Direct Sales Channels Unable to Escape Pinch of Faltering Economy


Whether a nutrition company is selling its products online, through medical doctors and other health practitioners, via a direct-response infomercial or through a traditional retail channel, the troubled economy is likely eating away at sales. In fact, although some were hit harder than others, every nutrition industry sales channel tracked by Nutrition Business Journal experienced slower sales growth in 2008, and the same is to be expected in 2009.

U.S. sales of dietary supplements, natural & organic foods and beverages, functional foods and beverages, and natural & organic personal care (N&OPC) and household products in the four NBJ-defined direct-to-consumer channels—multi-level marketing (MLM), practitioner, Internet and direct response—increased 4.9% to $12.2 billion last year. This was down slightly from 6.6% growth in the direct channels in 2007. U. S. direct-to-consumer sales accounted for 12% of total U.S. nutrition industry sales in 2008.

In comparison, sales of the above nutrition products within the combined natural & specialty and mass market retail channels grew 9.3% to approximately $90 billion. In 2007, total U.S. retail sales of nutrition products expanded 11.3% over 2006. Last year, retail added to the nutrition industry $7.6 billion in new sales, which was 13 times greater than the $570 million in new sales contributed by the combined direct-to-consumer channels in 2008. Of course, direct typically lags retail in growth. Between 2000 and 2008, direct channels experienced a compound annual growth rate (CAGR) of 6%, while the entire U.S. nutrition industry has seen a CAGR of 9%, according to NBJ estimates.

Even though growth was relatively flat for nutrition companies selling via direct response and MLM, not one nutrition industry channel dipped into negative sales territory in 2008—which can be considered a feat in and of itself given the strength and breadth of the current recession. “Historically, our channel has been pretty recession-proof, because it’s related to health, which most people value higher than other items,” said Jeffrey Bland, chief scientific officer of Metagenics, the leading practitioner channel supplement company in the United States. “But we are in a deeper hole than people have experienced since probably the Great Depression.”

NBJ’s 2009 Direct Selling in the Nutrition Industry issue, which publishes this month, offers an in-depth look at the 2008 sales performance of each direct-to-consumer sales channel in the U.S. nutrition industry for supplements, natural & organic foods and beverages, functional foods and beverages and N&OPC and household products. The issue also explores the benefits and challenges of landing a coveted ingredient supply deal with nutrition MLMs, profiles Nu Skin Enterprises’ new age LOC anti-aging product platform, delves deep into the world of nutrition industry e-commerce and much more. To order a copy of the issue, subscribe to NBJ or download a free 32-page sample issue, go to www.nutritionbusinessjournal.com.

NBJ Related Links:
Network Marketers Increase Recruiting to Offset Slowing Sales
Direct Selling in the Nutrition Industry VIII

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