The New Nordic business model

Our business model is geared so that we can focus on the two most important value creating disciplines: Innovation and marketing. 

As a company, and brand, we have many competitive strengths already structured in a platform that can easily be scaled. Even without the need to bring in more money to capitalise on the opportunities that lies ahead. We have an extraordinary raw material know-how, a really effective new product develop- ment set-up, a flexible and fast adjustable operation and manufacturing sourcing with our own strict quality procedures and an international set-up with an extraordinary international network and personal contacts to wholesalers and retailers around the world. We have everything in place for expansion. In addition we have a very effective structure and organisation with our own developed stearing tools exactly fitting the needs fo our operation.

New Nordic is a company run according to modern management principles with a family-like working environment that stimulates creativity and excellence. We value our expertise and heritage highly. Simplicity is key for the way we work at New Nordic. Excessive planning and bureaucratic reporting is avoided. By routinely asking ourself why we are doing what we do, we often finds new ways of doing things better. A revenue of SEK 8.5 million and a profit of more than SEK 520,000 per employee in 2018 is a proof of our effectiveness.

 

Research is the difference between knew-how and know-how

New Nordic’s business strategy leverages its unique ability to develop its own innovative formulations to provide its customers new products and solutions with superior effective- ness and ease-of-use in strongly branded packaging. We continue to broaden our assortment with the long term goal to cover all health and beauty related needs the individual has. The weight in our assortment shall always favourite our basic assortment, i.e. the assortment that is ”typical New Nordic” and reflects our Nordic value creating profile which again makes life easier and better for everyone.

We believe continual investment in research and development, marketing and advertising is critical to the development and sale of innovative products. We also believe in building at close and long term relation with suppliers as close to the original

supply source as possible to control quality from fields and forrest to the finished product.

We strive to control our brand in all aspects of its business and believes in adding experience of consumer understanding, marketing, advertising and media buying to it’s in-house know-how.

We are convinced that great concepts are global and selling is local. Our strategy includes expanding our geographical distribution network to effectively reach more customers. Either through own national sales and marketing companies or through highly reputable distributors. Our products are distributed in pharmacies, drugsto- re and health stores and through our own on-line store. In North America to some extend also in groceries.

 

How we do it

New Nordic’s own research and development of innovative new products is a key driver of profitable growth. We try build and maintain superior know-how and expertise in herbal ingredients and it’s ability to bring vitality to humans. We are focused on insight-innovation that pro- vides value-added new products. New Nordic strives that each brand should at all times have the most effective and convenient product formulation and presentation in the health con- cern category under the condition that the price-value ratio appeal to the broad population.

Beyond new products, innovation is embedded into our company culture to encourage new ideas and improved processes throughout every aspect of the organisation. This is to be more efficient and work smarter and faster with less bureaucracy and better planning and reporting. We strongly believe that the key to success lies in making life better and easier for end consumers and for the retail partners. We encourage our personnel to “go the extra mile” that competitors are not willing to go to surpass consumer and customer expectations.

New Nordic has an international ”in-house” concept and marketing set-up and each product is branded with a compelling story build to create the consumer loyalty, that will make our products the first choice in every health concern market segment they operate in. We also handle advertising, media buying and the press internally on an international and national scale.

We manage our business primarily on a geographic national basis through our daughter companies or through reputable national distributors. Planning and reporting is made both on a country level and on brand level.

At New Nordic we are convinced that driving growth and building brands, requires a strong engagement on a national local level. Engagement with retail customers, with the health care profession and with the end consumers. We seek to develop a deep and relevant consumer insight used to strengthen product development, packaging and the communications they deliver through internationally arranged marketing campaigns. The campaigns are primarily build on advertising directly to the end consu- mer with addition of shopper marke- ting programs that customise communications for different retail outlets and shoppers. The Company is also locally driving engagement, education and building leadership with health care professionals to strengthen their endorsement of the brands, which in turn build market share and brand loyalty. We engage with our retail partners to share expertise and provide shoppers with the best value and to educate and train the retailers personnel to enhance their knowledge of the New Nordic products. Additionally we have national in-house customer call centers and digital chat service to provide end consumers with a high-quality sales and post-sa- les support experience. Consumers are encouraged to call for advice through our advertising.

 

New product innovation

The management is deeply involved in the innovation processes led by our head of new product development. New product development, NPD, work is a continuous process with a prioritised pipeline reviewed quarterly. Each individual NPD project draws on ad-hoc involvement of world-wide specialist persons, institutions and consultants. Often a NPD project is done in collaboration with raw material suppliers. Particularly when new process technologies and new specifications are required. Over nearly two decades New Nordic has developed one of the most comprehensive electronic herbal databases in the world including rare botanical information gathered from institutions around the globe. Inspiration for new product ideas basically comes from two angles. The first being new discoveries of herbal and biological constituents which can benefit man health. The second being consumer research identifying new needs, wishes and trends that pave the ground for function and in use target for the development. New Nordic’s international presence and daily meetings with many cultures gives a unique insight in up and coming trends and possibilities. Married with a highly up to date understanding of the latest discovered benefits of natural food ingredients it present a unique ability to react very fast in our NPD work.

