How To Build A Supplement Brand Without Selling Your Soul

The dietary supplement industry needs a paradigm shift. Here’s how your brand can lead it.

Borne out of an obsession with building muscle, my career in the dietary supplement industry began in the early 1990s. (For a trip down memory lane read this.) I was naive and idealistic, yet I managed to work my way up to become one of the top brand and product development consultants thanks to an insatiable hunger for knowledge and by taking on every challenge I possibly could.

While working with over 30 companies, I learned how to add value to almost every facet of the business: brand and product ideation and positioning, product formulation, marketing, creative direction, copywriting, manufacturing, scientific studies, legal, regulatory, sales, distribution and more. I enjoyed some outsized successes, made plenty of mistakes and developed a unique ability to spot opportunities — “white space” — that others missed. All of which brings us to today.

Selling hope in a bottle: Information Asymmetry.

While it’s far from alone in this regard (hello, cosmetics), as a veritable insider, I can attest to the fact that the supplement industry frequently shortchanges consumers using a variety of practices, some unintentional, many not so much. A colleague once described it as “selling hope in a bottle.” Economists use the term information asymmetry: The producers know more than the consumers. This allows the former to charge the latter higher prices for lower-quality products. Ultimately, we all lose.

We’re all getting less out of this than we could be.

I’ve witnessed the negative effects of information asymmetry up and down the supply chain, from supplements brands to contract manufacturers, ingredient suppliers, distributors, retailers and more. It is as pervasive as it is pernicious. While it may allow you to juice sales in the short term, in the long term it disempowers consumers, stifles innovation and limits the growth of the marketplace as a whole. The result is that we’re all getting less out of this than we could be.

In recent years, some dietary supplement brands have made efforts to reduce information asymmetry, such as by foregoing the use of so-called “proprietary blends” on product labels. These attempts at “transparency” are typically superficial at best. In many if not most cases, the industry continues to practice the same old smoke and mirrors, shortcuts and slights of hand.

Above-Board Brands are the antidote to information asymmetry.

Now perhaps more than ever, the world doesn’t need another supplement brand; it needs a new one that is willing to be honest and open with consumers to an unprecedented degree. I refer to this as an Above-Board Brand. They are the antidote to information asymmetry.

Rather than declaring “transparency” while paying it lip service, Above-Board Brands embody it in their everyday actions. They openly share their knowledge while acknowledging the limits of it. This empowers consumers and accelerates innovation and value creation while elevating and expanding the supplement marketplace as a whole. The result is that we all get more out of this.

Below, I’ve provided 7 recommendations for how you can create your own Above-Board Brand. There are more where these came from!

Some may read my list and say “Other brands aren’t doing this, so why should ours?” or “Yeah, we’re not ready for that.”

First, the fact that no other brand is doing all or most of these things is evidence that there’s plenty of white space. Second, in the spirit of Jeff Bezos, the time to become an Above-Board Brand is before you have to. Third, if you’re not ready, then you’re probably part of the problem. Wouldn’t you prefer taking the lead now rather than watching as another brand captures market share by doing it before you? Rest assured, it’s only a matter of time.

Use these 7 steps to build an Above-Board Brand that makes the competition say “Uh oh.”

1. Talk with consumers, not at them.

As my wife regularly reminds me, “It’s called having a conversation!” Too many dietary supplement brands talk at consumers rather than with them. For instance, product development takes place largely by diktak (“You want this product because we say you do”), unilaterally imposed with little or no input from consumers. This is unfortunate, since conversation is the single most powerful way you can uncover consumers’ unmet needs.

Conversation is especially critical in the supplement marketplace. Unlike, say, apparel, cars or, more recently, video gaming (e.g. Twitch), supplements are rarely used in a social setting. Nor do they come with an on-board computer capable of relaying the user’s behaviors back to the producer (essentially, a form of conversation) like a Tesla can. (More on this later.)

