This year’s Natural Products Expo Asia attracted more than 200 exhibitors from 26 countries, and over 5000 buyers. A showcase for natural and organic products, the event also held several seminars, covering such topics as the US Bioterrorism Act and labelling guidelines, as Bruce Hoggard reports.

There is still something magical and exciting about Hong Kong, whether it be sitting on the Kowloon side looking across Victoria Harbour to the lights and tall buildings that adorn and rise up from the water on the island side, or taking that famous ride on the Star Ferry as it weaves its way across the busy harbour, or the breathtaking view of Hong Kong from Victoria Peak on a clear sunny day.

Although Hong Kong was returned to China in 1997, business and commerce still continue unabated. The hustle and bustle, although slowed by the Severe Acute Respiratory Syndrome (SARS) concerns in the summer and a slump in the property market, is once again gaining strength. It was in this great setting that the Natural Products Expo Asia was held at the Hong Kong Convention & Exhibition Centre (HKCEC) earlier this month. Originally scheduled for 18-20 June 2003, the Show was postponed as a result of the ongoing uncertainty caused by the SARS outbreak in Hong Kong and worldwide.

Asia represents enormous market potential, with close to 2.7 billion people, and substantial growth opportunity, with Asia being predicted to be home to 50% of the world’s population by 2025. According to Nutrition Business Journal, the total nutrition products market in Asia was worth US$37.4bn in 2001. And of course, China is the world’s fastest growing economy, Japan is second-largest, while the region includes six of the world’s most populous countries: China, India, Indonesia, Pakistan, Bangladesh and Japan.

A rapidly changing sector

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Although the retail channel for natural and organic products is not as developed in Asia as it is in America or Europe, it is rapidly changing. During the past three years, three high-end natural supermarkets have entered Hong Kong or expanded their business there, with one offering 2500 organic SKUs (stock keeping units) versus just 200 in 2001.

Many factors are fuelling sales growth of natural products in Asia, including the recent poultry culls in Hong Kong and China, the hoof and mouth disease affecting swine in Korea, the BSE scares in Japan and the high-profile product recalls of Pan Pharmaceuticals of Australia, one of Asia’s largest supplements contract manufacturers.

In addition, obesity is becoming a major problem throughout Asia. From Singapore to China economies are developing and people are embracing technology and alternate diets. Furthermore, debates over pesticide and hormone use, and particularly GMOs, are raging throughout the region following the pattern established in Europe and America. Finally the lack of a pharmaceutical remedy for SARS and similar viral illnesses in Asia, and the rest of the world, is forcing consumers to pay more attention to personal immunity and responsibility.

The show

Launched in May 2002, Natural Products Expo Asia has become one of the leading trade events for the health and natural products industries in Asia. In its inaugural year the event attracted more than 4000 buyers from 51 countries. These positive figures are encouraging for the further development of the dietary supplements and functional foods industries in Asia. The 2003 Expo had more than 200 exhibitors from 26 countries and over 5000 buyers from 51 countries.

The 2003 show, in response to industry prompting and recommendations, introduced sector-specific pavilions dividing the event into five product categories/areas. These were: natural and organic food, supplements, personal care products, herbal/traditional Chinese medicine/alternative remedies, and raw ingredients and supply-related products and services.

The food area featured organics, specialty food products, vegetarian offerings, functional foods, nutraceuticals, green foods, grocery, refrigerated/frozen foods, dry goods, cereals, gourmet foods, dairy products, meats, snacks, soy & meatless products, beverages and other natural food products.

Governments or associations from the US, Malaysia, India, New Zealand, China, Thailand and Italy were also present with national pavilions.

Seminars

In addition to walking the trade show floor and seeing the newest natural and organic products, attendees were able to enjoy three days of conference programs, at no extra cost. These information seminars, from 9:00 am to 6:00 pm each day, started Wednesday and ended Friday.

The issues discussed during the conference were both timely and relevant. One addressed the latest regulatory issues facing companies in US, Europe, Japan, China and several other Asian countries. Other seminars tackled the certification process, industry standards, bio-informatics and a perpetual favourite, global exporting.

