Portland Vitamin Maker Gets Ready For Merger

PORTLAND - Broccoli-basher George Bush sidestepped the bait when Hall Laboratories Inc. sent the former president a sample of its new line of broccoli vitamins.

"While I can't really say I have missed broccoli all these years, I appreciate your sending the caplets along," Bush wrote back. "I used to think my system would `reject' broccoli in any form, but maybe - just maybe - there's hope."

Hall Laboratories, based in Portland, was hoping Bush would try its new line of "phytochemicals," a fancy name for vegetable nutrients that have been reduced to pill form.

With or without Bush as a customer, Hall is prospering. It has $40 million in annual sales, more than 200 employees, a major deal with cosmetics giant Revlon Group Inc. and a pending merger with a New Jersey manufacturer.

When Hall merges with International Vitamin Corp. within two months, as expected, the combined companies will be a $100-million-a-year force in the nation's vitamin and nutritional supplement industry.

The total U.S. retail market is estimated at $4.6 billion a year. About 37 percent of U.S. adults take some form of vitamins or nutritional supplements, according to Hall's figures. The market grew 42 percent from 1991 to 1994.

Hall built a significant share of the West Coast market by producing house brands for big retail chains such as PayLess Drug Stores, Fred Meyer Inc. and PriceCostco Inc.

International, which went public last year, yesterday reported a profit of $486,000 on sales of $14 million in the first quarter - a 31 percent increase in profit and a 12 percent increase in sales from a year ago.

"When we saw the similarity of the product lines, the redundancy of raw-material usage, everything played into the route of doing a merger," said Andrew Pinkowski, Hall's 61-year-old chairman and, with his wife, Rita, one of the private company's biggest shareholders.

Hall began in 1953 as Don Hall Laboratories Inc., the smallest of a half-dozen vitamin companies in the Portland area.

In 1969, Pinkowski, then a product manager with Boise Cascade Corp., jumped ship to Hall to avoid being transferred to another state. Six months later, Pinkowski was part of a small group that bought out Don Hall. Pinkowski took over as president.

The year before the buyout, Hall's sales were $372,000 - not even 1 percent of the most recent year's sales.

Today, Hall packages everything from vitamin C tablets to ginseng supplements. Its Health Essentials proprietary brand, "the second-best way to get your vegetables," according to company literature, is beginning to command prime shelf space with retain chains.

Even with the merger, the two companies will face tough competition.

Leiner Health Products - the largest vitamin manufacturer in the United States, with nearly $400 million in annual sales - has half the market for private-label brands.

But Gale Bensussen, Leiner's president and a friend of Pinkowski, says the market keeps growing because people are more health conscious.

"There's more solid science about health, vitamins and nutrition today, and there's more coming. This is a very alive, very hot area," Bensussen said.