Natural Foods Merchandiser

Supplements Sales See Small Growth In Naturals Outlets

A sluggish economy and negative media attention combined in 2001 to cause a slump in supplements sales. In the naturals channel, versus the mass market, last year's supplements sales growth was still 4.8 percent, with supplements accounting for 38 percent of all naturals sales. On a positive note, several categories maintained strong growth, and retailers also reported an expanded customer base.

"While overall the growth of supplement sales in natural channels is down considerably from the late '90s, the good news is that growth is still well above that of the economy, mainstream food sales and supplement sales in the mass market," says Grant Ferrier, editor of Nutrition Business Journal.

Two categories that grew in 2001 were sports nutrition and specialty products, up 13.7 percent and 12.5 percent, respectively. These products were the supplements sales leaders in 2001. "Sports nutrition continues its strong growth as products spread to a wider swatch of the population," Ferrier says. "And more novel items like EFAs—both fish oils and plant oils—and probiotics also have had good sales."

Changing consumer perceptions may be responsible for some slow-growing categories. "There is some sentiment that some consumers are obtaining what they believe is ample supplementation from functional foods," says Ferrier. "This [reason] has been cited in the leveling of calcium sales in spite of the fact many women are still calcium deficient." Functional foods may ultimately encourage more customers to buy supplements, but it will be a gradual shift.

"Change will be evolutionary rather than revolutionary as far as supplement usage goes," Ferrier says. "We at NBJ forecast supplements growth in the 3 to 5 percent range."

Supplements sales were definitely influenced by media coverage in 2001. St. John's wort and kava in particular took a beating in the press. Last year, more of Vitamin Cottage's customers voiced concerns about what they'd heard regarding supplements, says Matt Seres, supplements buyer for the 16-store chain based in Lakewood, Colo. "We've had a lot of people with misinformation from the press about herbal supplements; people are concerned with what they're reading about kava and St. John's wort," he says.

To allay shoppers' fears, Vitamin Cottage uses education. "We show them the original study and then present the critical articles and other studies," Seres says.

The media didn't make too big a dent in Seres' sales. Overall, 2001 supplements sales for Vitamin Cottage were just a bit lower than 2000—not bad news, according to Seres. Among the chain's best-sellers were Cold Snap by OHCO, NOW vitamin E, bulk MSM powder and Health from the Sun's Total EFA.

Bob Minkler, owner of Minkler's Green Earth in Renton, Wash., also heard more supplements shoppers worrying about what they were hearing in the media. "People are concerned that the product has what the label says it has," Minkler says. "They wonder if it has the potency it says it has or if it's contaminated with anything else."

Possible drug-herb interactions are also on the minds of many consumers. "Everyone's getting on Warfarin—blood thinners," Minkler says, "it [influences what] supplements we can recommend."

Minkler's recommendations must have been on target because he reversed a three-year sales slump. "2001 was about 1 percent better then 2000, which is good because for the previous three years it was down." Bilberry and grape seed, as well as condition-specific products such as heart health and diabetic formulas were among Minkler's best-selling supplements.

Negative media may have slowed sales, but The Wrinkle Cure (Warner Books, 2001) made up for it. Shortly after Nicholas Perricone's book hit the shelves and he appeared on television touting his diet and supplements regimen for healthy skin, retailers saw a huge increase in sales of the supplements in his plan.

"The Wrinkle Cure supplements have been really big," says Vitamin Cottage's Seres. "Out of nowhere we started selling massive amounts of alpha-lipoic acid, DMAE [dimethyl-amino-ethanol] and ascorbyl palmitate."

Perricone's recommendations boosted sales for Minkler as well. The topical and internal products recommended in the book had huge sales, Minkler says.

In addition to shoppers worrying about supplement quality and those seeking youthful skin, many retailers noticed another trend: More men shopped the supplements aisle in 2001. "Men are starting to shop [for supplements] as much as women," says Mary Short, assistant manager for New Life in Tucson, Ariz. "Women shop for the whole family, whereas men buy for themselves," she says. At New Life, men are buying saw palmetto, joint support products and Viagra alternatives. Short says her staff is also seeing more crossover consumers shopping for supplements. "We're getting more people who just saw something on TV," she says.

Gary Walton, the supplements manager at People's Co-op in San Diego, is also seeing more men shop his section. In addition to saw palmetto and sexual health tonics, men bought more supplements tailor-made for them, such as New Chapter's Every Man. "I think it was the appeal that there was something more specific for them," Walton says.

Expanding the customer base to include men and crossover shoppers was one victory for retailers, especially as more mainstream grocers stocked supplements. This competition led naturals retailers to find creative ways to maintain customer loyalty, and given that the mass market saw no supplements sales growth in 2001, those efforts may be working. "Sales data have proven that the natural channel consumer is more committed to supplements and more loyal to their products," Ferrier says.

Source Naturals, a Scotts Valley, Calif.-based supplements manufacturer, helps retailers maintain customer loyalty by not selling its products in the mass market. "Retailers have been looking for something to help differentiate them from the mass product market and Source Naturals is industry loyal," says Jeff Lipsois, vice president of Threshold and Source Naturals. "We're looking for more ways that retailers can convey to customers that they can get things here they can't in mass."

Considering the negative media, terrorist attacks and economic slump, 2001 supplements sales were not bad—another indicator that the naturals category is stable enough to weather tough times.

Natural Foods Merchandiser volume XXIII/number 6/p. 30-32, 34

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