Weekly News Update

October 25, 2001

Organic Trade Association Cautions Members of Possible Anthrax Exposure While in Washington

After reports of anthrax exposure in the nation's capital, the Greenfield, Mass.-based Organic Trade Association (OTA) decided to contact 13 of its members who attended meetings during OTA's Congressional Education Day on Capitol Hill on Oct. 11. According to OTA Communications Director Holly Givens, on Oct. 18 the association decided to call the individuals who could have possibly been exposed to anthrax while in meetings on the fifth floor of the Hart Senate Building, to advise them to contact their physicians as a precautionary measure. That same day, however, the Atlanta-based Center for Disease Control issued a health warning saying that anyone who was on the fifth or sixth floors of the building between 9:00 a.m. and 7:00 p.m. on Oct. 15 should receive 60 days of prophylaxis for possible anthrax exposure because it is believed that these individuals were potentially exposed to the bacteria. No OTA members have reported any exposure to anthrax, according to Givens. For more information about the health warning visit: www.bt.cdc.gov/documentsapp/anthrax/10182001healthalert/10182001healthalert.asp.

Herbal Companies Defeat California Prop. 65 Alcohol Allegations

The Silver Spring, Md.-based American Herbal Products Association (AHPA), in cooperation with several manufacturers of liquid herbal products, announced the group had successfully defeated a lawsuit which alleged that herbal tinctures and extracts sold by the companies were mislabeled and therefore illegal because the products contained minimal amounts of ""ethyl alcohol [found] in alcoholic beverages."" California's Proposition 65, a list of chemicals that require warnings to consumers of the possibility of birth defects on labels, includes ""ethyl alcohol in alcoholic beverages"" as one of these chemicals.

The plaintiffs claimed that because the products contained alcohol, companies should be required to provide label information on the possibility of birth defects. In response to the case, AHPA formed a group of defendants called ""Prop65/Liquid Extracts Joint Defense Group"" in Dec. 2000. Judge William Highberger of the California Superior Court ruled that while listings of such ingredients must be read and interpreted broadly, ""broad reading does not equate to 'absurd' reading."" For information on the court's findings, contact AHPA Executive Director Michael McGuffin, mmcguffin@ahpa.org.

Coke Denies Interest in Odwalla

After The Wall Street Journal reported that Coca Cola Co. (KO) is in preliminary acquisition negotiations with Odwalla Inc. (ODWA), based on a report in Beverage Digest, the company quickly denied the rumors. However, ODWA has been seen as a likely acquisition candidate for some time. Tucker Anthony Sutro Capital Markets analyst, Carol Buyers, noted that a likely takeout price will be between $11 and $13 million and said that an ODWA/KO partnership could dramatically improve ODWA's selling and distribution efficiency. Shares in ODWA soared 50 percent on Oct. 19, from $6.80 to $10.05, and were sitting at $10.71 on Oct. 24.

Study: Carrageenan Could Cause Gastrointestinal Problems

The food ingredient carrageenan, a thickener derived from red seaweed that is used in some soymilk products, could cause health problems, according to a new study. Joanne Tabacman, M.D., an assistant professor at the University of Iowa, recently published the findings of her study in the October issue of Environmental Health Perspectives and noted that there is enough evidence to associate carrageenan with ""significant gastrointestinal lesions, including malignancies.""

Eden Foods Acquires Quebec-based Japanese Pasta Maker

Clinton, Mich.-based Eden Foods has acquired Montreal, Quebec-based Sobaya Co. Sobaya is the only certified organic Japanese pasta maker in North America and has been providing Eden with several of its pasta products for the last 10 years. Terms of the acquisition were not disclosed.

Starbucks Expands Fair Trade Programs

Starbucks Coffee Co. (SBUX) is expanding two programs targeted at helping struggling coffee farmers improve their quality of life. First, the company invested $1 million through Calvert Community Investments to be distributed directly to farmers in need of support. Also, SBUX announced that it will purchase 1 million pounds of fair trade certified green coffee and will encourage its college and university accounts to switch to the coffee at no additional cost beginning in January 2002. Furthermore, Starbucks stores will offer fair trade certified coffee as the ""Coffee of the Day"" on the 20th of each month. Finally, SBUX will begin offering Fair Trade Certified coffee in some of its international markets, including stores in Canada.

Hemp Food Association Encourages Comments on ""No THC"" Regulation

The Hemp Food Association (HFA), based in Santa Rosa, Calif., is encouraging consumers and industry members to submit comments to the U.S. Drug Enforcement Agency (DEA) on the proposed ban of tetrahydroncannabinol (THC) in hempseed products.

HFA asserts that this rule is simply ""a clarification of the basis under which the DEA, U.S. Customs, and all responsible hempseed importers have been operating under for quite some time."" HFA also notes that this is the first time the DEA has asked for public comment regarding industrial hempseed and foods. The association says several issues should be addressed by respondents, including the high levels of nutrients found in hemp, the fact that hempseed companies already comply with the rule, the need for the deregulation of industrial hemp, and the unfortunate tendency of defense attorneys to blame hemp foods for THC levels found in their clients by drug-testing companies.