Given the size and appeal of the United States market the new US Bioterrorism Act will have a major impact on all the companies involved in the production, packaging and distribution of food and feed products for export to the US. Therefore, this report provides a greater look at the details of this Act to help clarify and provide valuable insight.

United States makes major adjustment and protection shift

Companies involved in the manufacture, growing, shipping, packaging, or re-sale of products for export to the USA were in attendance at the Thursday morning session covering compliance with the new Bioterrorism and Food Safety legislation. The session explained what companies need to do to avoid business disruptions as a result of this new legislation.

Enacted more than a year ago, the “US Public Health Security and Bioterrorism Preparedness and Response Act of 2002” became fully functional on 12 December 2003. From this point all foodstuffs and dietary supplements entering the US must meet the new Food and Drug Administration requirements or risk quarantine or outright rejection.

It is estimated the new law will affect more than 400,000 US and international businesses in the food and supplements industry. It requires, among other things, the registration of domestic and foreign food facilities that manufacture, process, pack, transport, distribute, receive, hold or import food or food supplements for human or animal consumption.

The FDA published interim final rules on 9 October 2003 for two parts of the Bioterrorism Act. One section requires most food facilities in the United States to register with the FDA and foreign entities doing business there to appoint a domestic agent. The other section changes the rules covering prior notice to the FDA of food shipments arriving on US soil.

The registration rule applies to domestic or foreign facilities that manufacture, process, pack or hold food for human or animal consumption in the United States. It defines “food” to include dietary supplements and dietary ingredients, infant formula, beverages (including alcohol and bottled water), fruits and vegetables, fish and seafood, dairy products and shell eggs, raw agricultural commodities for use as food, canned and frozen food, bakery goods, snack food and candy, live food animals, animal feeds and pet food.

Exempt from registration are retailers, private homes, municipal water systems, transport carriers, farms, restaurants, non-profit food establishments such as food banks and soup kitchens, fishing vessels and meat-packing plants that are regulated by the US Department of Agriculture.

o The prior notice rule requires importers or brokers to notify the FDA two to eight hours before a foreign food shipment arrives, depending on the mode of transportation. The key features of the prior notice interim final regulations are:Anyone with knowledge of the required information may submit the prior notice, including, but not limited to, brokers, importers, and “US agents”.

o Prior notice must be received and confirmed electronically by the FDA no more than five days before arrival and, before the following time, depending upon mode of transportation:

• Two hours before arrival by road;
  
• Four hours before arrival by air or by rail;
  
• Eight hours before arrival by water;
  
• Before mailing if food is sent by international mail.

It adds food regulators to a prior notice list that already includes the US Bureau of Customs and Border Protection.

To facilitate a better understanding of the Act, here are several of the questions asked and the response to those questions.

Who must register?

If you are a facility that manufactures, processes, packs, or holds food intended for human or animal consumption in the United States you must register with FDA by 12 December 2003, unless you qualify for an exemption.

“Facility” means “any establishment, structure, or structures under one management at one general location, or in the case of a mobile facility, travelling to multiple locations, that manufactures/processes, packs, or holds food for consumption in the United States.”

“Food” is defined broadly to include all foods regulated by FDA, including raw agricultural commodities, pet food, alcoholic beverages, food ingredients, dietary supplements and dietary ingredients, and substances that migrate to food from immediate food packaging and other articles that contact food.

Do foreign facilities have to register?

Foreign facilities must register unless exempt. A foreign facility is any facility not located in one of the 50 States of the United States, Washington, DC, Puerto Rico, or a US Territory.

Do foreign facilities have to have a US Agent?

If you are a foreign facility that is required to register with FDA, you must designate a US Agent. A “US Agent” is defined as “a person residing or maintaining a place of business in the United States whom a foreign facility designates as its agent.” The purpose of the US Agent is to serve as a communications link between you and FDA. An agent may be a parent company, business partner, broker, or US lawyer. An agent may not be a mailbox, answering machine, or answering service.

Is my facility exempt from registration?

