Grocers are increasing sales and gaining market share in the valuable vitamin category.
Sometimes less is more. That certainly rings true when it comes to vitamin, mineral and supplement sales in supermarkets.
According the latest TABS Group Annual Vitamin Study, the percentage of U.S. vitamin users decreased to 66% during the 52-week period ended in April, compared to 77% in the previous tracked period. Despite the decrease, the study reports $12.2 billion in retail sales for the 52 weeks ended in April, an increase of about 2% versus the previous tracked period.
Industry observers attribute the increase to trade-ups and price inflation, indicating that most of the increased use is emanating from current buyers purchasing more vitamins. More importantly, the survey shows a significant shift as to where consumers are purchasing vitamins. That shift is away from specialty outlets and toward traditional retailers—particularly supermarkets.
“In the five years of conducting this survey we have seen a steady migration from specialty to mainstream retailers,” says Dr. Kurt Jetta, CEO of the Shelton, Conn.-based TABS Group. “This year it really accelerated. We saw a pretty significant drop of purchase levels, particularly for the heaviest buyers in the specialty channel, and a pretty big jump in mass channels.”
The study shows that the supermarket channel is keeping pace, if not slightly outpacing the market. Of course some retailers are performing better than others. Jetta says retailers that promote the category aggressively, such as Kroger and Shop Rite, are doing very well.
“The category exhibits a high level of space elasticity, meaning the more products added, the more additional items there are to sell, that is one reason why grocery has been doing well,” says Jetta. “It is almost a one-to-one relationship. There is really no other HBC category that does this quite as well as nutritionals. Overall retailers are much better off adding extra space to nutritionals than any other HBC category.”
Further emphasizing the point, the Chicago-based SymphonyIRI Group, reports that for the 52-week period ended June 10, vitamin and mineral dollar sales at food, drug and mass outlets, excluding Walmart, were up 5.4%.
Observers say there are a couple of reasons for the jump in sales at traditional retail outlets. Since there is a big price premium charged at specialty channels, as consumers become better educated and aware of product offerings, migration is inevitable.
“Consumers are always going to go to channels that offer a better price,” says Jetta. “That has been accelerated by much more aggressive and frequent promotional support. That has moved people over and is why we are seeing a lot of grocery chains doing pretty well.”
With more consumers shopping the grocery channel, it becomes important for retailers to better serve shoppers. That manifests in different forms, but one of the most important is via employee/shopper interaction. Part of the reason consumers shop specialty stores is the influx of new products but they also like the information they can get in-store, particularly on new products. Manufacturers can help supermarkets by working more closely with store personnel. That interaction can also help manufacturers better understand consumers’ mindsets.
“There is definitely a need [for us] to consider more interaction with store personnel,” says Gary Pigott, senior vice president of sales and marketing for Miami Lakes, Fla.-based Mason Vitamins. “They have more consumer information than the Internet can provide. [We should] probe them more. I do it every time I visit a retail store and a lot of new product ideas emerge.”
Consumer lifestyles seem to be affecting the category as well.
“Consumers appear to have kept up with preventive health measures so supplementation is increasing as a valuable component,” says Pigott. “More people are also exercising and for example, dieticians are reminding patients about magnesium to reduce cramping.”
Pigott says that consumers are also trying new products for sleep— including melotonin, L-tryptophan and valarian root—and energy. As a result, single-letter vitamins (B and D) and minerals such as magnesium, multi-vitamins, fish oil/omegas and probiotics are selling well.
Observers also say grocers would be able to better compete if they merchandised the category as a destination and not integrate it into the overall health and beauty aisle.
“The segment is one of the key pharmacy categories and the challenge is merchandising the category appropriately,” says Douglas Jones, manager, external affairs, for Pharmavite, based in Northridge, Calif. “The greater challenge is in the smaller format stores, given their space constraints. Larger format stores have space to merchandise the category as a destination.”
As with most categories, innovation breeds new sales. While that is good for the overall category, new product launches may actually be a detriment to grocery sales, since traditionally grocers lag behind when it comes to offering “hot” items in most HBC categories.
“Innovation drives shoppers to specialty stores,” says Jetta. “When there, they buy traditional items also. Specialty consumers are usually heavy buyers as well and much more likely to try innovation. They also exhibit search behavior and if they are disappointed with new product offering at specialty, they will pickup what they need—the essentials—at traditional channels.”
Despite the current dearth of innovation, there have been some new products introduced by manufacturers. Mason Vitamins recently launched 1500mg of Ultra Strength Krill Oil, which is said to reduce the risk of coronary heart disease while supporting healthy heart, eyes and brain function; and Coconut Oil softgels, which helps maintain healthy cholesterol levels, promotes heart and immune systems health and healthy hair and skin.
Along with softgels, gummies continue to enjoy solid growth. Together the two represent about 32% of category sales. In June, Pharmavite, under its Nature Made brand, launched Adult Gummies. Jones says the gummies are a “great tasting chewable option for taking vitamins.” They are available in fruit flavors and the line includes a multivitamin, fish oil, calcium, vitamin C, vitamin D, B-complex and CoQ10.
Gaga for gummies
Gummies are not just for kids.
According to data from New York-based The Nielsen Co., gummies are the fastest growing segment within the vitamin category. With sales growing at more than 37% annually, gummies far and away outpace the second fastest growing segment, softgels (up 9.1%). Overall, the category is up almost 5.0% for the 52 weeks ended June 9.