Consumer Markets

Five emerging trends in vitamins, minerals and supplements

Increased numbers of individuals are taking a proactive approach to their health and the wellbeing trend is sweeping the nation.

This presents businesses in vitamins, minerals and supplements (VMS) with an opportunity to take full advantage of this shift in mainstream consumer behaviour.

Resulting from increased levels of investment in new product development and advertising spend, the UK VMS market enjoyed strong growth in 2015, with overall category sales worth an estimated £421 million by September 2016.

Considering the combination of an ageing population, a rise in lifestyle related diseases and increasing engagement among men within the category, the sector is forecast to see an uplift of 8.6% over the next five years. Sales values are expected to hit £457 million in 2021. [1]

The debate over the use of VMS as part of a healthy lifestyle continues. Critics argue that individuals should get all of the nutrients they need from a healthy balanced diet.

M&A activity in the sector

Investment appetite in the sector is reflecting consumer uptake, with food and healthcare companies showing significant interest in acquiring wellbeing assets.

The attraction lies in diversifying into a growth category that ticks all the natural health and nutrition boxes that are increasingly important to consumers. This is key for businesses whose existing product offering is dominated by less healthy or manufactured foods and medicines.

In November 2016, the German healthcare company Stada acquired UK VMS business Natures Aid for its high quality branded products and complimentary fit with Thornton & Ross, its UK based OTC business. The acquisition moved them firmly into the natural health space. Likewise, Samworth Brothers acquired sports nutrition business Sci-MX in June 2015 with the intention of using their brand expertise to reinforce Sci-MX’s market share and providing them with an entry point into the sports nutrition market.

However, it isn’t just the food and healthcare branded players that are active in this space – it’s also of particular interest to the ingredients and powders industry as they look to acquire products complimentary to their offering that will utilise their by-products and provide them with a value-add product portfolio. Glanbia, formerly a dairy co-operative is an obvious example. Glanbia Performance Nutrition is currently the number one global performance nutrition brand portfolio, comprising Optimum Nutrition, BSN, Isopure, thinkThin, Nutramino, ABB and trusource. Other examples include County Milk, a dairy ingredients supplier, which acquired CNP Professional, a sports nutrition and supplements provider in October 2016 and previous to that, in March 2015, Irish agrifood business Aurivo Cooperative acquired My Goodness, the producers of For Goodness Shakes nutritional drinks.

The sector also continues to be of interest to private equity, looking for branded businesses with strong product USPs, capable of delivering robust returns on investment. Grovepoint Capital, Carlyle Group and Lonsdale Capital currently have investments in the VMS and nutrition sector.

Here are five emerging trends you need to know:

1. The purchasing decision

Consumers purchase VMS for reasons often driven by their age. We are starting to see the effects of the rise in health technology, with younger consumers turning to VMS to self-treat symptoms or meet certain fitness requirements. Older generations are often using VMS to avoid sickness and the development of chronic health conditions. Brands should keep this distinction in mind when branding and marketing their products to their target market.

2. Demographic segmentation

Whilst male VMS represents the smallest segment of the market, with 3% of total value sales to the year ending May 2016, it experienced the fastest growth in 2016 with an increase in value sales of 29% between May 2015 and May 2016.

The majority of products targeted at men have a clear focus on sports nutrition, while products for the everyday male consumer are less represented, presenting an opportunity for businesses. Similarly, there is potential to capitalise on the growing demand for sports related supplements for older generations, targeting against muscle wastage and maintaining healthy joints and for active females. [2]

3. Increased accessibility to VMS a priority

More consumers want to buy their VMS products whilst doing their weekly food shopping.

Where consumers purchase their VMS is changing

Infographic 1 - Where consumers purchase their VMS is changing

Source: Mintel estimates September 2016

Following the closure of Nutricentre in April 2016, Tesco announced in August 2016 that it would partner with Holland and Barrett to introduce a health and wellbeing ‘store in store’ format in a number of Tesco stores across the UK, providing consumers with greater choice. This demonstrates the importance of 'wellbeing' as a category for retailers and it will be interesting to see how other major retailers respond over the coming year.

The rise in direct to consumer brands such as My Protein and Bulk Powders demonstrates the huge potential of this channel, as well as third party online distributers, most notably Amazon and online pharmacies, with an increased number offering online consultations, driving more consumer visits and purchasing.

Whilst new routes to market may help drive incremental sales, businesses should bear in mind the risk of sales cannibalisation (as the benefits of growth in one channel may be offset by a reduction elsewhere) as well as margin erosion, if consumers switch to a lower margin sales channel.

4. Fun and innovative formats

New product development has led to an increase in innovative delivery formats, including powders, chews, transdermal creams and sprays, helping the brand stand out and broaden the category to include children and teenagers. Powder based VMS products, which consumers can add to their food or drink to improve its nutritional content, are often perceived to be more 'natural', and as such are a key focus area for many brands. Own label brands however remain heavily focused on launching conventional pill methods which are regularly seen to be the most convenient format.

Powder based VMS products which consumers can add to their food or drink to improve its nutritional content, are often perceived to be more 'natural', and as such are a key focus area for many brands.

VMS formats

Infographic 2 - VMS formats

Source: Mintel GNPD, IRI/Mintel September 2016

5. Food and VMS

The growing convergence between food and wellbeing sees businesses pioneering innovative products meeting the dual needs of today's health conscious consumer. This has led to more businesses launching functional food ranges which include organic oils, butters and seeds. Products such as cereal toppers and additives are also growing in popularity.

Contact

To find out how your business can capitalise on these trends contact Nikki Calver, Manager.

Sources:

  1. Mintel – "Vitamins and supplements UK", September 2016
  2. IRI/Mintel – "Vitamins and supplements UK", September 2016