Certain types of facilities are exempt from registration. You may be exempt if you operate a:

• Farm;
  
• Restaurant;
  
• Retail facility (e.g. grocery store) that sells food directly to consumers only;
  
• Meat or poultry slaughter or packing plant;
  
• A foreign facility where the food from your facility undergoes further manufacturing or processing by another foreign facility before the food is shipped to the United States.

What if information in my registration changes?

If any registration information changes, you must submit an update to FDA within 30 calendar days after the change.

What happens if I don’t register?

If you are a foreign facility, you may not be able to import your food into the United States. Food from a foreign facility that is required to register but fails to do so will be refused admission and held at port of entry. Failure to register is also a prohibited act, and FDA may bring a civil action to compel registration or bring a criminal prosecution against the offender.

How will registration work?

Register electronically at FDA’s website and receive an instantaneous confirmation and facility registration number. It is also possible to register by mail, but receipt of confirmation and a registration may take weeks or months. Finally, hire a US food agent who will submit registration to FDA and obtain a confirmation and registration number for each of your facilities.

For more information on the Act contact Bruce Hoggard through just-food.com

Still with the US, another seminar addressed the labelling guidelines as covered under the USDA’s national organic program introduced on grocer’s shelves in October 2002. There are four categories that companies need to be aware of and ensure their labels are correctly marked:

• 100% Organic: These foods must contain, excluding water and salt, only organically produced ingredients. The USDA seal can be used on these packages.
  
• Organic: These foods must consist of at least 95% organically produced ingredients, excluding water and salt. The USDA seal can be used on these packages.
  
• Made with organic ingredients: Processed products containing at least 70% organic ingredients and must list up to three organic ingredients or food groups on the principal display panel. The USDA seal cannot be used.
  
• Transitional: The “transitional organic” label is not allowed under the national organic rule. In the past, this label has been used to signify that a farmer is using organic methods but hasn’t reached the three-year pesticide-free requirement.

Organics in China

One of several seminars held on Friday 5 December was invaluable for companies seeking to enter the Chinese organic and natural products markets. Given its current size, although still behind the Japanese market, and its potential for tremendous growth, many companies are turning their attention to this market.
China’s organics certification body discussed the development of the organic standards and the growth of organic consumption on the mainland. There was also a presentation from China’s equivalent of the US FDA, discussing the new registration requirements and regulations for food and drug products in China.

Organic operations are scattered throughout China and their production abilities are limited. Most companies are unable to invest adequately in organic production base development and intensive and fine processing and packaging.

Meanwhile the domestic market for organic food still remains underdeveloped. Thus most producers and trading companies must depend on overseas importers and markets. They may also be producing organic food on request, which carries high economic risks, or through joint venture or transfer of seed technology projects.

From an export perspective most organic products from China are raw materials, as processing and packaging still remain low quality. Therefore, producers earn comparatively low prices and the margins for international traders and processors are high.

Another topic was the regulation of natural products in China from the practical viewpoint of compliance, always a difficult thing to monitor given the size and the level of development in China. The session talked about the procedures involved in obtaining a “Certificate of Free Sale” and the areas of functional foods, dietary supplements, and herbal products.

Functional foods

An interesting term being bantered about during the seminars and on the trade show floor was “functional foods,” a term cutting across many food categories. Although not new, the term has different levels of acceptance and meaning throughout the three largest food markets, the US, Europe and Japan.

In the US, where there is no regulatory infrastructure for functional foods, manufacturers have forged ahead, encouraged by consumer demand and business opportunity. The $20.5bn US functional food market is divided into 37 categories including food, ingredients, consumer healthcare, dairy and dietary supplements.

In Japan the current regulatory framework for foods with some sort of health-benefit claims, including Foods for Specific Health Use (FOSHU), foods with nutrient function claims and so-called “health foods”, is confusing and difficult to follow. Functional foods enjoy a more lenient position in the market, making it more difficult and confusing for the consumer.

In contrast, only a quarter of German, French and UK consumers are familiar with the term ‘functional foods.’ It has been replaced by the newer term ‘well-being’ which has already gained greater recognition. From an acceptance stand point, 75% in each country were prepared to buy well-being or functional foods if given a choice.

