From field to frustration: How botanicals are weathering the great supply-chain cataclysm of 2022

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Botanicals may well be the sine qua non of “natural” ingredients: plant-based, often wildcrafted, and subject to the whims of Mother Nature herself. As such, securing steady supplies can be a delicate business under the best of circumstances. And as Wilson Lau, president, Nuherbs (San Leandro, CA), is all too eager to attest, these are not the best of circumstances.

“Over the last two years, we’ve seen lockdowns, shipping delays, and cost increases that have escalated continually, as well as worker shortages and myriad manufacturing challenges even as demand has skyrocketed—just to name a few,” he laments.

So what does the herbal industry do when fate tosses a once-in-a-century pandemic onto a massive logistical crisis—all atop a burgeoning botanical boom? It dials up the patience and keeps its eyes on the long game.

Accentuate the Positive

Granted, things aren’t all bad for botanicals—not by a longshot. In fact, the irony underlying the supply-chain crisis is that interest in botanicals has never been higher, and for good reason.

“While the global popularity of botanicals has increased for some time,” observes Ajay Patel, founder and CEO, Verdure Sciences (Noblesville, IN), “awareness and demand since the onset of COVID-19 have spiked to levels not seen prior.”

Indeed, while sales of immune-support botanical supplements had been rising for years—with elderberry alone seeing 100%-plus growth in both 2018 and 2019, and three of the mainstream channel’s four top-selling botanicals of 2019 (elderberry, Echinacea, and turmeric) situated squarely within the immune category—“It’s clear that starting in 2020, the growth trend for immune-related botanicals continued and accelerated,” says Holly E. Johnson, PhD, chief science officer, American Herbal Products Association (AHPA; Silver Spring, MD). And she predicts that growth will continue “now that consumers have become even more aware of the power of herbs to maintain general health and vitality.”

Predicting the Unpredictable

Lau agrees, adding that interest in stress- and sleep-support formulations “won’t slow down,” either. After all, he says, “There’s so much to be stressed about.”

What vexes him most? “The uncertainty has been perhaps the biggest challenge,” he says. “It’s taken away predictability: How many days will you need to allocate for the logistics of moving an item from point A to point B—whether that’s across the country or an ocean? The old schedules just don’t apply now.”

For perishable items, such delays portend disaster. “Imagine if you shipped something in spring but didn’t receive it until midsummer,” he suggests. “Instead of two months, it takes four or five to get to you. Now imagine that it’s temperature-sensitive and you didn’t put it in a reefer—a refrigerated shipping container. You could be looking at a total loss.”

And if what you shipped is coming from China, expect a significant price hike in addition to the now-requisite delays. By Lau’s estimate, almost all Chinese-grown products have seen cost increases of anywhere from 10% or 15% to as much as 400% and even 500%, with COVID, the country’s pandemic policies, and extreme weather all to blame. As for the upcoming harvests, he suspects they’ll “bring many more surprises, as well.”

Growing Pains

Yet as disruptive as it currently is, surprise has always been a feature of the botanical supply chain.

For one, Patel points out, the ingredients “are typically sourced from remote locations, and the logistics of getting them to collection houses, manufacturers, and ports is a huge challenge.”

Take bilberry extracts, for example, which “generally require multiple shipping steps to get from their Northern European harvest to China for extraction and then to the U.S.,” explains Cal Bewicke, president, Ethical Naturals Inc. (San Anselmo, CA). “Each step in this chain can get delayed.”

And even when the logistics run smoothly, Bewicke continues, botanicals remain vulnerable to threat because…well, because they’re vulnerable ingredients that “depend upon natural growth cycles as well as human involvement for their production,” he says.

Case in point, their planting schedules need advance mapping one to two years ahead of market requirements—perhaps longer for some root crops, Bewicke says—making it hard to respond rapidly to sudden demand spikes. And as for wildcrafted product, it’s subject to its own harvest variation, he adds, which will only increase with climate change.

Change for the Worse?

