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Monitor: Shifts in supplement demand illustrate why market data is so important in coming post-COVID era

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Immunity products may have boosted the supplements market in 2020, but a decline in 2021 shows how important it is for brands and retailers to dig into data to plan for the future.

Natural Products Industry Health Monitor, July 1, 2021
 
As the world emerges, haltingly and unevenly, from lockdown, new challenges emerge. In this feature, New Hope Network provides an ongoing update on those challenges and the opportunities they hold. Look for the Industry Health Monitor every other Friday to learn the major news that is affecting the natural products market immediately and the less obvious insights that could dictate where the market may struggle or thrive in the months to come.

 

Consider this: As demand for immunity products fades, supplement industry must adjust

Pandemics, at least for businesses, are nearly impossible to plan for. Few companies stockpile face masks and build inventories for once-in-a-century events. Now the supplement industry is learning that pandemics are also difficult to plan from. After a year of historic growth—U.S. supplement sales increased by 14.5% in 2020—brands are facing a “what now?” situation with a readjustment that includes elements of “back to normal” mixed in with a “next normal” of continued market momentum that is anything but certain.

Projections from the newly published Nutrition Business Journal Supplement Business Report make clear that the supplement condition category that built “the COVID bump” in 2020 is the same one that will drag back growth in 2021. The cold/flu/immunity market shot up by 72.3% in 2020, growing by $2.5 billion and accounting for more than a third of the $7 billion added to the overall supplement market last year. That picture changes dramatically in 2021, however.

Nobody ever thought 2020’s growth would continue, but NBJ sees sales heading in the other direction. Projections call for a 3.9% decline.

What that means for the overall industry is significant. In 2019, cold/flu/immunity accounted for 7.1% of the overall supplement market. In 2020, it represented 10.6%. At that new heft, the impact of the decline in cold/flu/immunity looms large. Take out the decline in that one category and the growth rate for the overall industry climbs to 6.4% from the 5.3% NBJ charts for 2021.

In short, the change in fortunes for cold/flu/immunity knocks nearly 1% off growth for an industry now estimated at $55.75 billion.

In the chart above, we see growth matched against projections made before and after the pandemic emerged. It illustrates how quickly things can change and what NBJ thinks it means when they change back.

What all of this tells us is that momentum can be a fickle phenomenon. The supplement industry is still hoping for that “next normal,” but planning for it will be difficult. We have no doubt that something similar is true for other corners of the natural products universe. Retailers with bargain bins brimming with hand sanitizer know how difficult it is to plan for demand that can seem obvious one moment and evaporate in the next. With all that going on, it is imperative that brands dig into the data. For supplement brands, there is NBJ’s Supplement Business Report, but in other natural products categories, the numbers may be more difficult to find but possibly no less important.

COVID-19 proved that forecasting can’t always work in the unexpected events of pandemic magnitude but planning from hunch to hunch as we wait for a new normal to materialize doesn’t make sense at all. Right now, companies are launching a barrage of new immunity supplements just as the market begins its retreat.

The pandemic may have been impossible to plan for and planning for normal will be no small task.

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