Above-Board Brands are always trying to up their conversation game. They encourage consumers to actively participate in shaping and molding their brand to create the products they want rather than the ones they think consumers want. No more product development by diktak.

2. Get rid of friction.

Above-Board Brands are constantly on the hunt for sources of friction and ways to reduce it. Using product development as an example again, they know that the success of their supplements will ultimately be determined by their ability to solve problems (friction) that consumers face in real life, not those fabricated in a marketing meeting.

The sports nutrition sector of the supplement industry has a fanciful history of creating products and marketing tactics that add friction to consumers’ lives rather than removing it. Examples include “night-time” fat burners and protein powders, supplement “stacking” “nutrient partitioning” agents, “cortisol blockers,” “myostatin inhibitors,” “intra-workouts,” “post-workouts,” “AM/PM” [enter product category here] and auto-subscriptions, among many others.

Fiction is friction.

Fiction doesn’t just disempower consumers; it also makes your business operations run less efficiently. Literally and figuratively, fiction is friction.

Consider something as simple as a brand story. A good one can act like a magnet to consumers. The most compelling brand stories are built with facts, not fiction. Despite this, I’ve witnessed countless companies throw away money hiring writers to craft fictional brand stories when they could have crafted a better one themselves based solely on the facts.

3. Just the Supplement Facts, please.

Speaking of stories, product claims (e.g. “Burns fat!”, “Reduces wrinkles!”) are such an egregious source of information asymmetry and friction in the supplement marketplace that they deserve treatment in a separate article.

As someone who has read more than their fair share of scientific studies and been heavily involved in the product development and marketing sides of the business, I’m the first to admit that there are things we know about how the vitamins, minerals, amino acids, botanicals and other ingredients used in dietary supplements behave inside our bodies, and far more that we don’t know, not to mention that Rumsfeldian type of unknown, the “unknown unknown.”

What does this mean for an Above-Board Brand?

Substantiate your claims.

Specifically, don’t make claims about your products unless they can be scientifically substantiated. Read any study that you intend on using as substantiation yourself and make sure that you understand its implications and limitations. Share this information honestly and openly with consumers.

In the case of a single-ingredient supplement, don’t attempt to use a scientific study to substantiate your claims unless your product:

1. contains the identical ingredient used in the study and
2. provides the identical dose used in the study when the product is taken as directed on the label.

This is especially important in the case of complex materials, such as botanicals, proteins and probiotics, which can vary significantly in composition. For instance, an Ashwagandha, green tea or turmeric extract from one source is highly unlikely to be identical in composition to another from a different source. Therefore, the results of scientific studies on these types of ingredients are frequently not generalizable. Many consumers may not realize this; an Above-Board Brand lets them know.

The functionality of the parts doesn’t necessarily equal that of the whole.

In the case of a multi-ingredient supplement, don’t attempt to use scientific studies on individual ingredients to substantiate claims for the product formula as a whole. The functionality of the parts does not necessarily equal that of the whole. Unless the efficacy of your formula in its entirety has been scientifically validated, you shouldn’t make claims implying that it has.

Some might say “These guidelines are too limiting. There won’t be anything left to say about my supplements!” If that’s how you feel, either your supplements are part of the problem or you’re failing to see what you could say about your products that doesn’t amount to fiction. Again, the best stories are built with facts. Limitations are opportunities in disguise.

Here’s a personal example. Many years ago, I coordinated a small proof-of-concept study for a client involving one of their weight-loss dietary supplements. The study was conducted by a respected academic institution with expertise in this sort of thing. The results of the study showed that the product did not work as intended; it lacked proof of concept. Nevertheless, the client went ahead with selling the product to consumers while making claims to the contrary.

An Above-Board Brand would handle things differently. It would see the “failed” study as an opportunity. For instance, they could submit it to a peer-reviewed scientific journal, share it with consumers and openly discuss how they intend on using the insights gleaned from it to develop and test another version of the formula, maybe this time with consumers’ active participation. And so on. Imagine how much trust and loyalty this approach might engender with consumers, and the opportunities to innovate and add value that it might uncover versus burying the study like it never happened?