Speaking of which, Patel notes that Verdure’s unique view onto India’s botanical market indicates that supplies remain straitened by “the unpredictable nature of climate change.”

This is especially so given that the country’s monsoons—which typically last from June to September—continued well into November and December of 2021. With turmeric, ashwagandha, holy basil, bacopa, and ginger harvests all normally occurring after the monsoons—from November to March, Patel says—quality in the upcoming crop may suffer. “Some reports we’ve received are anticipating as much as 20% damage of crops,” he says, “especially among botanicals whose roots are harvested for medicinal use.”

None of this is lost on Lau, who ranks global warming the “top issue facing the dietary supplement industry long term.” With botanicals comprising an increasingly weighty portion of popular formulations, “the extreme weather patterns of global warming will impact yield, availability, and quality,” he predicts. “We’ll be facing this for the rest of our careers.”

One of Nuherbs’ proposed solutions is to “build resiliency into our operations to anticipate and mitigate developing vulnerabilities.” The company has already installed solar power systems to address operational vulnerability and permit the quick addition of battery storage “when pricing allows it or need necessitates it,” he says. “During energy-grid disruptions, we’ll be able to maintain daily operations.”

Hurry Up and Wait

In the more immediate term, the industry continues to contend with COVID-19’s fallout, including the transportation congestion and concomitant cost increase that have been “the most significant challenges,” as far as Greg Ris, vice president, sales, Indena USA Inc., is concerned. “Everything’s become more difficult and more expensive while also exposing infrastructure issues that had to be addressed.”

Patel agrees, adding that steep freight and logistics costs, rising fuel and labor rates, and high prices for botanical feedstocks are squeezing everyone along the supply chain, as well as with their bottom lines.

And Bewicke warns industry participants not to forget about packaging. “Almost all of these products come bottled in capsules,” he points out, “and supplies of these essentials have also seen a heavy impact, with delivery delays now running up to four months and more.” Customers tell him that staffing snafus—“from filling open positions to managing COVID absences”—have also slowed manufacturing. “So if obtaining quality botanicals is one step, getting them to market is one more challenge to add to that.”

Creative Strategies

Patel doesn’t expect delays to ease much this year, with lead times as long as 12 to 16 weeks likely to continue for at least the foreseeable future, he says.

In the meantime, he claims that Verdure has redoubled its dedication to maintaining multiple sources for feedstock botanicals to sell suppliers and manufacturers, as well as backup sources for customers. The company also increased its “sourcing footprint” by adding more acreage at the grower level and more manufacturing capacity with partner facilities. And of course, Patel says, “We’ve beefed up inventory levels of both raw materials and finished extracts to meet growing demand.”

For its part, Ethical Naturals “now works even further ahead” with both manufacturers and customers to keep storerooms filled, says Bewicke, who adds that the company’s inventories of key botanicals “are now substantially higher than when things were ‘normal.’”

And for brands who’d consider “shopping the open market” for ingredient substitutes, he has this to say: “That’s always risky with botanicals, and especially so now. So many shipments come into contract warehouses where no realistic U.S. testing is available. We don’t do that.” So when brands do need to shop around, he advises them to choose suppliers “with certified GMPs and a willingness to provide U.S. testing data from their own or independent labs.”

Johnson notes says that brands and suppliers alike are coming up with other “creative ways” to mitigate the challenges, including shifting from sea routes to air freight, expanding long-term storage and processing capabilities closer to home, and even “building relationships with U.S. farmers capable of growing botanical species typically sourced internationally.”

Relationships Count

And in the end, those relationships are what it’s all about. As Johnson puts it, “Brands that have prioritized longstanding, trusted partnerships with farmers and suppliers are in the best position to ensure they have the safe, high-quality ingredients they need for manufacturing and production without disruption.”

Ris agrees, noting that “opening up the conversation both with suppliers and customers has allowed us to manage disruptions effectively, and we’re confident our network will be even stronger as a result.”

And it had better be. With uncertainty all that’s certain, Lau says, “I think the best current workaround is planning early and communicating your needs to your partners, while providing ample time for materials to get to you.”