Easy To Swallow

October 10, 2008
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Category Review: With the pursuit of health and wellness topping the agenda of many today’s consumers, it should come as no surprise that sales of vitamins and supplements are up overall.

Data from Chicago-based Information Resources Inc. (IRI) show the total U.S. vitamins category (including liquid vitamins/minerals, mineral supplements, multivitamins and one- and two-letter vitamins) up 8.5 percent in dollar sales and 6.9 percent in unit sales during the 52 weeks ending July 13, 2008 (food, drug and mass, excluding Wal-Mart). Even more impressive are the 45.7 percent and 52.6 percent respective dollar and unit sales gains for the total liquid minerals/vitamins category during the same timeframe.

And conditions look just as rosy on the supplements side, with industry observers pointing to no signs of a slowdown anytime soon - despite the troubled economy. In fact, in its September 2008 “Nutritional Supplements in the U.S., Third Edition,” Packaged Facts, a Rockville, Md.-based division of Market Research Group LLC, forecasts a 39 percent rise in sales in the U.S. nutritional supplements market between 2007 and 2012, with sales predicted to reach $8.5 billion.

“Helping to protect the category as consumers tighten their discretionary spending belts are the strong preventive health-care angle of supplements and the market’s sizeable component of better-off demographics, including aging baby boomers,” Packaged Facts says.

The report adds that numerous other positive factors are at play, including industry’s efforts to promote supplements as a cost-effective means to avert the need for costlier prescription drugs and medical treatments, greater credibility resulting from new federal requirements related to good manufacturing processes and adverse event reporting, a steady stream of new products, and more.

Matter of Condition

One of the most significant recent trends in the vitamin and supplement industry is growing interest in - and availability of - condition-specific formulations. Such formulations tackle everything from heart health and joint health to cholesterol reduction and diabetes management.

“As the economy continues to spiral downward, consumers seek basic products to prevent disease and avoid costly medical expenses,” stresses Erin Silva, technical marketing manager for Irvine, Calif.-based VitaCeutical Labs and a registered dietitian.

Silva adds that consumers appear to be moving toward what she calls “core” nutritional supplements - psyllium husk, letter vitamins (vitamin D, in particular), calcium and magnesium, joint health products and essential fatty acids - which have “solid science and consumer recognition behind them.”

Shane Conti, regional sales manager for Reliance Vitamin Co. Inc., Somerset, N.J., believes consumers are looking for natural alternatives to synthetic drugs - at least as a first line of defense. Supplements long have played a major role in Europe’s preventive health care programs, he adds. And since FDA passed the Dietary Supplement Health and Education Act of 1994 - allowing companies to describe health-specific benefits for various categories - condition-specific supplements have been building a fan base here in the states.

Tim Greene, director of sales for branded and private label at Sparta, Wis.-based Century Foods International, agrees, noting particularly high consumer interest in immune-support type products similar to the Emergen-C national brand. The vitamin C/mineral combination comes in a powdered form that becomes effervescent when added to water. Both powdered and effervescent formats also are on trend, Greene says.

And probiotics have become extremely popular, not only for their gut health benefits, but also for their ability to replenish the “good bacteria” lost during an antibiotic regime.

“Probiotics are continuing to grow, but there’s so much more room to grow, in our opinion,” Conti says. “We partnered with a probiotic company, and that’s been our biggest growth over the last six to 12 months. Fish oil, too, over the last five years has just continued to increase in sales,” he adds.

For his part, Brendan Gaughran, director of sales for Sunrise, Fla.-based Nature’s Products Inc., notes a move toward organic ingredients - and against GMO and hormone-infused products - in the supplement arena.

“This seems to be the fastest-growing part of our business,” he says. “Not only are we gaining new accounts concentrating solely on organic supplements, but our existing [customers] are reformulating products to gain the USDA organic designation.”

On the vitamin side, Silva says liquid vitamins and minerals are still a fairly new market entry and, therefore, growing.

“I think the gains seen for unit sales result from more new liquid products coming to market, not necessarily organic growth,” she adds.

Gary Pigott, senior vice president of sales and marketing for Mason Vitamins, Miami Lakes, Fla., says the national brands have reformulated their top SKUs here more frequently and are offering more aggressive FSIs.

“Various deliveries - gummies, drinks, etc., all impact the demand, but eventually studies will confirm product stability is best in solid form,” he contends.

Healthy Dose of Opportunity

Although the economy doesn’t seem to be adversely impacting the vitamins and supplements category, it could actually be a boon to the category’s private label side - if retailers play their cards right.

