Sales growth in the vitamins and dietary supplements market has slowed noticeably, but long-term demographic and health care trends hold promise for retailers, according to the TABS Group Annual Vitamin Study.

TABS Group, vitamins, dietary supplements, TABS Group Annual Vitamin Study, Kurt Jetta, health care trends, market analytics, Walmart, Walgreens, vitamin purchasers, online retailers, vitamin category, nutritional supplements, vitamin industry, vitamin sales, macro trends in vitamins, baby boomers, self-care

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Study: Promising trends buoy slow vitamins market

June 19th, 2014

SHELTON, Conn. – Sales growth in the vitamins and dietary supplements market has slowed noticeably, but long-term demographic and health care trends hold promise for retailers, according to the TABS Group Annual Vitamin Study.

The market analytics and intelligence firm said Thursday that the $11.4 billion vitamin and supplements industry saw 4% sales growth in 2013 after four years of high single-digit annual growth.

Online retail is tied with Walmart for first place in the category and continues to be the growth story, TABS said. This is the first year in which online sales growth has been driven by marginal category users, many of whom buy through the Internet. Pure-play online retailers continue to garner two-thirds of that channel's $1.7 billion in vitamin sales.

Walgreens had sizable gains in vitamin sales after retooling its promotional strategy, which de-emphasized its loyalty program in favor of strong and regular price promotions, TABS reported.

The food, drug and mass retail channel continues to draw most vitamin purchasers, with relatively few of these consumers moving to nontraditional vitamin specialty stores, according to the study, which surveyed 1,000 U.S. adults ages 18 to 75. TABS pointed to a significant rise in dual-channel purchasing, stemming from the migration to online sales.

TABS noted that despite marginal sales expansion in the vitamin category, the industry has much concern about decelerating growth, because vitamins and nutritional supplements are the largest health and beauty category among consumer packaged goods. The market researcher also said its registering of $11.4 billion in sales in the market this year is much lower than the generally predicted $24 billion to $27 billion.

"The vitamin industry has many problems that still need to be worked out," TABS Group chief executive officer Dr. Kurt Jetta said in a statement. "It is likely that some retailers refused to increase vitamins space because of the reduction in trade promotion investment from major manufacturers. And with no meaningful innovation on the horizon it did not make sense to carve out more space."

According to the study, factors reining in vitamin sales include a lack of space and expansion for vitamins at most major retailers; a reduction in the quality and frequency of promotions; the absence of a major innovation, such as gummy vitamins' popularity a few years ago; and consumers moving to buy vitamins online, where sales are much more sensitive to promotions.

Still, there are some promising trends for retailers and suppliers. For example, the TABS study noted that men are a key sales segment and have driven macro trends in vitamins for the last five years.

Men age 65 and older have a 72% penetration rate in the category. And while heavy use of vitamins and supplements — buying more than three types — appears to be tapering off among women, men are increasing in penetration and buying rates. That trend, most likely, is because women have maxed out in terms of potential types of vitamin purchases, according to TABS.

"We remain positive about the vitamin category long term because it is aligned with the trends of aging baby boomers, who are becoming more reliant on self-care options for their health. Also, a larger investment in price promotions can have an immediate and meaningful effect on sales and profits," Jetta added. "We will never underestimate the ability of manufacturers to develop true innovation in a product or merchandising that will jump-start the category for longer-term growth."

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