Health on Display
Vitamin, mineral and supplement sales have been flat over the past few years, but there?s good news for retailers in specific high-growth segments of the category.
Supplements that target issues associated with aging, products designed to address specific health concerns such as digestive health, and new formulations are areas of opportunity in the next few years. Retailers that give the category a high profile are having the best results with all of its segments.
?The category is shifting from a focus on overall good health to specific health concerns, so products that target specific issues are showing the most growth,? says Bob Sanders, EVP of home and health practice at Chicago-based market researcher IRI.
Among condition-specific products, probiotics lead the pack. A recent report from Rockland, Md.-based Packaged Facts shows that sales of digestive health supplements and probiotics were up nearly 25 percent last year and that more than 40 new probiotic supplements were introduced in 2013.
?Probiotics have been seeing strong growth as big companies are driving awareness in the category,? notes Laura Mahecha, a health care analyst at New York-based Kline & Co. ?Procter & Gamble has been using study results in ads for Align, and the idea of strengthening your immune system from the inside out is resonating with American consumers.? Retailers are expanding the space given to the category, with some chains, including Whole Foods Market and Fairway, adding a refrigerated section for specialty probiotics in their vitamin, mineral and supplement (VMS) sections.
Sales of vitamin C and immunity boosters are strong, and retailers are chasing the eye health segment, which continues to be hot, but while bone and women?s health products are still significant segments, their sales have suffered steep declines as more food products tout increased calcium benefits. Consumers are increasingly looking to get their nutritional benefits from the source, since recent studies have questioned the value of supplements.
?In the VMS category, product sales follow studies, and that can be good news or bad news,? observes IRI?s Sanders. ?It?s really important for retailers to be on top of these trends and on the forefront of innovation, so they have the products when consumers want them.?
Plenty to Chew On
Retailers are increasingly giving more space to alternative formulations, particularly gummy products. A recent study from Chicago-based Mintel reports that sales of adult gummies are growing even faster than sales of children?s gummies. ?Dollar sales for the gummy segment are nearly three times what they were in 2011,? affirms Sanders.
?Gummies have had a huge jump in sales,? seconds Mahecha. ?Church & Dwight has taken a small brand, VitaFusion, to significant growth, and its Li?l Critters children?s multivitamin brand has also shown a significant spike in sales.? Competitor Pharmavite also added three new lines of gummies in early 2014.
?We now have gummies in multivitamins, fish, calcium and CoQ10,? notes Sue Vodika, HBC category manager at Chandler, Ariz.-based Bashas?. ?We have melts in energy, vitamin B12, multivitamin and melatonin. Gummies is the leader in new growth, but that can be attributed to the many new SKUs being developed in gummy form.?
Ahold USA banners are also seeing opportunity in gummies. ?We?ve identified a segment of customer highly loyal to the emerging gummies form, so we make it easy by grouping all gummy VMS together, regardless of condition,? says Howard Sherr, VP of merchandising for health and beauty care at the Carlisle, Pa.-based retailer.
Mintel reports that chews, which include gummies, now make up 18 percent of new product launches and are emerging in the supplement and mineral segments as well as in vitamins. The market research company expects melting tablets (such as Nature Made VitaMelts) and liquids to increasingly appeal to consumers. Liquid vitamin and mineral sales were up nearly 5 percent in the supermarket channel, according to IRI data.
Making the Most of VMS
Pockets of growth are crucial in a category that has seen modest increases. After several years of sales increases that have outpaced the OTC category, VMS sales have been down in the past year. In the supermarket channel, sales of mineral supplements slipped 1 percent, with sales at $590 million for the 52-week period ending Nov. 2, 2014, according to IRI multioutlet research.
Sales of multivitamins for the same period fared slightly worse in the channel, with sales dipping 2 percent to $327 million. Sales of B and D vitamins are fueling growth in the one and two-letter segment, according to Sanders; sales there were up 3 percent to $222 million in the supermarket channel.
Merchandising the category by segment is one way retailers can make the most of their vitamin and supplement sections. ?The most important thing supermarket retailers can do to improve sales is to merchandise by segment (immunity, digestive, men?s health) on the shelf,? counsels Gary Pigott, SVP of marketing at Miami Lakes, Fla.-based Mason Vitamins. ?Products that explain the benefits from 10 feet away speak to the supermarket customer.?
Ahold USA stores group products in condition-specific sets whenever possible. ?We?ve also launched a Vitamin or Supplement of the Month program in 2014,? says Sherr. ?Each month, we feature a different item on display in stores and merchandise them with short brochures that help educate our shoppers on usage and benefits.?
At Lakeland, Fla.-based Publix Super Markets, spokeswoman Maria Brous asserts that the chain?s Nonfoods Co-Op has been a good vehicle to promote the vitamin segment. ?We position by target segment (i.e., adult nutrition for Ensure, Boost, etc.) while some sets incorporate many small segments and are arranged by usage (probiotics, bone and joint, multivitamins),? she explains.
Publix, Delhaize America?s Hannaford Supermarkets banner and Ahold USA stores all try to positon the category across from the pharmacy, where space permits, so that consumers have easy access to the pharmacist. ?We generally place the vitamins adjacent to the pharmacy, so that trained professionals are nearby to answer questions about how particular supplements may interact with prescription drugs and to provide customers with other information,? says Eric Blom, spokesman for Scarborough, Maine-based Hannaford.
According to Mason?s Pigott, the grocery channel too often sees the department as a convenience and may be placing too much emphasis on pricing. ?If they have a good selection and do a good job merchandising, they don?t need to play around with buy-one-get-one and high-low strategies,? he maintains. That said, 60 percent of promotional activity is buy-one-get-one deals, according to Solon, Ohio-based ECRM Marketgate. Some chains, such as Wegmans Food Markets, Publix and H-E-B, opt for an everyday low-price strategy, with occasional coupons, in an effort to move product consistently, rather than footballing prices to create a spike in sales.
Roxanne Lord, Bashas? director of health-and-wellness initiatives, says that while the mainstream supplement segment remains primarily value-driven, in her chain?s natural/organic supplement segment, consumers are also focused on a variety of other factors, including potency, purity and taste.
?Conventional HBC customers seem to be trying out more natural/organic supplements,? observes Lord. ?Although there are different types of consumers purchasing mainstream supplements versus their natural/organic counterparts, there are also many crossover purchases as a whole in this category.?
?Products that explain the benefits from 10 feet away speak to the supermarket customer.?
?Gary Pigott, Mason Vitamins
?Gummies is the leader in new growth.?
?Sue Vodika, Bashas?