“With the increased prices in everything, private label is continuing to grow - in general, not just in this category,” Conti notes. “The quality has gone up, and grocery and mass market accounts are promoting their private label as the premier brand, which is smart. People aren’t as brand loyal anymore.”

Conti says retailers would be wise to bring in proprietary products under their own private label, not simply a control brand, to gain “free advertising” for the store. He also recommends that they offer more condition-specific supplement formulations that set them apart from their competitors.

“Vitamin C is vitamin C, but if you have a really high-end heart health product, we find people are very loyal in the dietary supplement category,” he says. “Once they try it, they want to stick with it, especially if it’s working.”

That said, other private label opportunities pretty much mirror those of the national brands, according to Greene. A new launch from Century Foods - slated for debut at the PLMA Private Label Trade Show this November - gives retailers the opportunity to appeal to current consumer excitement around powdered formulations - as well as protein.

The product puts a new spin on the Ensure national brand drink concept, providing retailers with a nutritious supplement offering in a powdered form that costs less to ship. Available in pouches and in a resealable canister, the product simply is mixed into milk.

“We’re trying to take some of that freight component out,” Greene notes. “It will be ready for market by the time PLMA hits.”

Silva also points to the essential fatty acid category and supplements to promote joint health as major opportunities for private label programs because they mesh well with the needs of the aging U.S. population.

Pigott adds vitamin D and heart health, sleep/relaxation and digestive formulations to the condition-specific private label growth areas.

“[An] increase in medication intake creates digestive imbalances and inhibits gastric juice production,” he adds. “Side effects from medications and OTCs are becoming consumer concerns, so alternative care is moving full speed with positive media.”

Probiotics, too, represent a huge opportunity on the private label side, Conti says - especially for retailers willing to develop what he calls a pharmacy “nutrient depletion program,” whereby the in-store pharmacy recommends a probiotic to consumers who are prescribed an antibiotic. Such programs can be implemented in a number of ways, he adds, with some retailers placing probiotic displays right at the pharmacy counter and others relying on stickers (on-bag) or other educational tools.

Finally, Gaughran sees a private label market for organic ingredients and recycled material.

“They will never get the USDA label because of the inability to hit those percentages of organic material required,” he says, “but to be able to make any claim would be helpful.”

Polish the Program

Retailers have much more to consider, of course, than the types of vitamins and supplements they want to offer under their private label programs. The decision process also involves vendor selection, education, merchandising and promotion strategies, and more.

Pigott advises retailers not to “put all their eggs in one vendor,” but instead to consider multiple vendors to supply products that complement the specific program.

“Most retailers have reactive vendors handling store brand programs,” he says. “They do not have the pulse of the next trending segment - for example, colon cleansers, etc.

“There is no need for five forms of three-a-day glucosamine chondroitin,” he adds. “They are just occupying shelf space.”

Once the vendors and products have been decided on, education plays a huge role in winning shopper dollars.

In Silva’s experience, the most successful retailers take the time to thoroughly train store staff about specific products her company supplies - and about nutrition and wellness in general.

“Education is a powerful tool that yields more sales and employee and customer retention,” she stresses.

VitaCeutical long has been on the forefront in producing science-backed quality products that are formulated by scientists, including a registered dietitian, Silva adds. Registered dietitians (such as Silva herself) are becoming more prominent players in both the natural and mass market retail arenas, and are part of a team that can provide expert training to help educate retail staff.

“We also offer extensive technical literature and information for our retailers to advertise or promote,” Silva says, “and also shelf tags.”

A well-educated staff also would be better equipped to implement the nutrient depletion program Conti recommends to promote the sale of probiotics - or boost sales of other supplements. For example, pharmacies could promote a private label coenzyme Q10 (CoQ10) supplement to patients who are prescribed a statin cholesterol-reducing drug (which lowers CoQ10 levels) - using counter displays, shippers, on-pack stickers and/or information programs.

“We have pharm techs or assistants who are helping with such programs, and the numbers are unreal,” Conti says. “I think it could be implemented on a much larger scale; it’s a huge way to supplement income being lost in those areas. It’s a huge opportunity because there are more people on antibiotics or statin drugs - or even birth control, which reduces the vitamin Bs in your body.”

Beyond nutrient depletion programs, Greene advises retailers to apply traditional grocery merchandising tactics to the vitamin and supplement arena.

“There seems to be more and more receptivity to doing that in the more traditional channels than there ever has been before,” he says, “and I think it’s a great way to see incremental volume and sales.”  PLB

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