No “window dressing.”

Dealing in Supplement Facts, not fiction, also means not engaging in “window dressing.” This is the practice of intentionally under-dosing an ingredient so that it can be declared on the product label, thereby enhancing consumer appeal (hence, “window dressing”), without materially increasing costs. While consumer pushback against proprietary blends has made window dressing less common these days, it still goes on, often in broad daylight.

Truth → Trust → Profit

Just to be clear, it is certainly acceptable for an Above-Board Brand to use a sub-clinical dose of a clinically studied ingredient in its supplements. What makes it unacceptable is when you aren’t honest and open about it with consumers. Disclose and grow rich. The truth yields trust yields profit.

(NOTE: I’ve witnessed far more tricks of the trade than alluded to above, but for the sake of your time, I’ve limited our discussion.)

4. Cost Transparency

If your not already inclined to be an Above-Board Brand, then the idea of cost transparency may scare the [poop emoji] out of you.

Note that I used the term “cost,” not “price.” When consumers buy dietary supplements, they can see the price. What they can’t see are the costs behind it. As the term suggests, cost transparency involves itemizing the costs incurred in making your supplements on the label, online product pages and other consumer touchpoints. The following list is not exhaustive:

• Ingredients (ex-flavor)(you can break these out individually if you like)
• Flavor system (if applicable)
• Packaging & label
• Manufacturing (e.g. blending or encapsulation)
• Testing & certification
• Shipping
• Profit (though not technically a “cost”, it ultimately becomes one for the customer)

So why would you want to share your costs with consumers in the first place? A better question is, why wouldn’t you?

Supplement prices transmit poor economic signals.

Again, the supplement marketplace is far from alone in suffering from information asymmetry. (I’m reminded of this every time my wife comes home with another skin cream.) Still, it’s definitely got a worse-than-average case of it. At the risk of oversimplifying, this can largely be explained by the fact that the barriers to entry for new supplement brands are relatively low and industry regulations (or lack thereof) are such that many of them indulge in misleading practices largely because they can get away with it. As a result, the economic signals transmitted by supplement prices are generally pretty noisy. This causes consumers to waste a great deal of time and money.

Cost transparency to the rescue.

As a supplement brand, when you get a quote from a contract manufacturer to make a product for you, it usually consists of a single number. If you’ve ever been fortunate enough to get a manufacturing quote with the underlying costs itemized, well, you know helpful it can be. It makes you feel a lot more comfortable about the prospect of doing business with the manufacturer.

A regular non-itemized quote transmits regular-strength economic signals. But a cost-transparent (itemized) quote opens up the signal floodgates; it transmits economic “super-signals.” Alas, this is a rare treat. I can count on one hand the number of contract manufacturers that have provided me with an itemized quote. Some will do it — those are the ones I try to work with — but it’s not the norm.

Now imagine if you were to itemize the underlying costs of your supplements for consumers in an honest and open fashion that they could understand and appreciate. This would allow you to transmit economic super-signals. In turn, consumers could send super-signals back to you. Both parties could uncover unmet needs that they would otherwise be blind to. It’s a win-win. That’s cost transparency in action.

Above-Board Brands are the masters of the super-signal.

It gets even better. Indeed, it’s not just the supplement brands and consumers who benefit from cost transparency. Those economic super-signals eventually reverberate throughout the entire supply chain, back and forth between brands, contract manufacturers, ingredient suppliers, distributors, retailers and so on. This encourages and indeed puts pressure on the members of the chain to innovate and create value. In turn, this elevates and expands the marketplace as a whole. The result is that we all get more out of this. This is one reason why Above-Board Brands can be such a powerful force for change.

