Weekly News Update

November 29, 2001

Merck Removes Kava from Market

German pharmaceuticals manufacturer Merck says it has permanently removed its products containing the herbal extract kava from the market following reports that kava was linked to several cases of liver damage, according to an article in The Financial Times. The company insists it was not pressured by authorities to make the voluntary recall, and that there were no indications that its two products, Kavadura and Kytta-Kava, had been causing side effects related to the alleged 24 cases of liver disease recently reported to German authorities. According to the company, the removal of the product from its lineup should not have adverse effects on overall sales (combined annual sales of the two products totaled $220.9 million).

European Union Fines Vitamin Manufacturers $752 Million

The European Competition Commission has fined eight bulk-vitamin manufacturers for price-fixing with fines totaling $752 million. German chemical group BASF received a $260.5 million fine and Hoffmann-La Roche received a penalty of $406.7 million. Other companies found guilty of violating antitrust laws and fined include Takeda Chemical Industries ($33 million), Daiichi Pharmaceutica Co. ($20.5 million), Eisai Co. ($11.6 million), Merck KgaA ($8.1 million), Solvay Pharmaceuticals ($8 million), and French biotech company, Aventis ($4.4 million). Mario Monti, European competition commissioner, said, ""This is the most damaging series of cartels the Commission has ever investigated due to the sheer range of vitamins covered,"" according to just-food.com. BASF and Roche are considering appeals.

R.J. Reynolds Ups Ante for Natural Tobacco Company

The second largest tobacco company in the U.S., R.J. Reynolds Tobacco Holdings Inc. (RJR) announced it plans to buy Santa Fe-based Santa Fe Natural Tobacco Co. on Nov. 21 for $320 million. Santa Fe Natural Tobacco produces the American Spirit brand, which is made with natural and organic tobacco.

If the sale is approved by shareholders and regulators Santa Fe Natural Tobacco Co. would operate from its New Mexico headquarters as a wholly owned subsidiary of R.J. Reynolds. Approximately one month ago, Canadian-based tobacco company Rothmans Inc. offered $275 million for Santa Fe. Rothmans has five days to make a counter-offer, according to the Associated Press.

Organic Sales Booming in England; Farmers Still Struggling

The U.K.-based Soil Association has released a new report saying that sales of organic foods in the U.K. are rising faster than in any other European country. The Organic Food and Farming Report 2001 asserts that the retail market for organic foods reached $706 million in 2000, up from $532.6 million the year before. Additionally the amount of land being used for organic farming has doubled from 103,000 hectares to 240,000 hectares. The number of companies licensed to produce organic foods has also risen 50 percent to 1,675.

The report warns, however, that even though the market is flourishing, organic farmers still need government support. Patrick Holden, director of the Soil Association, said ""Despite strong continued support from consumers for organic food and a huge increase in the amount of organic land, reliance on imports, price pressure from retailers and centralized buying policies mean that many small organic businesses are seriously questioning whether they can continue to run a viable enterprise."" For more information visit: www.soilassociation.org/sa/saweb.nsf/librarytitles/offr_summary.html.

Stocks & Financial News:

Reliv International Inc. (RELV) has offered to repurchase shares of its stock from shareholders with less than 100 shares as of Nov. 30. Shareholders will be paid $.25/share.

Hauser Inc. (HAUS) announced a net loss of $911,000 or $.16/share for 2Q02, a dramatic improvement over 2Q00's loss of $3.1 million or $.63/share. Total revenues were $13.4 million vs. $17.4 million last year.

Natural Alternatives International (NAI) reported 1Q02 net revenues of $9.9 million, a 3.3 percent decrease over 1Q01's $10.2 million. Net loss was $658,000 or $.11/diluted share vs. a net income of $205,000 or $.04/diluted share in 1Q01.

Los Angeles-based Rubin Investment Group has invested $3 million in supplements retailer Cetalon Corp. (CETA), which operates store-within-a-store outlets in Sears stores in the U.S. and Canada.

Briefs:

St. Augustine, Fla.-based Tree of Life Inc. subsidiary, American Natural Snacks, has acquired the assets of Better Than Milk, a division of Fuller Life Inc. of Maryville, Tenn. Terms of the acquisition were not disclosed.

Nutra Pharma Corp. (NPHC), an Internet-based health food supplement company, has completed the acquisition of Nutra Pharma Inc. and has announced several changes in management. Rafael Gonzales-Vizoso has been appointed director, medical director, and chief medical officer of Nutra Pharma and Michael Flax has been hired as director and provisional CEO.

Richmond, Va.-based Ukrop's Super Markets is expanding a test of offering yoga products in an additional five Virginia supermarkets, according to Supermarket News. Products include yoga blocks, balance balls, yoga mats and yoga straps, as well as 40 different video and five DVD titles.

