Vitamins, supplements and energy drinks are boosting the bottom line.
By Nora Caley
Consumers need nutrition and energy and they are willing to spend money on products that can help. Sales of vitamins, supplements, and energy drinks and bars are strong, and industry observers say that will continue as more retailers expand their assortments.
According to the New York-based Nielsen Co., for the 52 weeks ending Aug. 7, sales of vitamins in food, drug and mass, including Walmart, totaled nearly $6.36 billion, an increase of 7.5% compared to the same period the previous year. Sales of nutritional supplements totaled $4.02 billion, an increase of 5.9% compared to the same period the previous year.
Steve Mister, president and CEO of the Council for Responsible Nutrition, based in Washington D.C., says there are several reasons for consumers’ continued interest in these products. One is the economy. “People are concerned about losing their jobs and losing healthcare and they are concerned about getting sick and not having insurance,” he says.
Another factor, Mister says, is that people are not looking to big institutions to be the sole managers of their health. “People need to feel empowered,” he says. “‘What can I do to feel empowered about health care? I can take multivitamins, get serious about weight loss and take protein powders.’”
According to a survey conducted by Ipsos-Public Affairs for CRN, consumer confidence in dietary supplements reached a high point in 2009, with 84% of American adults indicating that they are confident in the safety, quality and effectiveness of dietary supplements, compared to 81% in 2008. Also, 65% of adults label themselves as supplement users, with 64% classifying themselves as such in 2008.
Gary Pigott, senior vice president of sales and marketing for Mason Vitamins, based in Miami Lakes, Fla., says consumers are taking preventive care into their own hands. “The data shows consumers are backing off their medications,” he says.
Backing off medications
He adds that national media attention, such as stories quoting cardiologists heralding the benefits of taking fish oil for heart health, lend credibility to the category.
Also, consumers are asking for, and retailers are beginning to stock, other products besides the ever popular glucosamine and omega fatty acids. Pigott says retailers are starting to understand the B vitamin category better.
Retailers are no longer limiting their offerings to B12. Today many offer B2, B3 or niacin, B6, and others. Also, digestive products used to be limited to probiotics, but now ginger and other remedies for motion sickness and morning sickness are available.
Arnie Stein, a marketing consultant for Santal Solutions, based in Neenah, Wis., says much of the consumer demand comes from baby boomers. “They question their doctors more than any other age group,” he says.
Santal Solutions offers OmSanA, a dietary supplement designed to help maintain blood sugar and cholesterol levels within the normal range. “Consumers are becoming sophisticated and they are starting to look for things other than prescription medication,” Stein says. “People come in to buy food and they find functional foods, such as orange juice with calcium. Many consumers are crossing over from health food stores into mass and grocery outlets.”
Kate Jones, vice president of Northwest Natural Products, based in Vancouver, Wash., says drugstores dominate vitamin sales, but grocery has growth opportunity. “Vitamins and supplements are an affordable complement to conventional medicine and are poised for increased sales in the coming years,” she says. “The increase in television, print and radio media coverage has led consumers to look to nutritional supplements as a way to maintain their immune system naturally.”
Northwest Natural Products makes vitamins and other gummy products. “Consumers are looking for easy-to-take and tasty alternatives to the traditional hard-to-swallow and chalky tablets,” she says. Some of the company’s newest offerings include Vitafusion Fiber, Vitafusion MultiVites, Vitafusion PreNatal and others.
Other products that are doing well are energy drinks, energy shots, and energy bars. According to the Chicago-based SymphonyIRI Group, for the 52 weeks ended Aug. 8, sales of energy drinks in food, drug and mass excluding Walmart totaled $1.1 billion, an increase of 9.4% compared to the same period the previous year. Energy shots made up 12% of the total, or about $135 million, and those sales increased 48% compared to the previous year.