Let’s say an Above-Board brand creates a pre-workout supplement in the form of a powdered drink mix. Upon reading the product label, consumers see that the flavor system makes a rather large contribution to the selling price. In response, many request an unflavored version. The brand decides to do so and passes the cost savings along to consumers in the form of a lower price. Of course, depending on the level of engagement a brand has with consumers and its supply chain, the possibilities for creating value can go far beyond this.

You might be saying “Our contract manufacturer won’t provide us with a complete breakdown of costs like you described.” In my experience, there are manufacturers that will do so, but it may come at a cost — pun not intended. Remember, transparency begets transparency. Openly explain to the manufacturer what your brand is trying to accomplish. If you still can’t come to a reasonable agreement with them, take your business elsewhere.

One thing I’ve learned is that if you experience difficulties at the beginning of a business relationship, there’s a good chance you’ll experience them throughout. It’s usually best to nip it in the bud.

Draw a picture.

You can find plenty of examples online showing how cost transparency can be communicated powerfully using infographics. Everlane uses a simple one. Here is one for petrol (gasoline) and here is one for a t-shirt. Oh, and check out this one for a Nike shoe. (I especially like the last two.) While these particular infographics are better suited for online product pages where space is less of an issue, each contains elements that can be adapted to fit the confines of a supplement label. Where there’s a will, there’s a way.

5. Ingredient Transparency

The internet has made it clear that consumers want brands to share more about what they know and don’t know about the ingredients they put in their products. Above-Board Brands don’t wait for them to ask.

Similar to cost transparency, ingredient transparency involves disclosing the typically undisclosed details about the ingredients in your supplements, such as who produces it and where, along with a certificate of analysis (COA) and possibly other documents. This information should be made readily available to consumers online.

Also like cost transparency, ingredient transparency elicits economic super-signals that are transmitted up and down the supply chain, ultimately benefiting consumers and everyone else. For an Above-Board Brand, ingredient transparency is a no-brainer.

Changing ingredients? Let consumers know.

An Above-Board Brand lets consumers know when it changes the ingredients in its products. (Remember, “Supplement Facts, not fiction.”) For instance, if you decide to get an amino acid or botanical extract from a different source because it will reduce your cost of goods (COGs), explain this to consumers and indicate how it might impact the product’s efficacy and/or other aspects of the user experience. This should go without saying, but a lot of brands neglect to do it, often intentionally. If you’re uncomfortable disclosing such information, it’s likely because your decision isn’t in the best interest of the consumer. In which case, it’s not in the best interest of your brand.

In an ideal world, the details of the ingredients you use in your dietary supplements might be stored on a “trustless” blockchain. Alas, the industry doesn’t appear to be remotely close to doing this. In the meantime, you’ll have to collect them the old-fashioned way. Often, this means requesting the information from your contract manufacturer, who in turn may ask the ingredient supplier, who in turn may ask the ingredient manufacturer. Each step requires the assumption of trust (fake documents?), not to mention time and, frequently, frustration.

You can always take sourcing into your own hands, of course. I’ve had clients who have done this. It isn’t easy, but nothing worthwhile is. The upside is that it gives you more control and strengthens your Above-Board Brand story.

6. Endorsement Transparency

If you compensate an influencer or any other party for endorsing your brand, disclose the nature of the relationship to consumers. For instance, how and why did you choose that individual to endorse your brand? Were they already using your products, or did you just like the fact that they’re pretty or have big muscles? Are you paying them with cash, a commission, in product, or otherwise?

Some brands may say “This kind of information is private.” What makes you say that? Don’t think of it as divulging “private” or “sensitive” information. Think of it as an opportunity to build an even more compelling story about your brand based on facts, not fiction. Disclose and grow rich. Remember, truth → truth → profit.

On a related note, if you’re a sports nutrition brand and you share the exercise or diet habits of your influencers with consumers, don’t make it up. Consumers want to know how they actually exercise and eat in real life, not tales of fiction intended to fool them into buying your supplements. If an influencer doesn’t actually take, say, three of your products every day, don’t imply otherwise. The cracks in your story will eventually be seen. In fact, they already have: The influencer sees them, as do you. Be part of the solution.

