The "vitamin industry"
by Karl Loren

These raw materials would be in the form of "basic sulfur," or basic chemicals of all types.  There are thousands of these companies.  Most of what they sell has nothing to do with the vitamin industry -- they are just selling raw materials.

A very few of these companies which mine or extract these raw materials might also further convert the raw materials into bulk vitamins -- selling Vitamin C, for instance, by the ton.

Then there are the companies which "manufacture" vitamins.  They start with basic chemicals, etc., manufactured by others and convert them into vitamin substances.

Click here to read a news release describing a US Justice Department Anti-Trust Action against a "global vitamin price-fixing scheme."  Whether this attack has any merit or not, it is usually true that such investigations result in a great deal of information being made public that wouldn't otherwise become public.

This would be information known to some, but not to the majority of consumers of vitamins, or even most of the small retailers of vitamins.  The information in this news announcement indicates that three companies, all controlled from Europe, control about 75% of the entire raw material production for the vitamin industry.  

After you have identified the three very large manufacturers, you then find a large number of very small manufactures -- usually making specialty items.  MSM would be included in this category.

Solgar Vitamin & Herb Company would be one of these "small" manufacturers.  Even though it is classed, here, as small, Solgar's sales would be in the many millions of dollars per year.

Solgar is a vitamin manufacturer which has its own sales force.    Solgar is supplied raw materials by various manufacturers/suppliers of raw materials.  Click here to review a web page, within this web site, of the products "produced" by Solgar -- as an example of one of these small manufacturers.

Most manufacturers would have some salesmen of their own, but also work through brokers or even wholesale distributors.  Typically a broker never takes ownership of the stuff he sells, nor handles it physically.  Rather the broker simply acts as a go-between -- between the manufacturer and the next level downward in the marketing structure.

Broker fees can vary from 5% down. They are negotiable, depending on the sales volume and/or competition.  A broker can represent either a buyer or a seller.

Since manufacturers typically sell in ton quantities there is, within the market, the "wholesale distributor" who takes possession of materials, often breaks it down into smaller lot sizes (like 25 KG drums) for sale to the next lower level in the marketing chain.  Manufacturers like Solgar actually produce retail-sized packages of vitamins.

Other small manufacturers would produce no retail-sized products.

This marketing channel is not a simple straight line downward.  But, at this level there are both "packagers" and "bulk material distributors."

MLM companies are a major factor in the vitamin market.   Virtually none of them do any actual "manufacturing."  Many of them would not even own their own machinery for making tablets or capsules -- but would contract that work out to a separate company.

The "packager" is the company which buys or receives raw materials and converts that material into tablets and capsules.  They sell to distributors and retail outlets.

Packagers typically make vitamin products for hundreds of small customers.  They may make a thousand or more different "formulas," and are constantly faced with the problem of having to have inventory (or not) for hundreds of different substances.  "Life Glow Plus," for instance, is a formula designed by Karl Loren -- with 51 ingredients.  When the packager makes this formula for Vibrant Life, he cannot start the process until ALL the ingredients are in hand.  He may need many kilograms of vitamin C for that process -- and have that in stock.  But, he may not have any "thymus extract" in his inventory, needs only five pounds and must wait on HIS supplier for that "thymus extract" before he can start producing.

Thus, the packager is one of the most clever of people in this business.  He is constantly having to find new suppliers of raw materials and is constantly juggling production schedules against arrival of shipments of small or large quantities of materials.

He would normally not want to deal with a company such as B&B because B&B sells ONLY one product.  Purchase from B&B, even at a lower price than he can get his MSM elsewhere, might jeopardize his buying other products from other suppliers.  Thus, B&B expects to appoint regional stocking distributors.

If you purchase some bulk materials from us (or any other source) and walk into a packager -- he doesn't want to see you.  You represent a problem.  First, he doesn't really know what is in that drum!  He certainly doesn't want to get caught putting bad stuff into capsules for you -- his business is on the line.  So, he will often refuse to accept your raw materials.  That makes it tough for a company like us to break into the market.  We do it, as others have, by offering lower prices and very consistent service (shipment, quality, etc.).  More recently we have decided to start offering a complete line of retail products -- having them made in a factory willing to cooperate with us in using our own raw materials.

Packagers have been the key to the success in the vitamin business and also to major bottleneck for the newcomer.  If you are interested in selling MSM, you will have to be creative in finding a packager willing to use bulk MSM purchased from us -- or convince him to switch.  We, of course, are working from the other end to accomplish that.

The "bulk material distributors" handles bulk materials and sells to packagers, usually.

There are also "distributors" who only buy finished products, retail-sized products, from manufacturers and packagers.

Distributors such as Tree of Life or Cornucopia buy finished product from manufacturers of retail-sized products, usually at 25% below wholesale.

Say that the wholesale price for some bottle of vitamins is $10, the distributor would buy this at $7.50 per bottle, and sell it at $10.00.

The retailer would often sell this bottle for $20.00 but a "discount store" would sell it at less -- perhaps as low as $15.00.

MLM companies are "retailers" who typically buy in huge quantities and whose mark-ups are also huge.  Amway, for instance, has a vitamin line and sells one form of  Vitamin C at such about $7,000 per kilogram.  MLM companies would hardly ever sell a single-substance product.  They all try to create a formula, or add some hype to the substance, so that their product can be made to look so unique that price comparison is not possible.

Distributors usually cover a region with 500-1500 health food stores.

They have their own wholesale catalogue listing hundreds of brand names and thousands of Stock Keeping Units  (SKU).

There are companies called "private labelers" which usually have no facilities for putting materials into tablets or capsules, but buy from many different sources, only requiring that these companies put the private label on the product.

Companies like this would include many MLM companies and large mail-order firms as well as chains of retail stores.