Vitamin/Nutritional Supplement Market Entering a Battle of Strength
By Laura Klepacki, special to GMDC
After a couple of unhealthy years, sales of vitamins and nutritional supplements are looking rosy again.
A new study released this month from Packaged Facts, a New York-based market research firm, said retail sales will reach $4.7 billion by year end, an increase of one percent. While a modest gain, it is in sharp contrast to a three percent drop in 2005 - when the industry was pummeled by media reports that questioned the efficacy of select vitamin products.
With the help of new products and an aging population, the study predicts the market is poised to skyrocket to $6 billion over the next five years - a 20 percent increase.
The nutritional supplement category presents an interesting retail landscape with supermarkets leading with a 33 percent share, followed by mass at 28 percent. Drugstores, surprisingly, account for a meager percent of sales.
Filling out the field are health and natural food stores at 17 percent, with the remaining 11 percent of volume coming from warehouse clubs, direct selling firms, such as Shaklee and NuSkin, and internet sales, according to the study.
ACNielsen reported vitamin sales at U.S. food, drug and mass stores, excluding Wal-Mart, grew 4.5 percent for the 52 weeks ended October 7, to $3.42 billion, apparently driving the total market growth.
Over the past five years, the above outlets have gained share at the expense of health/natural/vitamin stores, with mass merchants making the greatest strides with an increase of three percentage points, according to Packaged Facts.
It appears, however, the vitamin store segment may be gearing up to take some market share back.
Earlier this month, Pittsburgh-based GNC, the largest specialty vitamin retailer with 4,800 stores, announced it was exploring strategies to infuse cash into the business with a possible sale or an initial public offering. The timing seems well placed as sales at the chain rose 14.6 percent to $1.13 billion for the nine months ending Sept. 30.
New Jersey-based Vitamin Shoppe is also in a growth mode. Now with 290 stores in 30 states, it has another 12 planned this year.
Vitamin World of Bohemia, N.Y. now owns and operates over 550 retail stores nationwide. Through its direct selling operation, it ships some 15,000 packages a day to U.S. households. It hasn't announced a major expansion plan, but is getting involved in new types of marketing efforts such as the tie-in with radio personality Don Imus to benefit his New Mexico ranch for children with cancer. Vitamin World sells Imus's organic food products and environmentally friendly household cleansers with proceeds going to the charity.
Discussion Questions: What will the competitive battle in vitamin and nutritional supplement products mean for consumers? Is this competitive situation likely to prompt the mass market channel retailers to engage in greater education and organization of their vitamin departments to counter the specialist segment? Will the mass market retailers now focus on the vitamin category with more and better marketing and merchandising?