For more information about the proposed rule, visit www.dea.gov/advisories/pa100901.html. For more information on HFA's position, visit www.hempfood.com, or email moreinfo@hempfood.com. The following address may be used to submit comment prior to Dec. 10 to DEA: Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Agency, Attn: DEA Federal Register Representative/CCD, Washington DC 20537.

DSEA Expands Access to Supplements Info, Asks for Consumer Testimonials

The Dietary Supplement Education Alliance (DSEA) has allied with IMAGINutrition Inc., a Laguna Niguel, Calif.-based nutrition technology think tank, to collect and release information about the dietary supplements industry. The partnership allows DSEA access to information, conducted and/or received by IMAGINutrition from a plethora of sources, otherwise unavailable to DSEA itself.

DSEA also is asking for industry assistance with its ""Testimonials Project."" Retailers and suppliers are asked to forward to the group any information they may have about customers who have taken supplements for an adverse health condition and have greatly benefited as a result. Alternatively, the companies can encourage their customers to contact the DSEA directly if they have a ""life changing"" story to tell about their experiences with supplements.

Testimonials should be directed to: Deb Knowles, DSEA, 4034 Roberts Point, Sarasota, FL 34242; 941.349.9044; email info@supplementinfo.org.

Olympians Told to Avoid Supplements

According to the AP World News, the U.S. Anti-Doping Agency has warned U.S. athletes not to use dietary supplements offered at Olympic training centers prior to the Salt Lake City Olympic Games. The independent agency, which represents Olympic, Pan American, and Paralympic athletes says the warning is based on findings by the International Olympic Committee's medical commission, which found banned performance enhancers in 40 of 200 dietary supplements it tested this year. The warning said that athletes should avoid using supplements because of lax quality control and labeling.

White House Voices Support for Revised Farm Bill

The Bush Administration has announced that it plans to back Sen. Richard Lugar's, R-Ind., version of the new farm bill. Agriculture Secretary Ann Veneman told Sustainablebusiness.com, ""The bill has many positive attributes consistent with our principles."" Final legislation on the farm bill must be completed by September 2003.

Stocks & Financial News:

Immunex Corp. (IMNX) reported 3Q01 net income of $39.7 million or $.07/share, up 26 percent from 3Q00's $31.5 million or $.06/share. Revenues were $253 million vs. $219 million in the same quarter last year.

Shares in NBTY Inc. (NBTY) dropped to $7.05/share on Oct. 22, a decrease of 29 percent, following the company's announcement on Oct. 19 that 4Q01 earnings may be lower than expected. Tucker Anthony Sutro Markets downgraded NBTY from Strong Buy to Buy with a $13 target price and advised clients to buy on further weakness. It noted that it would tentatively lower FY02 EPS from $.92 to $.75 until the release of 4Q01 results on Nov. 5.

Nature's Sunshine Products Inc. (NATR) announced a net income of $4.2 million or $.25/diluted share for 3Q01, vs. an income of $4.5 million or $.27/diluted share for 3Q00, a decrease of approximately 6 percent.

Galaxy Nutritional Foods (GLXY) has filed a registration statement with the Securities and Exchange Commission (SEC) with regard to the offering of approximately 2.4 million shares of its common stock. The registration statement was declared effective as of 4 p.m. on Oct. 17.

Perrigo Co. (PRGO) has posted 1Q02 net sales of $217 million, a 13 percent increase over 1Q00's $192 million. Net income was $13 million or $.17/diluted share vs. $10.5 million or $.14/diluted share a year ago.

Carrington Laboratories Inc. (CARN) has announced its board of directors has renewed the company's shareholder rights agreement to protect shareholders from unsolicited takeover proposals and to require that acquisition proposals be negotiated with the board.

Briefs:

The Committee on the Framework for Evaluating the Safety of Dietary Supplements held its first meeting last week, according to Natural Products Insider. The committee, formed by the Washington-based National Academy of Sciences, is charged with developing a proposed framework for categorizing and prioritizing dietary supplements ingredients based on safety issues. It includes a range of doctors and professors from around the country and is receiving input from industry members.

A survey of 3,000 people conducted by Greenfield Online revealed that Priceline.com, a web grocer that announced it was closing earlier this month, was the most used of all the online grocery sites. Ranked by number of visitors, the top five sites were Priceline.com with 33 percent of the online grocery market; Netgrocer.com at 31 percent; Peapod.com captured 17 percent; and Homegrocer.com had 13 percent, while Egrocer.com attracted 12 percent of the market.

The U.S. Department of Agriculture announced it would continue to accept early applications for accreditation from potential organic certifying agents until Dec. 21, an additional two months. Application forms can be downloaded at www.usda.ams.gov/nop. Assistance in filling out the applications can be obtained by calling 202.720.3252.

New Rochelle, N.Y.-based Acirca Inc. has launched its first advertising campaign for Walnut Acres. The campaign targets women ages 25-49 and is designed to help Walnut Acres establish a leadership position in the $8 billion organic food and beverage industry.

Bethesda, Md.-based Honest Tea has received kosher certification for its Black Forest Berry bottled tea from the Orthodox Union. As a result, the company's entire line of teas is kosher.

