Dietary supplements sell with promises of good health

By Rita A. Widiadana

JAKARTA (JP): It could be called the shortcut to better health for those loathe to make hard sacrifices.

The "Back to Nature" movement, which reached Indonesia from Europe and the United States in the 1980s, preaches a holistic natural lifestyle and turning one's back on harmful modern conveniences.

But for those disciples not willing to bite the bullet in changing their habits, dietary supplements -- made of exotic extracts of fruits, vegetables, grains, marine plants, spices and herbs -- are often embraced to beat the onslaught of time and grievous bodily harm incurred by everyday living.

A rarity just a decade ago, dietary supplements now pack the shelves of major health stores such as Guardian, Shop in Body Care and Medicare.

The popularity of dietary supplements began in the country's growing middle class and their exposure to Western trends through living abroad, said Stevie Adriyanto, human health and nutrition manager of PT Rosindo Husada Pratama, the sole local representative of Roche International.

"These people brought the trend here and the market was then shaped, since demand for dietary supplements increased in line with the growing number of the nation's middle class."

The potential led many international manufacturers to seek local agents for their products.

Linda Poerwoko, managing director of PT Berumas Libera Corpora, local marketer of Imadeen and Zinax, claimed her company was the first to jump on the dietary supplement bandwagon.

In 1990, Libera was invited to become the sole agent for Imadeen from Denmark.

"At first I was pessimistic whether my company could market such an expensive product, which at that time was sold at Rp 100,000 a box " Linda recalled.

A few months later, Linda was pleasantly surprised to find Imadeen was enjoying brisk sales in the local market.

"It was beyond my business calculations that Indonesian people were willing to buy such an expensive good like Imadeen.

"It is a clear sign that Indonesian people are willing to spend their money to be beautiful and healthy."

There is enormous potential for market growth, she said.

"Imagine, we have a population of more than 200 million. Let's say the middle to upper classes comprise only 10 percent of the population. It is still a big target market."

Her company's success invited new players to try their hand. Today, dozens of companies are sole agents and distributors of dietary supplements.

A manager at PT NVPD Soedarpo Corporation, a noted distributor of pharmaceuticals and supplements since 1952, maintained that these sole agents would appoint firms to distribute products to retail outlets nationwide under conventional marketing strategies.

Soedarpo is extremely selective in choosing both products and distributors, said the manager, who declined to be named.

"Our company is willing to distribute products provided that they are high quality and medically checked. We don't want to cheat consumers."

Aggressive and innovative companies have adopted multi-level marketing strategies to bring products directly to consumers.

PT Amindoway Indonesia, a subsidiary of the Michigan-based Amway International, is among the more than 20 firms using this approach.

It sells dietary supplements and other personal care items through more than 25,000 distributors in major cities including Medan, Jakarta, Surabaya, Bandung and Yogyakarta.

Another prominent company is PT Centranusa Insan Cemerlang, with more than 70,000 distributors in the country.

Distributors are categorized into upline and downline: Upline distributors are responsible for recruiting and training the people to become downline distributors to sell products.

An upline distributor who manages to secure downline salespeople will get "points", or bonuses, from the agent.

Multi-level marketing distributorships are considered profitable as they cultivate an entrepreneurial spirit, often suppressed in regular corporate jobs, to excel.

For example, PT Amindoway Indonesia's sales reached around Rp 100 billion in 1996.

There is always the danger of unscrupulous agents and distributors making empty claims.

Chairwoman of the Indonesian Consumer Foundation, Tini Hadad, said the Ministry of Health had yet to issue clear regulations on sales of dietary supplements.

"In fact, people tend to buy and consume such products because they are attracted to intense promotions. Many of them have inadequate knowledge of the potency and ingredients in them."

She urged the government to effect regulations to prevent abuse of consumer trust, especially during the monetary crisis.

"The government must be strict in regulating various consumer goods businesses. Most dietary supplements are imported goods, which means we need foreign currencies to import them.

"This is the kind of business that needs to be reconsidered at a time when Indonesia is battered by an economic crisis."

Crisis

After years of glowingly healthy growth, the sudden economic slide has been a bitter pill to swallow for the business.

Adriyanto conceded there would be a downturn in sales.

Few products are locally packaged, he said, and all members of the distribution chain here were embattled.

Those who do manufacture will find it difficult to procure imported raw materials. Agents may not have the funds to purchase the products.

"Many foreign banks have recently refused to confirm Letters of Credit issued by Indonesian banks as they have lost confidence in our country and its banking system," he said.

Distributors and retail outlets will also suffer from the lack of available products.

"I hope the price of dietary supplements will not increase irrationally like other goods," he said.

The Soedarpo employee admitted there had been a slowdown in the distribution network. Some retailers are also making fewer orders.

Budi Poerwoko, chairman and CEO of Libera, predicted glumly that a prolonged crisis could be the death sentence for dietary supplements in the country.

"Because of the rupiah devaluation against the U.S. dollar, we should raise the price of dietary supplement products at least 200 percent over previous prices.

"But we cannot do that since the buying power of Indonesians is decreasing sharply."

Consumers are now thinking twice about purchases of non- essential goods.

Firms such as Libera are striving to maintain prices. Imadeen still sells for Rp 160,000 at local outlets; it costs S$85 in Singapore and about A$85 in Australia.

"I have suffered significant losses in the last few months," Budi said. "It is really incredible that the crisis has driven such a lucrative business into real trouble."