Vitamin maker finds new health in New Jersey

China Daily (Canada) - - ACROSSAMERICA - By LIU LIAN in New York lian­liu@chi­nadai­lyusa.com

In his of­fice in Free­hold, New Jersey, Steven Dai has two dis­play shelves filled with sup­ple­ment bot­tles pro­duced by the In­ter­na­tional Vi­ta­mins Corp (IVC), the vitamin and nutritional sup­ple­ment busi­ness that he and six other Chi­nese in­vestors bought from In­ver­ness Med­i­cal In­no­va­tions (re­named Alere in July 2010) in 2010.

In the three years since the takeover, IVC has jumped into 2nd place — from pre­vi­ously fail­ing to make the top 20 — in the pri­vate la­bel sec­tor, which ac­counts for roughly 40 per­cent to 45 per­cent of the US di­etary sup­ple­ment mar­ket. The com­pany now sup­plies “25 per­cent of FDMC (food, drug, mass mer­chant and ware­house club) re­tail­ers in the US,” Dai said.

FDMC in­cludes chains such as Wal­mart, Tar­get, Costco, Sam’s Club, Wal­greens, CVS, RiteAid, and Safe­way.

Pri­vate la­bel sup­pli­ers like IVC are con­tracted by the re­tail­ers to man­u­fac­ture vi­ta­mins, min­er­als and sup­ple­ments (VMS) to sell as their own store brands. Com­pared to well­known vitamin brands such as GNC and Vitamin Shoppe, pri­vate la­bels of­fers qual­ity op­tions at lower costs, Dai said, which in­creases in­ter­est from re­ces­sion-stressed con­sumers.

“We pre­dicted that con­sumers’ en­thu­si­asm for VMC would con­tinue un­abated,” said Dai, “and we saw great po­ten­tial in this fast-grow­ing pri­vate la­bel sec­tor.”

The sup­ple­ment in­dus­try grossed $30 bil­lion in sales in 2011, up nearly 8 per­cent from the pre­vi­ous year, ac­cord­ing to Nu­tri­tion Busi­ness Jour­nal, an in­dus­try trade pub­li­ca­tion.

Among sup­ple­ment shop­pers, 80 per­cent pur­chased vi­ta­mins at a gro­cery or drug store in the past two years and 67 per­cent of shop­pers al­ways pur­chase vi­ta­mins from gro­cery or drug stores, ac­cord­ing to a 2012 re­port from re­search firm Vest­com.

“In­vest­ing in the US was an im­por­tant step for us for two rea­sons: one is the lo­gis­ti­cal de­mands of com­pet­ing in the US mar­ket, in­clud­ing ware­hous­ing, trans­porta­tion and cus­tomer ser­vice; and the other is ac­quir­ing tech­nol­ogy and in­no­va­tion.”

Dai re­called the days when in­vest­ment in China was fo­cused on low-cost man­u­fac­tur­ing. Back in the 1980s and 1990s, China was a low-cost la­bor leader in the world for Western com­pa­nies.

But with China’s ris­ing la­bor cost and the re­cent eco­nomic slow­down, this was no longer the case. There are now in­creas­ing de­mands on com­pa­nies to di­ver­sify port­fo­lio in­vest­ments into de­vel­oped mar­kets, par­tic­u­larly the US, a trend con­firmed by a re­cent Deloitte sur­vey of global, China-fo­cused M&A prac­ti­tion­ers that found that ac­quir­ing tech­no­log­i­cal best prac­tices re­mains the main rea­son for out­bound Chi­nese in­vest­ment.

“We have en­joyed an an­nual growth rate of 30 per­cent to 35 per­cent since the ac­qui­si­tion and 50 per­cent of the growth came from in­no­va­tion,” Dai said.

Dai got an MBA at Rut­gers Univer­sity in 2002 and gained in­dus­try ex­pe­ri­ence work­ing as an ex­ec­u­tive in global sourc­ing for US phar­ma­ceu­ti­cal firms.

“IVC was not a profit-mak­ing branch for the pre­vi­ous owner, which was fo­cused on med­i­cal equip­ment,” said Dai. “Over the years the par­ent com­pany had been re­luc­tant to in­vest more in tech­nol­ogy at IVC. The busi­ness was run­down and morale was low.

“We rec­og­nized the crit­i­cal role of in­no­va­tion in re­vamp­ing the com­pany,” he said. “And have in­vested heav­ily in re­search and prod­uct de­vel­op­ment since the takeover. But in­no­va­tion is not just pick­ing up the pace of new prod­ucts, ser­vices and mar­ket strate­gies; it also in­volves cre­at­ing a dy­namic or­ga­ni­za­tion that em­braces the em­ploy­ees’ sense of be­long­ing, pas­sion and in­di­vid­ual re­spon­si­bil­i­ties.

“We broke down IVC’s lon­grange com­pany goals fur­ther into goals for dif­fer­ent de­part­ments, and even­tu­ally for in­di­vid­ual em­ploy­ees,” said Dai. “Ul­ti­mately, in­no­va­tion is a very per­sonal ex­er­cise, and align­ing in­di­vid­ual growth with the com­pany’s de­vel­op­ment made ev­ery­one feel rel­e­vant and con­nected.”

The strat­egy seems to have worked. Be­sides the growth in sales, the num­ber of em­ploy­ees at IVC has grown from 200 to more than 400 in the last three years, in con­trast to the dire un­em­ploy­ment rate in the US.

“When we made a plan of cre­at­ing our own phar­ma­ceu­ti­cal ware­house within six to 10 months dur­ing the first year, many peo­ple thought it im­pos­si­ble, as it typ­i­cally takes two years for Amer­i­can com­pa­nies to ac­com­plish a project of such a scale,” said Dai.

But Dai and his team got it up and run­ning in eight months, en­abling em­ploy­ees to reach their pro­duc­tiv­ity goals un­der the new man­age­ment. “The fact that we were able to suc­ceed on a very ag­gres­sive time­line un­doubt­edly boosted the em­ployee con­fi­dence in the Chi­nese own­ers,” he said.

All em­ploy­ees of IVC were ei­ther re­tained from the ear­lier com­pany or hired lo­cally. “I used to joke about be­ing the only Chi­nese em­ployee in the com­pany,” Dai said, “and to­day we have added two more who are eth­ni­cally Chi­nese: my as­sis­tant and an ac­coun­tant.”

As for the fu­ture, Dai hopes to ex­pand IVC’s West Coast pres­ence and reach more venues in the US mar­ket.

“On top of tablets, cap­sules, soft­gels and chew­ables, we are de­vel­op­ing new for­mats such as liq­uids and pow­ders in or­der to give con­sumers a wider range of choices. We are also look­ing into the mar­ket of pre­scrip­tion and over-the-counter med­i­ca­tions,” he said.

“Even­tu­ally, I want to bring IVC to China.”

PRO­VIDED TO CHINA DAILY

Steven Dai and six part­ners ac­quired the droop­ing In­ter­na­tional Vitamin Corp from an Amer­i­can com­pany in 2010 and it is now the sec­ond-largest pri­vate la­bel di­etary sup­ple­ment busi­ness in the United States.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.