In total we have spent less than one percent of our revenue in research and new product development in 2018. These costs have not been activated but have been charged under other operating expenses.

 

Raw material sourcing

We source our raw material as close to the farmer or manufacturer as possible. Behind the scenes New Nordic allocate many resources to do this in-house. In the natural trade there exist an enormous amount of middlemen trading raw materials. We try to buy direct from farmers, ex- tractors and manufacturers. During the last two decades we have build a relationship with a great number of suppliers. They understand our quality requirements and we understand the critical risk factors in their farming and production processes. That is a real advantage. Our relation also makes us understand new qualities and raw material variants and improvement

that are under development. We take this into account in our new product development process at an early stage. Some raw materials are particularly developed and manufactured for New Nordic only and in special occasions we arrange the farming or wild collection before the season to secure steady supply.

 

Manufacturing

New Nordic focus ressources on innovation and marketing. New Nordic have a long term cooperation with several third party manufacturers. For key products New Nordic has a policy to have at least two manufacturers in order to secure steady supply. To secure consistent standardised quality, we source all key raw materials from around the world and we coordinate a successful extraordinary quality test programme of raw materials used by our manufacturers. Today, nearly nearly all manufacturing is done in Scandinavia. This is changing somewhat as we look world wide for new technology and manufacturing of new dosage forms. We have made concrete investigations and analysis of pros and cons of establishing our own manufacturing in Scandinavia. So far our conclusion is that allocation of ressources and focus towards continued innovation and marketing is more favorable for the company. However, we will keep an eye on further developments and evaluate the situation with regular intervals.

 

Regulatory affairs

Before you actually try to operate in the dietary supplement industry it is difficult to grasp how complex the regulatory situation is. Particularly when you operate internationally and especially when you are dealing with herbs. It is a regulatory challenge that we do our best master to perfection. Our in-house quality and regulatory department coordinate the tasks of our national regulatory consultant and quality laboratories that we work with in all countries that we operate in.

Basically we operate under 3 major groups of different jurisdictional principles: EU with its food authorities supervision, USA with FDA supervision and China with its food and health authorities supervision. There in between, there are many variations. For example in Canada where supplements need to be registered and approved under Health Canada before marketing. Even in EU where the European Food Safety Authorities work towards harmonisation, every single country still has its special rules and guidelines that we need to adhere to. A good understanding of the variety of national rules and regulations and the local authorities admi- nistration of the rules plus its ever changing situation can indeed be a competitive advantage in the supple- ment industry.

In EU the European Union’s Food Supplements Directive of 2002 - requires that supplements be demonstrated to be safe, both in dosages and in purity. Only those supplements that have been proven to be safe may be sold in the bloc without prescription.

As a category of food, food supplements cannot be labeled with drug claims but can bear health claims and nutrition claims. 2012 saw the implementation of the European Health Claim Directive EC 1924/2006, which is currently having a significant impact on the market. In June 2013, the European Commission published a positive list of permitted generic health claims, which, broadly speaking, makes all claims not on this list illegal unless a manufacturer has received permission to use a product-specific, proprietary health claim.

In the United States, a dietary supple- ment is defined under the Dietary Supplement Health and Education Act of 1994[9] (DSHEA) as a product that is intended to supplement the diet. If a dietary supplement claims to cure, mitigate, or treat a disease, it would be considered an un-authorised new drug and in violation of the applicable regulations and statutes.

As the FDA states, in a response to this question, Companies that market dietary supplements are permitted to

make structure/ function claims about a given supplement in the marketing material. These are broad claims that the product can support the structure or function of the body. The FDA must be noticed of these claims within 30 days of their first use, and there is a requirement that these claims be substantiated.

In Canada all natural health products (NHPs) are subject to the Natural Health Products Regulations and must have a product licence before they can be sold. To get a licence, appli- cants must give detailed information about the product to Health Canada, including: medicinal ingredients, source, dose, potency, non-medicinal ingredients and recommended use(s).

Once Health Canada has assessed a product and decided it is safe, effective and of high quality, it issues a product licence along with an eight-digit Natural Product Number (NPN).

 

The power of recognition

We must inform the world of our fine products and how they are the solution to individual needs. Health and beauty matters are serious matters for our consumers. We take that seriously and our marketing effectiveness is crucial to our business model. We want to keep the marketing know-how in-house. Therefore, we have build an effective in-house creative and marketing and advertising department able to master all relevant marketing disciplines. We also handle all media purchase in-house. Thereby, we save the middlemen and build a know-how with a unique fingerspitzgefuhl of media effective- ness. Our marketing includes all facets of modern marketing and brand buil- ding. Our global focus on one single brand definite help us keep on track.

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