Should Retailers Know What's in Their Store Brands? 

By George Anderson, RetailWire 


It's been argued that food, drug and mass retailers selling thousands of products made by branded manufacturers can't be expected to know the actual ingredients of every item they stock. But what about the products that carry retailers' own labels?

Last week, the New York Attorney General's Office sent letters to GNC, Target, Walmart and Walgreens telling them to immediately stop the sale of popular private label herbal supplements after "just 21% of the test results from store brand herbal supplements verified DNA from the plants listed on the products' labels," according to the Office’s statement. The tests found that asparagus, wild carrots, peas, powdered rice and other substances were used as fillers. In some cases, ingredients used could have proven dangerous to those with allergies.

According to the tests, the DNA matched the label 22 percent of the time for GNC, 41 percent for Target, 18 percent for Walgreens and only 4 percent for Walmart.

"Results seem to confirm long-standing questions about the herbal supplement industry. Mislabeling, contamination, and false advertising are illegal," said Eric Schneiderman, New York's Attorney General, in a statement. "They also pose unacceptable risks to New York families — especially those with allergies to hidden ingredients. At the end of the day, American corporations must step up to the plate and ensure that their customers are getting what they pay for, especially when it involves promises of good health."

Although the U.S. Food and Drug Administration regulates supplements, manufacturers are not required to seek the agency's approval before producing or selling the products. The FDA leaves it up to manufacturers and distributors to "make sure that all claims and information on the product label and in other labeling are truthful and not misleading."

According to a New York Times report, Walgreens said it would remove the products across the country and Walmart said it would "take appropriate action" with suppliers. While GNC said it would cooperate with the attorney general's office, it continues to stand behind its testing methods and products. Target did not respond.


Discussion Questions:
:How will the New York Attorney General's findings affect the sale of store brand supplements in the chains named in the investigation? Does the FDA need to be given greater authority by Congress to regulate the manufacture and sale of supplements?



















Comments from the RetailWire BrainTrust:

I think this ruling will have a profound effect and retailers need to pay attention. The NY findings are a wake-up call for the supplement industry. Look for consumer complaints and lawsuits. Retailers would be wise to make sure that the products sold under house brands live up to their billing.
Max Goldberg, President, Max Goldberg & Associates

The supplement problem is very complicated. Because the traditional pharmaceutical companies can't copyright them, there's not a lot of research done in this country. And so, the presumption is that they're all harmless.

But they are neither quality-controlled (as the article explains) or studied correctly. And so you end up with stuff like this, or the Ma Huang scandal of the late twentieth century (it could flip your heart right out).

Good research and regulation seems to occur in Germany. Unfortunately, I don't see any of this happening here in the foreseeable future, which leaves us open to all kinds of quackery, and potentially missing out on real benefits.
Paula Rosenblum, Managing Partner, RSR Research

There is a problem in the supplement industry regarding ingredients. There are some high-quality brands that provide real products, as advertised and ethically, and then there's a slippery slope downwards from there. Just as any supplement or product company is responsible for their claims, evasive marketing jargon, or outright deceptions, so too should be any private label store brand trying to hide behind assertions of ignorance regarding product ingredients. If they put their name on it, they are responsible.

I applaud the investigation and hope there are more.
Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

Facts and the Internet will regulate the manufacturers of supplements. Given the facts and the immediacy of social media, shoppers will regulate with their purchases. Retailers need to take responsibility for what it places on its store shelves and virtual shelves. Requiring the manufacturers to provide an independent lab report to verify and take responsibility for its products should be a minimal requirement. Retailers are all-too-often blinded by margins and not social responsibility. Shoppers will show their feelings and emotions by how they choose to spend their money. The trusted retailer should take responsibility to, at the very least, be honest.
Adrian Weidmann, Principal, StoreStream Metrics, LLC

This has been an issue for all supplements, not just store brands. When regulation is relegated to the manufacturers, don't expect many batches to be rejected.
Dr. Stephen Needel, Managing Partner, Advanced Simulations

The New York Attorney General's findings will affect the sale for a little while, but barring a class action suit, which is a real possibility, nothing will change long-term and this will totally blow over in six months. Greater authority for the FDA? Well, somehow, there should be teeth in a law somewhere to penalize gross offenders like the ones in this story. But that's unlikely to happen considering Congressional gridlock and the power of lobbyists. Even though I think I'm pretty jaded, I confess to being dismayed at how badly the chains in question blew this, in terms of ongoing quality control checks of their private labels. Makes me think it is probably rampant.
Warren Thayer, Editor & Managing Partner, Frozen & Refrigerated Buyer

Retailers as the "suppliers" of the product in the customers' eyes will have to behave as suppliers. I think that's what customers would expect, that the retailers stand behind the product. Indeed it is probably overdue.
J. Kent Smith, VP, Business Development, Galleria RTS

These findings should prompt retailers to do a better job of quality control on their own labels. Will consumers translate this lax quality control to wondering what is in the food products that they are eating in a retailer's own brand? That could be disastrous for all concerned, from manufacturers to retailers to consumers. Once trust is broken it is very hard to reinstate.
J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

This problem really bothers me and should bother all consumers. If a retailer is putting their name on a brand they need to assume the responsibility and liability that the product is what it is reported to be. They should also do this for all of the products they sell but more so for products that carry their name.

Reminds me of an old song from the show Annie Get Your Gun: I didn't know the gun was loaded and I am so so sorry my friend.

Just don't think that is going to stand up in a court of law.
Mel Kleiman, President, Humetrics

The supplements industry is a hot mess as a direct result of insufficient federal oversight. It's super-unlikely that this Congress will address it, so retailers will have to protect themselves by continually testing these private-label products to avoid another black eye in the future.
Cathy Hotka, Principal, Cathy Hotka & Associates

The retailer that rises up and sets new standards for testing, monitoring and communicating transparently with shoppers is poised to win big in this area. Trust is huge in the wellness space and when four or five major retailers get "slapped" in this way, consumer confidence gets shaken. Which retailer will see and step up to this big opportunity?
Anne Howe, Senior Vice President, Shopper Solutions, part of Acosta Mosaic Group

FDA has ample authority to regulate dietary supplements, and as part of the regulation, dietary supplement companies are required to adhere to Good Manufacturing Practices (GMPs), which includes identity testing. DNA barcode testing is an inappropriate test for herbal products made with extractions because the extraction of phytochemicals that takes place during the manufacturing process can damage or leave behind the plant DNA. Scientific experts familiar are questioning the results of the tests from the Attorney General's office given the use of the DNA barcode test method. For more information on this issue visit our website: crnusa.org

Full disclosure: We are the trade association for the dietary supplement and functional food industry.
Council for Responsible Nutrition


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                                                                         Mid-February 2015