Finally, Above-Board Brands know that it’s better for business if they select influencers who share their values (e.g. honesty, openness, integrity), and they allow them to actively participate in achieving their mission. A pretty face or big biceps alone isn’t enough.

7. It’s time to tech up.

If you follow Warren Buffett, you know that he’s fond of brands that have a “moat”; i.e., an enduring competitive advantage.

Building a moat around a supplement brand isn’t terribly easy, which probably explains in part why Buffett doesn’t seem all that interested in investing in one. This is due to a number of challenges facing the supplement marketplace, among them:

1. Relatively low barriers to entry ensure that there are always lots of competing brands. You can start a supplement brand fairly easily with as little as $10,000.
2. All supplement brands must largely choose from the same list of DSHEA-compliant ingredients to formulate their products with. (*DSHEA = the Dietary Supplement Health & Education Act)
3. Little differentiation between brands: Due to 1 and 2, plus other factors.
4. Network effects are basically zero: A network effect occurs when the addition of another person to the network makes it better. Think Massively Multiplayer Online Games (MMOGs) and Facebook.
5. Switching costs are basically zero: E.g., the costs of leaving Facebook for another social media platform are pretty steep if all of your “friends” are on FB. In contrast, there’s little to stop most consumers from switching from one supplement brand to the next. For good reasons, most supplement users are not very brand loyal and tend to shop more on the basis of price. (Amazon has arguably encouraged the latter.)
6. Supplements are “asocial”: They’re generally not consumed in social settings. To boot, in the case of sports nutrition, the exercise modalities practiced by most consumers tend not to be very social. (For instance, bodybuilders generally don’t train in groups. Crossfit involves groups, but “Crossfitters” traditionally have not been big users of dietary supplements.) This has a number of negative knock-on effects.
7. Lack of feedback effects: When you hop on Facebook, Zuck and his team of engineers track your every move. Similarly, when you get behind the wheel of a Tesla, the on-board computer collects data on your driving habits and transmits it back to Elon and the gang. Supplements? Nada.

Build a better moat with tech.

Supplement brands need all the help they can get in overcoming the challenges listed above. Above-Board Brands know this, which is why they’re always looking for ways to incorporate tech into their business. It can help them build a better moat while elevating and expanding the marketplace as a whole.

Online games provide plenty of ideas. The most popular ones allow users to immerse themselves in an environment replete with network effects, switching costs, social elements, feedback effects and more. Even if you’re not actually playing a game, you can feel like you’re participating (e.g. Twitch). Properties like these would make the supplement experience much more appealing to consumers. The knock-on effects would be tremendous.

It’s not just the consumer-facing side of things where tech can help you build a better moat. For instance, think about all the steps you have to go through to bring a supplement to market. Many of them feel unnecessarily old-fashioned. There’s information asymmetry around every corner.

I’m not a coder (I spent a few minutes watching a Python tutorial on Youtube), but surely there must be a way to create a digital platform that allows you to, say, get a quote from a contract manufacturer more efficiently. On a related note, I’ve been saying for years that it’s only a matter of time before dietary supplements are formulated by AI.

Conclusion: Come to the Above-Board side.

I hope that I’ve given you lots to think about today. Indeed, every one of the 7 recommendations provided above can be applied in many different ways, at many different levels.

It bears repeating: The world doesn’t need another supplement brand; it needs a new one, an Above-Board Brand. It’s time for a paradigm shift.

Taking the high road, particularly before you have to, will allow you to capture market share from those that don’t. Jeff Bezos supposedly said, “Your margin is my opportunity.” I say “Your information asymmetry is my opportunity.”

But it’s bigger than that. Every new Above-Board Brand that comes into existence puts more pressure on the entire supply industry to innovate and create value. This helps elevate and expand the marketplace as a whole so that we all get more out of it. Isn’t that what we want?

Fiction is friction. Take the path of least resistance. Come to the Above-Board side.