US interest in kava

fuels multi-million dollar sales

By Christine MacDonald

S Tressed-Out

Americans, looking for some Pacific Islands atti tude, have discovered kava in increasing numbers in the last two years. This growing US following is con verting kava into a standout herb, and kava sales from minuscule to a multi-million dollar business, according to industry executives and analysts.

Kava pills and tinctures are now widely sold in US pharmacy chains and even in some supermarkets nation-wide, a trend that is propelling kava beyond the shelves of health food stores and into the American mainstream.

Riding high on a wave of public interest in “natural” medicine, kava’s US sales exceeded $35 million last year and are likely to double this year, according to Thomas Aarts, editor of Nutrition Business Journal, a San Diego, California-based trade journal that tracks the industry.

Aarts said kava sales have taken off since the mid 19905, when the root went from relative obscurity to be heralded as another St. John’s Wort. St. John’s Wort, another age-old medicinal plant, has become enormously popular with many Americans as a natural alternative to the antidepressant Prozac. Kava promoters have quickly extended the comparison,

likening the root’s psycho active powers with those of the anti-anxiety drug Xanax.

The herb has grown attractive with some of the estimated 23 million Americans who suffer from chronic anxiety, according to medical researchers. Kava is also the sub ject of half a dozen recent books on holis tic stress reduction. Dozens of US news reports, including a prime time television news show, have profiled the drug. Amid the media attention, new importers, phar maceutical manufactures and retailers have come out of the woodwork.

“In two years, it has gone from not even on our radar to become one of the top 10 or 12 products” sold in the United States, said Aarts, who expects Kava to become a sta ple of the US herbal supplement market.

“Barring any kind of regulatory issues, I think it has real legs. It could take on a role in people’s lives,” Aarts said.

Gary Friedman, who has been import ing kava from Vanuatu since the 1970 s through his Seattle-based company Cosmopolitan Trading, said he will easily sell $lO million worth of raw kava roots this year. He said the market started grow ing two or three years ago, but it really began to boom in the early spring this year.

“All of a sudden we got slammed.

Everybody was of aware of kava,”

Friedman said. At least a half dozen prod ucts - mostly pure kava root extracts and a few supplements that combine kava

with other herbs - havcM'ound a market niche, according to Aarts. Many herbal supplement companies are small, privately owned operations that are not required to report sales and earnings

to US regulators.

Even the public firms are reluctant 1 to break out figures for S

individual 1

products, Jj

which

makes the 1 1

cut-throat

industry dif

ficult to track. Yet, Aarts, who collects data direct i y from

industry companies, said kava market lead ers currently include Twin Labs, Natrol, Rexall Sundown and Enzymatic Therapy.

Natrol was one of the first US compa nies to launch a kava product two years ago. Cheryl Richitt, vice president of mar keting for Natrol, said the early work has paid off.

“Kava is finally getting its due. It was a sleeper for many years,” said Richitt. Her company and two others - the L’Oreal cos metic company and German pharmaceuti cal giant Dr. Wilmar Schwabe GmbH & Company - have taken out US patents on kava products, according to US Patent Office. Natrol launched Kavatrol in 1996, just as kava began to create a buzz among industry insiders. Since then, the compa ny’s sales and profits have soared.

Net sales for the first nine months of the year were US$4B.9 million, up 65.8 per cent over the year earlier period’s $29.5 million. Net income more than doubled to $5.3 million, up from $2.4 million a year earlier, according to the compa re,. n y’ s third quarter report to the US Securities and Exchange Commission.

Richitt declined to say Low kava sales contributed to the total. But, she said the product is one of the company’s four princi s} pal herbal products.

Natrol purchases the herb from exporters in Fiji and does not pay x any royalties to kava 4 growers, Richitt said.

I I The company patented its particular kava U A cocktail j which is most ifaippiS' ’ ly kava plus a few other herbs r ■ to protect the brand, she said. “We wanted to HNfc 1 protect the

Ski'll * nyre

dients so other companies could not go out and duplicate it and build off our success in building the brand,” Richitt said.

“Whenever you get a consumer industries where you are experiencing this kind of growth you get a lot of competition”.

The competition is indeed fierce for a slice of the billion-dollar alternative medi cine market. Skyrocketing industry sales in the last few years have caught the attention of America’s largest distributors.

US retailers have rushed to cash in on the natural medicine craze. Chain stores such as Walgreen, Brooks and OSCO Drug and some supermarkets have begun stock ing herbs. And, retail sales appear to be accelerating. Boca Raton, Florida-based Rexall Sundown’s retail sales jumped 116 per cent during the first nine months of this year, but for the third quarter alone, retail sales were up 156 per cent, the company said. Other industry companies have reported similar acceleration, which jibes with a recent survey published this month in Boston. It found Americans made more trips to alternative healers than to Western medical doctors last year.

The survey published by Beth Israel Deaconess Medical Center and Harvard Medical School estimated that four in every 10 Americans used an alternative remedy such as herbs in 1997.

The findings compare to an earlier study conducted in 1990, which found three in 10 Americans used alternative medicine. The Harvard report estimated that Americans paid $5.1 billion on herbal remedies and another $4.7 billion on books, classes and equipment used in alter native therapy.

The herbal remedy companies are working overtime to sustain public inter est. For instance, Natrol reported a 72 per cent increase in sales and marketing expenses, which include advertising and promotional costs, during the third quarter compared with the third quarter of last year. The company said it spent $4.6 mil lion in the third quarter and $12.3 million for the first nine months of 1998. Natrol and other companies once restricted adver tising to the pages of alternative lifestyle magazines and newsletters. Today, they are channelling advertising dollars to televi sion spots and ads in newspapers and gen eral interest magazines.

Rexall Sundown, a company with a wide array of businesses including nursing homes and herbal supplement manufactur

ing and marketing, is another company that is experiencing windfalls from the health care trend. The company, which makes two kava-based stress relievers, saw net sales for the first nine months of its fiscal 1998 grow 86.7 per cent to $377 million, up from $202 million for the same 1997 peri od. Net income nearly doubled to $49.6 million from $26.3 million for the first nine months of fiscal 1997.

Several herbal product companies have cashed in on their recent success by going public, buying competitors and generally expanding operations.. Others have been bought by large pharmaceutical companies looking to enter a promising new market.

German giant Schwabe formed a US joint venture with another German compa ny Madaus A.G. and Nature’s Way Products Incorporated of Springville, Utah to produce kava and other herbal products in the mid-1980s. The company has held a US patent on its process for producing its kava-kava extract since 1992. Enzymatic Therapy, a Greenbay, Wisconsin company, and Nature’s Herbs, an American Fork, Utah-based division of Twin Labs, provide little more than promotional information and no market information.

Beyond stress-relief, Kava is inspiring less orthodox treatments. L’Oreal has patented a topical hair loss formula. A Los Angeles start-up company is marketing kava as a sex aid. Pacific Sensuals Inc. calls its Erotikava “the legendary drink of love of the South Pacific” and offers cus tomers “romance in a bottle”.

Despite the public enthusiasm, the American medical community is begin ning to demand an accounting from alter native medicine promoters. This month’s issue of the Journal of the American Medical Association includes a lead article on the Harvard survey, accompanied by an article calling the trend “deeply troubling.”

In September, the New England Journal of Medicine strongly criticised alternative remedies as unproven.

The onslaught could prompt the US Congress or the federal government’s Food and Drug Administration, to clamp down on the industry.

Currently, herbs and many other natural remedies sell as “dietary supplements,” thus escaping the scrutiny new drugs face before they may enter the market.

Natural medicine critics would like to see more laboratory testing and stricter regulations. ■