Strong performers

Niacins and omega-3s—along with sports nutritional supplements and functional foods and beverages—are giving the vitamin and supplements category a lift.

By Nina Amir

Americans continue to be concerned—some would say obsessed—with health and nutrition. For grocers, that means vitamins, supplements other health-related products, including sports and energy bars and drinks, offer a prime opportunity for increased sales. Add to this the fact that in a bad economy consumers purchase more of these products to avoid doctor’s bills plus the high cost of prescription drugs, and the category is in a position to be among the most profitable in the supermarket, according to industry experts.

Peter Brechter, CEO of New York-based Everlast Sports Nutrition, points out that the health and nutrition category historically performs well during an economic downturn “as people with reduced means switch to prevention to avoid medical expenses. Supplementation is the foundation of preventative medicine, so the category thrives in bad times,” he says. “The category also gets a boost from those who choose to self-medicate rather than visit a physician.”

The economy and high health-care costs have changed how people view their health. “They approach health from a proactive rather than reactive position, looking for ways to stay healthy,” says Kate Jones, president of Vancouver, Wash.-based Northwest Natural Products.

While vitamin sales have certainly gotten a boost from the sagging economy, experts say category sales will continue to climb as the economy improves. Gary Pigott, Sr., vice president of sales and marketing for Mason Vitamins, based in Miami Lakes, Fla., expects category sales to increase by more than 4% in 2010. “Patients are really paying attention to side effects more and more, thus opting for alternative care first, then medication second,” says Pigott.

New research in the area of nutrition and health also continues to support sales in this category. For example, the latest nutritional research highlights the benefits of vitamin D, Jones says.

Consumer demand and changes on the pharmaceutical side of the category continue to drive innovation in the area of digestive aids as well, according to experts. “I have always believed the digestive aid category would be a huge opportunity as a result of the prescription to over-the-counter switches, such as Prevacid, Prilosec, etc.,” Pigott says.

He points to B and D vitamins, niacins and omega-3s as hot products for grocery stores to stock. Mason Vitamins’ recent product introductions include Krill, Chia, D Spray and Flush Free Niacin 750mg.

Jones adds probiotics to the list of popular supplements, even though, like digestive aids, this product is not new. “Probiotics continue to be big in the news,” she says. “More people are concerned with supporting their digestion, and the buzz on probiotic supplements has spiked recently.”

Good sports

Sports nutrition supplements are another bright spot in this category. Increasingly more retail grocers are installing sports nutrition sets in their stores, according to Brechter.

In a parallel hot niche, consumers continue to pursue a healthier lifestyle by purchasing nutritionally related foods and drinks. “Functional foods and beverages are a value-driven and effective means to this end,” says John Serieka, president and chief managing officer of Solis Brands, Inc., based in Altamonte Springs, Fla. “The robust category growth of the last 18 months from the transition of consumer purchasing patterns towards healthier and functional items should be further enhanced by a good share of this increased consumer spending through the balance of 2010 and 2011.”

By targeting specialized niche areas in this category—and promoting them well—experts say grocers can build the category. For instance, in the area of nutritional foods and beverages, Serieka says the single biggest driver of future growth will be consumers’ desire for easy-to-understand and convenient-to-use products. He says there is a growing market for products aimed at specific performance or health concerns such as joint health or weight management.

“Consumers need to be able to perceive and feel a true physiological benefit associated with the products they use,” he explains.

The company has two premium brand lines that fall into this category: ZOIC Nutrition Drink for healthy weight management and balanced nutrition and SUPER C Vitamin & Mineral Drink Mix. The SUPER C Vitamin and Mineral Drink Mix is available in seven formulas—Immunity, Energy, Recovery, Sleep, Slender, Sport, and Bone & Joint.

Superfruits are super

In addition to products targeted at specific heath or performance needs, Serieka pointed to three long-term sales trends in nutritional products and vitamins: antioxidants, caffeinated products and protein based-products.

Antioxidants are commonly represented in products by vitamins A and E, and especially vitamin C, he says, “The ‘superfruit’ segment is really hot right now,” Serieka says. “Some currently hot ingredients in the superfruit family are products that are high in vitamin C and polyphenols, including Acai Berry, Goji Berry, Noni Berry and Resveratrol.”

