Think outside the basics

As the old saying goes, an ounce of prevention is worth a pound of cure. It’s a message that millions of Americans take to heart every day with the consumption of vitamins and supplements, one of the easiest, most affordable and painless ways to improve health.

Media-wise, last year wasn’t necessarily a great one for the supplement industry after the Annals of Internal Medicine, published by the American College of Physicians, ran an editorial claiming health supplements to be largely a waste of money. Whether that is true or not remains a subject of debate, but nevertheless, the industry did take a sales hit from it, according to Rockville, Md.-based Packaged Facts. Negative press coverage, along with an increase in the use of functional foods and beverages, resulted in a market slowdown in both 2013 and the first part of 2014, notes the market researcher’s “Nutritional Supplements in the U.S., 6th Edition” report, released in June. Some good news, though, is that despite the slowdown, nutritional supplements are expected to see 6 percent annual growth through 2018, when the industry will hit $16.4 billion.

Offer premium products

According to London-based Euromonitor, a lot of the current growth within the vitamin and supplement space is taking place in the private label sector.

When looking to grow sales of store brand vitamins and supplements, retailers should start by thinking premium. Mark Strobel, a consumer health analyst at Euromonitor, says that although consumers are increasingly choosing private label health products, many of them are still more comfortable purchasing private label over-the-counter (OTC) remedies than vitamin and dietary supplement (VDS) products. That’s because many are in a higher-income bracket, so price is often a secondary factor to quality. “Appealing to consumers who seek  premium supplements is a realistic possibility for private label VDS,” he says.

One retailer onboard with the demand for premium vitamin products is Woonsocket, R.I.-based CVS/pharmacy, which just launched its Radiance Platinum line of vitamins and supplements, all of them attractively packaged and cleanly labeled as “100% preservative-free.” Many of them also feature messaging such as “organic,” “natural” or “non-GMO.”

Investing in store brand supplements that appeal to an increasingly gluten-free population, as well as other segments such as vegans and consumers who just want more simplicity in the ingredients they consume, also could be a sales win for retailers.

“The watchword for private brands of the next couple of years is ‘transparency,’” says Kenn Israel, vice president of marketing at Santa Ana, Calif.-based Robinson Pharma Inc., a nutritional supplements and body-care products contract manufacturer.

Despite the popularity of clean-label products, retailers really have to be aware of what they are offering and ensure it actually is what consumers think they are buying, particularly in a product space that is rife with lawsuits.

“For store brands, the big issue is risk management,” Israel says. “I think there is a high degree of dissonance between the marketers’ language and the consumers’ understanding,” he continues, adding that the “natural” claim can be one of the most problematic, as the term has not been defined under law, unlike organic and gluten-free. “Some consumers think of it as ‘chemical free;’ others feel that if you can’t grab it out of the produce aisle in its raw and unprocessed state, it should not be called natural. Plantiffs’ attorneys and the courts are getting very involved.”

Rethink delivery formats

Retailers could also convey store brand quality through new delivery formats ranging from gummies to melts to lozenges. If retailers want their store brand vitamins and supplements to stand out, they need to make sure they are offering products in some of those forms.

“Vitamins and supplements are getting smaller, and are coming in alternative forms to address ‘pill fatigue,’ states “Formulating for Gummies,” a technical paper recently published by Schenectady, N.Y.-based Fortitech Premixes, a functional ingredients manufacturer. “Newer products and delivery systems that address this issue can keep existing consumers happy and can help attract new consumers.”

In addition to the wave of gummies, the last few years have seen the introduction of “minis,” smaller vitamin and supplement products for those who hate large pills. Retailers might also find success with store brand vitamin formats that aren’t yet being widely seen.

“People are looking for different,” says Robert Estey, CEO of Hunt Valley, Md.-based Mastix Medica, which contract manufactures and private labels tableted products in emerging dosage forms, most notably, chewing gum. “It’s different, convenient, and you decrease the pill burden,” Estey says, adding that, in addition to being the fastest means of delivery, gum also requires no water and is discreet.

Focus on the gut

One particularly hot category in vitamins and supplements market is digestive aid products. According to Packaged Facts, sales of probiotics and digestive aids posted an increase close to 25 percent in the multi-outlet channel in 2013, and for both 2014 and 2015, “gut health and probiotics will remain the top condition-specific nutritional supplement category.”

Probiotics and prebiotics, the live beneficial microorganisms that inhabit our digestive systems and other areas, “are a massive growth area and hot bed of innovation,” Israel agrees. “This is perhaps the most significant trend as it will drive whole new ways of thinking about wellness and therapeutics.”

Justin Krahl, sales manager at Wausau, Wis.- based Probium LLC, manufacturer of both name-brand and private label probiotic products, says that when he started working in the probiotics industry almost 10 years ago, “no one even knew what a probiotic was.” Now, however, “everyone is trying to jump on the bandwagon.”

Krahl warns that not all probiotics are created equal. Their rise in popularity has resulted in a barrage of products of varying quality flooding the market.

“Retailers themselves are really taking a great role in increasing the quality of probiotics, along with consumers themselves doing research on the strains,” he says.

So how could retailers make sure their store brand probiotics are meeting the quality standards that shoppers are looking for?

With around 100 trillion bacteria living in the human gut, the same probiotic strain is not going to be equally effective for everyone who takes it, so one way is through offering multi-strain blends that will work well for a large customer base.

“You want to offer a really good broad-spectrum probiotic that benefits most of the hosts that take it,” Krahl says.

Retailers should also avoid fillers for their store brand probiotics. Many probiotics on the market contain maltodextrin, a corn-derived flow agent that offers no dietary benefits.

“People should look for probiotics where all ingredients have a benefit for the host, instead of just a benefit for the price,” Krahl says, adding that Probium uses Sunfiber, an invisible fiber additive that offers digestive benefits in addition to the strain itself.

He also recommends that retailers avoid probiotics originating from sponges and spores, and instead stick with the human-originated strains. While sponge and spore products might be just as good, “the research just isn’t there yet.”

While probiotics are still most commonly associated with ailments concerning the digestive system, the Des Plaines, Ill.-based International Probiotics Association notes that studies have shown their effectiveness in improving food and skin allergies in children, as well as ear, bladder and yeast infections. In fact, research suggests that they can be helpful for a whole range of conditions.

“A lot of the major retailers are already launching condition-specific probiotic products with credible claims about shelf stability and about what system in the body they are going to impact,” Israel adds. “They are a huge area that will eventually become a whole other field of medicine.”