By the end of 1992, NOW had hit the magical sales number of $10 million and our product selection was expanding to meet the requests of supportive customers everywhere. In 1989, NOW introduced its first herbal capsules and needed to find a quality raw material supplier that could be trusted, since we did not have the herbal expertise on staff at the time. I was our supplement buyer at the time and, after contacting our usual suppliers, I called Nature’s Way in Utah to see if they would sell to us. Their brand was one of the very first to put herbs in capsules and they had become known in the industry as the highest quality herbal supplier. I was very surprised to learn that Nature’s Way did sell in bulk and that they had a separate sister company that handled all of their bulk and private label business. I was even more surprised to learn that their prices were more than fair and NOW could do quite well as a middleman selling a NOW brand of Nature’s Way–produced products! We introduced echinacea purpurea root, pau d’ arco, and goldenseal root initially, all manufactured by our friends at Nature’s Way and sold at retail prices that were about 40% below that of the same supplier. Because normal vitamin and herb producers operate at margins well above those in the food business, NOW has always been able to easily discount high quality products at below–market prices. Until recent years, NOW’s game plan had always been to market to independent health food store owners, and then let that gatekeeper sell their customer our product. We had never really tried consumer advertising because that was too expensive and, besides, that’s what the “nationally advertised” brands were known for. This strategy has served NOW very well over the years, though some stores just wouldn’t consider NOW because our prices were too low. This meant that if they sold a bottle of NOW for $10 instead of a different brand for $15, the store would lose sales and profit and head in the wrong direction. Our answer had always been that this example would be true in the short term, but in the long term even loyal health food shoppers want a good value and will find it eventually. If stores only stocked expensive brands, then customers would move to discount outlets, mail order catalogs, grocery stores and chain drug stores – wherever the price was right. To counter this thinking I came up with an idea that seemed like a win-win situation for everybody. In 1990, NOW introduced a second brand called “Richard’s Finest Vitamins,” a premium brand that would be aimed at the high-end customer who couldn’t believe quality could be so inexpensive. (In some ritzy areas, stores found they would actually sell more NOW products at above retail prices, some as high as double normal retail!) The Richard’s name, of course, is proprietary and did seem to fit in with other family-owned names like Carlson, Thompson, and Schiff. Several upgrades made the introductory line different including: • Glass packaging with fancy silver foil labels • Expanded label information included historical information on vitamins • Potency overages of 5% on each multiple formula • New formulas called “Special One” and “Special Two” with green food concentrates • Food-based multi’s with herbs, enzymes, fibers and all-vegetarian • Full disclosure labeling, hypoallergenic products 1989-1992 65