Carl Sperber, director of corporate communications for Living Essentials, the Farmington Hills, Mich.-based company that makes 5-Hour Energy shots, says sales doubled last year. “For a lot of people it’s not a discretionary item,” he says. “It’s a necessary item and they rely on it and take it whenever they need it.”
He says the marketing campaigns for energy drinks such as Red Bull and Monster focus on teenagers engaging in sports or extreme adventure, while the 5-Hour ads target adults slogging through the workday. “They are merchandised differently but we fight for the same dollar,” Sperber says.
Karen Finocchio, vice president of marketing for NVE Pharmaceuticals, based in Andover, N.J., says there is much demand for energy drinks and energy shots. “People are losing their jobs or working longer hours or they have a second job,” she says. “They need energy to get through the day.”
NVE makes the Stacker2 6 Hour Power brand and also numerous private label energy drinks and energy shots. “A lot of people are very interested in getting into the shot game,” she says. “You are seeing them more on the shelves at the super mass retailers, and now grocery stores are saying, ‘We have to compete.’”
She adds that energy shots sell especially well in convenience stores. “It’s an impulse buy when you stop on the way home to pick something up,” she says. “People say, I can’t sit and drink an entire drink, so the shots are perfect.” NVE’s newest line is Stacker2 Vitamin Shots which include new 2-ounce shots such as Hangover Helper, Self Defense, Joint Fix and others.
Expanding the base
According to research by Chicago-based Mintel, only about 15% of adults consume energy drink and energy products, which points to a huge potential for growth, industry observers note. According to Mintel’s research, 16% of energy drink non-users and 14% of energy shot non-users say they would try the products if free samples were offered at a store where they usually shop.
Finocchio says sampling would be difficult because the shots are two ounces and retail for about two dollars. “It’s such a small ring. It’s difficult to do that as a sample.”
Peter Brechter, CEO of New York City-based Everlast Sports Nutrition, says energy bars are easy to sample. “In January this year we sampled in 800 stores, and many of those were grocery.” He says the company has sample-size bars and Everlast’s powdered sports drinks can also be sampled in stores.
He says there are opportunities for retailers to expand their offerings in sports nutrition. “From my perspective only 50% of grocers are even including these items in stores,” Brechter says. “Grocers began to add protein powder and workout products to their mixes and in some cases we’re seeing grocers setting up entire sports nutrition sections.”
The energy bars are often impulse purchases for people who want a boost but don’t want to eat a candy bar. Brechter says this works especially well in convenience stores, but consumers are also searching for the products in other channels. “People who are using these products are beginning to expect to see them in grocery stores,” he says. “I think there’s pent-up demand.”
Pigott says one way to boost sales in grocery is to make sure the section is well maintained. “There needs to be one person, call it the aisle captain, not just to stock shelves but to make sure things are placed back in the area because a consumer moved it,” he says.
He notes that health food stores often have workers who are knowledgeable about vitamins and supplements because they too use the products. Most grocery chains don’t have employees that offer these personal testimonials. “If you surveyed category managers on the supplement side and ask what vitamins do you take, 90% don’t take any but they are responsible for the planogram for consumers,” Pigott says.
Still, he is optimistic that more grocery chains will expand their sets and that sales will continue to increase. “Last year I said I expected the category to grow 5% this year and it is up 10%,” he says. “I’m not expecting anything to change.”
Jones says grocery retailers can promote products by brand blocking. “Our packaging is bright and colorful, so the products draw a lot of attention when they are grouped together,” she says.
It also helps if the section is easy to navigate. “We promote the concept of shoppability—making the vitamin section easy for the consumer to find the products they want and need. Seasonal promotions with prominent end-cap displays, like cold or back-to-school, can help move product. Floor displays and POP displays can lead to impulse buying by the consumer.”
CRN’s Mister says Walmart has expanded its private label vitamins and supplements, and he thinks more retailers will look to expand their offerings. “As people look back over the last two years they will say, Wow, this is a category that grew during the recession.”