Caffeinated products are also gaining favor, he says. “More and better studies are showing that caffeine and other xanthine stimulants can have a tremendous positive effect on physical and mental performance when consumed correctly,” Serieka says.

As for protein-based products, he says demand will increase as consumers become come more educated. “I’d proffer that protein based products are still under-appreciated as their benefits are still not well understood by most consumers,” he says.

Solis recently launched a SUPER C RECOVERY formula, which is a vitamin and mineral drink mix that provides a healthy daily detoxifying boost of antioxidant vitamins, minerals, and botanicals, according to company officials. In June, Solis officials plan to add Mixed Berries and Cookies and Cream varieties to the of ZOIC Nutrition Drink line.

“The entry of companies like Pepsi into the supplement market simply confirms that there is a big market emerging,” Brechter says. “The mainstream consumer is realizing that sports nutrition products are not just for passionate athletes or professionals anymore.”

To take advantage of this category niche, Everlast Sports Nutrition launched Everlast MainLine products in 2009. “Our Everlast ENERGY capsules and our RECOVERY drink mix are designed for this consumer, and are selling very well where these people shop—grocery and drug stores,” says Brechter. “These are our leading supplement products and are complimented by our Everlast Energy Bar. This product is really showing tremendous sell-through in grocery.”

Passionate competitors

To address the needs of passionate competitors—those who run marathons, triathlons, race bicycles or any other number of endurance sports—Everlast Sports Nutrition launched the Everlast ProLine. “We’re beginning to see these products have sufficient mass-appeal that they are appearing in grocery stores and drug stores in increasing numbers,” says Brechter.

Consumers concerned about nutrition and health frequently use energy shots to help enhance workouts or to provide the energy and motivation required to adopt a healthy, active lifestyle. “They like the fact that 5-Hour Energy contains zero sugar and only four calories, has several important B vitamins and amino acids and is only two ounces, so it does not make them feel full and uncomfortable during workouts,” explains Carl Sperber, corporate communications director for Farming­ton Hills, Mich.-based Living Essen­tials, makers of the 5-Hour Energy line.

Sperber attributes the success of 5-Hour Energy to its promotional efforts. “The message is 5-Hour Energy is a simple, effective solution to help working adults get through their busy day,” he says.

In the past six months, Living Essentials has introduced two new 5-Hour Energy flavors—grape and pomegranate.

Room to grow

Expecting a positive sales year, experts in vitamins and health and nutrition products are looking for additional SKU expansion in the area of digestive aid supplements. However, retailers might keep their eyes open for more offerings in the area of probiotics as well. “There seems to be [room] for at least another three to five SKUs,” Pigott says.

In the sports nutrition area, researchers continue doing an impressive amount of research into new functional ingredients. “This combined with the continued trend toward increased participation in fitness tells me that the category has the potential for a long and profitable run,” says Brechter.

Grocers need to carry products that successfully balance affordability, convenience and functionality, according to Serieka. When offering health and nutrition products in the form of foods and drinks, he emphasizes, “They must taste good in order to drive repeat replenishment sales for the retailer and manufacturer.”

Experts say retailers will have to manage a more fragmented, broader portfolio of smaller brands as an increasing number of smaller specialized brands come into the marketplace and challenge the lager brands. “In a contradiction of this coming reality, a number of traditional retailers have executed SKU reductions as a cost savings measure in this economy,” says Serieka. “This has effectively limited consumer choice in many categories. The danger here is that this will discourage consumer discovery and also effectively reduce sales for both brand manufacturers and for retailers.

“Moving forward, if the existing key retailers do not provide consumers with the product choices and services they demand, then the consumer base will continue to fragment as they seek out and patronize newer and better suppliers,” Serieka says. “This reality is already impacting the industry as a number of high profile retailers who have embraced the SKU-reduction strategy are already reporting lower and slower sales.”

Serieka suggests retailers engage consumers with cross-category marketing and personal interaction, such as sampling and product events.

On-shelf messaging is also key, he says. “The proper communication of product features and benefits at the shelf will be critical to any new brand’s success and to the success of retailers. Retailers should prepare for the eventual migration of these products out of just the HBC category and into other mainstream category areas of the store.”

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