishable'”
Whatever the whys and wherefores, says Lynne Parramore, a senior research analyst for New York think tank the Institute for New Economic Thinking, “big pharma and big herba are increasingly indistinguishable”. That may be to overplay the situation (outside the US at any rate), but it highlights a worrying direction of travel.
The ownership issue is frequently reduced to a ‘small is beautiful, big is bad’ characterisation. Ethically speaking, it is always going to be more complicated than that (for one thing, the ethical soundness of small companies is not a given). But one aspect of concentrated corporate power is indisputably harmful – the way big business buys political influence, often with the aim of perpetuating a self-serving status quo. In the case of food and health, where business as usual is environmentally devastating and fuels an epidemic of chronic ill health, the consequences are truly egregious.
Main image by fikry anshor on Unsplash
