Dietary supplements sell with promises of good health

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."