The California Integrated Waste Management Board has honored Chico, Calif.-based Smucker Quality Beverages Inc. for its exceptional recycling program.

Green Mountain Coffee (GMCR) has decided to expand distribution of its coffees in 27 Kings Supermarkets, located in New York and New Jersey. The stores will now sell brewed GMCR coffee by the cup as well as offer the products in self-serve bins.

PacificHealth Laboratories Inc. (PHLI) has launched a campaign with the United States Track Coaches Association to educate coaches about nutrition and the dangers of performance-enhancing drugs. Called ""Powering Muscles,"" the program will be initiated at the USTCA Annual Convention on Nov. 28- Dec. 1 in Mobile, Ala.

The U.S. Department of Agriculture's Risk Management Agency is projecting record losses for farmers in Montana, Wyoming and South Dakota this year. Extensive drought has resulted in farmers returning only a fraction of their normal crop. Collectively, the loss expected is $486.2 million, with $291 million of that amount falling on farmers in North Dakota, $190 million in South Dakota, and $5.2 million in Wyoming.

Senetek PLC (SNTKY) has hired Colucci, Blendow, and Johnson, an executive search firm with an emphasis in healthcare, to assist SNTKY in its organizational development and recruitment of staff.

The ""Dow Jones Stoxx Sustainability Indexes,"" an index of Europe's most sustainable firms, has been launched. The index lists the leading 10 percent of Europe's most sustainable firms, tracking financial performance in relation to economic, environmental, and social criteria. To view the index visit www.sustainability-index.com.

Amarillo Biosciences Inc. (AMAR) has signed a supply agreement with Natrol Inc. (NTOL) by which Natrol's ""Dry Mouth Relief"" brand will be sold in more than 2000 Eckard Pharmacies beginning this month.

Brea, Calif.-based private label and contract food packager HealthBest announced it has earned a ""Superior"" rating from the American Institute of Baking (AIB) following its Sept. 21 onsite food safety audit. The ratings are designed to analyze whether a company is meeting or exceeding current Good Manufacturing Practice (GMP) criteria. HealthBest is a division of wholesaler/distributor Nature's Best.

Harry's Farmers Market Inc. (HARY) has officially approved the sale of three of its stores to Whole Foods Market Inc. (WFMI). Additionally, Harry A. Blazer, Peter Barr, Robert C. Glustrom, Donald M. Pamenter, and Charles W. Sapp have all been re-elected as shareholder directors. Finally, HARY has decided to close an Atlanta, Ga. store.

Research Briefs:

Redwood Shores, Calif.-based strategic market research firm Cheskin has released its second Market Insight Series report. Life Science Perspectives: The Emerging Healthcare Consumer defines three consumer trends that are dominating the direction of the healthcare and life sciences industry: consumer enlightenment and empowerment; the ""blur"" between western and alternative medicine; and greater life expectations. To view the report, visit www.cheskin.com/life.

A survey conducted by the Southern California University of Health Sciences has revealed that while 32 percent of women have tried alternative therapies as a means for dealing with symptoms associated with menopause, only 19 percent of women received any information on herbs and other such remedies from their doctors.

Tests performed on different maize varieties in 22 communities within the state of Oaxaca, Mexico revealed that genetically modified materials have contaminated the maize in 15 of the communities. In response to the testing, Greenpeace Mexico has demanded an emergency ban on all U.S maize imports to Mexico until purity can be guaranteed.

International Briefs:

Tetra Pak Canada Inc., packaging manufacturer and maker of Canada's popular ""drink boxes"" has launched a new type of packaging called the Tetra Recart, a returnable, 100 percent recyclable carton that the company says is suitable for foods that have until now been canned or packaged in glass jars.

Representatives from the Pharmaceutical Manufacturers Association (PMA) in South Africa are suggesting that state run hospitals working on small budgets eliminate herbal cough suppressants from their treatment options because their effectiveness is still being debated and if patients want them they are now available over the counter. Instead, the association asserts, hospitals should purchase essential antibiotics.

People:

Former Wild Oats Markets (OATS) CFO Mary Beth Lewis has joined Denver-based, healthy fast-food restaurant Noodles and Company as executive VP and chief administration officer.

Christopher Pair has resigned as president and CEO of Herbalife International Inc. (HERBA), a move that New York-based shareholder in the company, Steel Partners II, considers a positive change. Stell Partners has reopened a campaign by which they are demanding that HERBA pursue a sale, citing conflicts of interest amongst executives as a potential difficulty within the company. A HERBA spokeswoman told Rueters, ""The letter is not saying anything new. We have previously responded to them…Mr. Pair's departure has nothing to do with them or their letters."" HERBA shares closed unchanged at $11.25 on Oct. 24.

Peter C. Rosendahl, Ph.D., environmental affairs VP for Florida Crystals, died of cancer on Sept. 30. Florida Crystals said that Rosendahl was committed to the company and its dedication to the restoration of the Everglades project. Instead of flowers, donations may be made in Rosendahl's memory to the Saint Rita's Church Homeless Ministry. Call Florida Crystals at 561.366.5149 for donation details.