Senetek PLC (SNTKY) is collaborating with Allure Cosmetics of Hayward, Calif., in order to market SNTKY's Kinetin to Allure clientele. The two companies have agreed to develop several new Kinetin products in the coming months, including the KQ10 Eye Firm and the KQ10 Decollete Cream, which should be available by the end 2001.

Odwalla Inc.'s (ODWA) subsidiary, Samantha's, has acquired a new product container made from recyclable plastic that will be used in new bottles for Samantha smoothies, juices, and shakes. According to ODWA, it better retains the fruit flavors within the container.

Coca-Cola Co. (KO) announced it would be introducing a new carbonated beverage within the next year that could enhance the diets of individuals with low levels of vitamins in their diet. Vitango, an orange-flavored drink that looks and tastes like Hi-C, has been part of ""Project Mission"", a project aimed to test the drink on malnourished children in developing nations. Test results found that children who were given the drink had increased levels of iron and zinc in their blood levels.

Newton Square, Pa.-based Boiron has initiated a program offering warning labels, disclaimers, and employee and retailer education, to provide accurate information about rumors that its homeopathic medicine, Anthracinum, can be used to treat anthrax. Boiron maintains that any person suspected of contracting anthrax should not depend on the product for treatment, but go to a hospital.

The Organic Materials Review Institute has released its OMRI Generic Materials List. The document includes information on over 800 materials associated with organic production. For more information, call 541.343.7600 or visit www.omri.org.

California Certified Organic Farmers (CCOF) has certified what it says is the first San Francisco-area organic retailer: New Leaf Community Markets. The retailer has locations in Felton and Boulder Creek, both in Santa Cruz County, Calif. For more information visit: www.ccof.org.

Co-Op America has released the 2002 edition of its Green Pages, a directory of socially and environmentally responsible businesses, services and products that consumers can use as a guideline for supporting businesses who are working to solve social and environmental problems and avoid those companies that are not. For more information, contact www.coopamerica.org/gp/index.html.

According to an article in The Boston Globe, Michael Maves, M.D., formerly president of the Washington-based Consumer Healthcare Products Association, has been appointed as the new CEO of the American Medical Association, replacing E. Ratcliffe Anderson, who was dismissed in June, according to The Globe, due to disputes regarding his authority over the group of physicians.

Legal & Regulatory Briefs:

FDA has issued a warning that a weight-loss aid marketed as a dietary supplement may cause liver damage. The product is called LipoKinetix and is manufactured by Syntrax Innovations Inc. of Chaffee, Mo. FDA is urging consumers who have used the product to contact its MedWatch program, according to Natural Products Insider. Separately, following an FDA warning letter sent to Corte Madera, Calif.-based ScienceBased Health, regarding its MaculaRx and MaculaRx Plus products, the company has hired an expert to reformulate its website to make sure that ScienceBased Health and its products are in compliance with FDA requirements on health claims.

Vote Hemp would like to remind consumers to submit a letter to the DEA regarding the attempted ban on hemp seed and oil. Letters can be submitted through the Vote Hemp Action Alert web page, www.votehemp.com/action.html, by clicking on the ""Send a Pre-written Fax"", button, faxed to 202.307.7183, or sent by postal mail to; Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, Attn: DEA Federal Register Representative/CCD, Washington, D.C. 20537. Letters must be submitted by Dec. 10.

Research Briefs:

Two new clinical studies have concluded that ephedra, used by 12 million Americans, is safe and effective for losing weight. Published in the October issue of the Journal of the American College of Nutrition and the September issue of Obesity Research, the studies show that the herb, when combined with caffeine, lowers body weight, fat and body mass.

The Natural Marketing Institute (NMI) has announced the release of a new monthly consumer research tool, HealthBeat Interactive, which offers companies the opportunity to customize their own research. To learn more, visit www.NMIsolutions.com.

London-based PFA Research Ltd. released a report showing that approximately 87 percent of small- and mid-sized food-products manufacturers are not tapping opportunities to become more profitable because they are not utilizing e-commerce as a sales option. Of the 300 companies surveyed, 50 percent have web sites, but only 13 percent of those have e-commerce capabilities on their sites. The report notes that most companies use the telephone or fax as a primary source of selling, which on average can cost between $15 and $50 per transaction, while an online transaction can run as little as $1, depending on the quantities of orders received. For more information, contact www.pfa-research.com.

Nielson/NetRatings taken for Nov. 23 reveal that online shopping jumped 22 percent for the day, a 10 percent decrease over last years' 32 percent increase. Amazon.com, Target, and Walmart received the most online traffic.

A recent study conducted by the University of Miami Medical School has concluded that root spice ginger could be as effective as painkillers in the treatment of arthritis pain. Findings for this study were reported in the Arthritis and Rheumatism journal.