However, the terms ‘functional’ and ‘wellness’ don’t hold the same meaning in the eyes of the consumer, although they seem interchangeable in the rest of the world. In Europe people relate functional foods specifically to foods linked to a specific health benefit. The wellness term is more holistic offering consumers multiple health propositions.

Show floor

An interesting approach to the show this year was the ability of the participants to schedule meetings with exhibitors prior to the show. This allowed people on both sides to plan ahead, maximise their time while at the show and take some of the unknown out of the process.

Nice and Natural of New Zealand specialises in the manufacture of organic, sports, cereal and muesli bars, chocolates, and speciality confectionery. It has won numerous awards for product development and innovation in Australasia and has an ongoing commitment to developing new and exciting product ranges. Nice and Natural also contract manufactures for a number of international customers.

Nice and Natural was promoting its Fruit and Nut 100% Organic Bars made from a combination of organic peanuts & almonds, sultanas, rolled oats, sunflower & sesame seeds combined with a unique fruity syrup.

The company also had its two different flavoured Chisel high protein sustained energy bars, each containing 20 grams of protein and 16 vitamins and minerals. The first was the Chocolate Chisel and the other was the Yoghurt Berry.

Hillman Orient Ltd, located in Hong Kong, was created to cater to people in the Asian community with special dietary needs. Its role has grown to fill the substantial and ever growing dietary gap in the market. It has expanded to cater to all people in the Asian region who have to follow a strict diet, due to health or other reasons. The company also deals with regional specialty foods.

One of the products it was promoting was EcoBaby, a rice meal made by a German baby food company. EcoBaby is an organic baby food line offering a clear and scientifically sound programme based on the development of the baby’s digestive system. There are stages, based on the baby’s growth and development, which are then matched with a particular formula for the baby food.

The baby food programme provides parents with general guidelines, helping to give their baby the best start and reducing the unnecessary risks of giving their baby too many or too heavy ingredients too soon. EcoBaby also offers a solution for babies who have problems with digesting solid food in the beginning.

Easiyo is from New Zealand and was promoting its various organic and healthy products at the show.

Its sweet yoghurt base in 17 flavours is a thick and creamy tasting yoghurt full of real fruit flavour. They each contain Acidophilus and Bifidus designed to keep your guts in good working order. The products have no artificial colours or preservatives.

The organic version of the yoghurt is made from 100% certified organic milk ensuring that it does not contain pesticides, chemicals or additives. This results in a clean and nutritious yoghurt for those interested in organic choices.

Another product was Mighty Milk. In this case you just add water to make a one-litre container of flavoured milk. The product comes in five flavours, including banana, and is promoted as being even better than milk as there is added calcium, fibre and acidophilus plus reduced fat.

For those who do not like to eat their yoghurt plain Easiyo also has a selection of real fruit toppings that you can squeeze from a bottle. As a syrup it is also suitable for pancakes, crepes and even ice-cream.

Another New Zealand company, Roen, was established in 1966. Its product range offers organic and natural foods that, as they claim, “are unable to be reproduced synthetically”.

In its food category was a novel product called Organic Manuka Deer Velvet Honey. Available in 500-gram and 250-gram jars, the product is a combination of the purest quality Manuka honey, from the pollution free countryside, and deer velvet. Both ingredients are from New Zealand.

The deer velvet contains all the essential amino acids, and is high in calcium, and when added to the proven anti-bacterial qualities of Manuka honey, a natural food, full of energy and goodness, is produced. Based on the properties of the two ingredients the product becomes a natural way of building a powerful resistance to illness while giving the body a feeling of well being.

Looking ahead to 2004

As is customary with the final article of the year we look ahead to see what is in store for the New Year. As usual, 2004 promises to be another busy year on the trade show circuit for organic and conventional food companies. Here are a few of the Shows you may wish to mark on your calendar. Or if you cannot attend, watch for the articles from the shows and stay abreast of the new and innovative products as well as the changing market.

In closing I wish you all a very Merry Christmas, a wonderful and safe holiday season and a prosperous New Year.

By Bruce Hoggard, roving just-food.com reporter

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