As nutritional products continue to post impressive growth, chain drug stores must decide how to best differentiate their stores and e-commerce platforms from pure e-commerce players. To me, establishing chain drug as the most trusted and reliable channel to shop this $20 billion category should be priority No. 1. Success will rely on promoting high-quality, evidence-based, vitamin, mineral, herbal and supplement (VMHS) products supported by knowledgeable staff and expert pharmacists who can help consumers’ navigate their total health and wellness regimens.
My partners and I at the New England Consulting Group (NECG) have had the opportunity to talk to a number of active VMHS consumers over the past 12 months, and there are high levels of confusion and misinformation around VMHS products. Drug chains can address this by improving the integration between the pharmacy and VMHS aisle. To develop the content required to successfully educate consumers, increase cooperation with the top branded and private label suppliers beyond promotions and innovation. Engage these critical partners in a mission to develop the most informative and easy-to-understand content around the VMHS category. These improvements will help drug chains capitalize on three dynamics with far-reaching impact on future category sales. Those three dynamics are:
• Consumers accelerating their online shopping and product “research.”
• Newer prescription products derived from ingredients commonly associated with VMHS will raise expectations on their supplement counterparts.
• Increasing physician willingness to engage in discussions about VMHS products.
A category worth fighting for
The VMHS opportunity was already sizeable, and it grew significantly throughout the first 12 months of COVID-19. Toilet paper and banana bread may have been wildly popular memes, Pinterest posts, and Tik-Tok subjects early in the pandemic. Still, consumers flocked to open chain drug stores and e-commerce sites seeking more control over their well-being by buying a wide range of wellness products.
VMHS purchases increased across the board, ranging from single- and double-ingredient vitamins and minerals to multi-ingredient products with explicit and implied immune-boosting benefits. According to the IRI report “COVID-19 – The Changing Shape of the CPG Demand Curve” (Part 14, 2020), VMHS sales increased 19.5% versus 2019.
Several minerals and herbal ingredients saw remarkable increases. Zinc, elderberry and apple cider vinegar (VMHS nonfood versions) increased 234%, 177% and 171%, respectively, as consumers were looking for products offering immune-boosting as well as general health. Further, some of the largest single-ingredient variants, vitamins C and D, also grew more than 40% during 2020. Interestingly, despite the significant 2020 increases, consumers plan to continue to increase their frequency and breadth of use in 2021. The net intended increase in usage is expected to be 16%, while the number of consumers claiming they will buy more types of VMHS products also increased by 11 points.
Consumers are accelerating their online shopping and product “research” — E-commerce now represents over 50% of total VMHS sales. Amazon is a leader in online, and the chain drug dot-com brands also experienced accelerating increases in VMHS sales. Further, major CPG and health care players like Bayer and Nestlé have recently purchased companies like Persona and Care/Of that offer personalized, bundled, daily dose VMHS packages driven by an online questionnaire.
However, there are hundreds of websites where consumers can buy VMHS products today. When we talked to consumers, we found that many of them are shopping these sites because they relied on “Dr. Google,” and they were directed to these brands (often premium, by the way), making claims that fall outside of DSHEA guidelines. Many consumers mistakenly believe that the Food and Drug Administration approves VMHS products like over-the-counter drugs, and few understand the difference between drug and structure/function claims. This is particularly problematic when products are sold directly to consumers on the manufacturers’ site and available on Amazon and other well-known sites.
FDA recently issued 10 warning letters to companies for making drug claims on their St. John’s wort or other “mood-elevating” products. To test the assertion that they may also be broadly available, NECG searched for these products on leading e-commerce sites and found four of them, with the offending claims, on Amazon, and one of those four on another leading site.
As users and their VMHS portfolios increase, so will the number of informational searches and online research. As leaders in ethical health care delivery, chain drug brands have the opportunity to position themselves as trusted sources for reliable research and products that comply with the structure/function guidelines.
Newer prescription products derived from ingredients commonly associated with VMHS will raise expectations for their supplement counterparts — Amarin’s relatively recent launch of Vascepa (EPA) and its successful label expansion is one example of a prescription product that has a supplement counterpart. GW Pharma’s U.S. launch of Epidiolex (CBD) is another. Both products should challenge VMHS manufacturers and chain drug retailers in discussions on how to respond within the parameters of VMHS to the increased, high-quality clinical studies that the prescription products bring to support their benefits. While we firmly believe that there is plenty of opportunity for both prescription and VMHS options, as new evidence standards are created, they should be reflected in some way across segments.
Beyond launches, supplement manufacturer Nestlé has increased its commitment to prescription medications through the recent acquisitions of ZenPep and Aimmune. In another example of a push towards quality and accountability, The Bountiful Co. is building an increasingly science-based culture with R&D and commercial leadership coming from leading prescription and O-T-C drug companies and a move to the Consumer Healthcare Products Association (CHPA) from the Natural Products Association.
Together, these initiatives point towards the increasing need for chain drug retailers to work closely with their large VMHS suppliers to build consumer and staff education around evolving consumer regimens. Creating this education across departments will require focused investments, but it will differentiate the channel from e-tailers without prescription capability. For those competitors looking to expand into e-pharmacies, the installed knowledge base the pharmacists of most chain drug retailers have today gives them a significant head start.
Physician willingness to engage in discussions about VMHS products — If you participate in a major meeting of gastroenterologists in the next 12 months and attend the Salix pharmaceuticals presentation, you will hear about Envive probiotics before or after a presentation for the prescription GI block-buster Xifaxan. That’s because Bausch Health Cos. has taken a page from its very successful eye vitamin playbook of detailing medical specialists along with DTC advertising as a way to drive awareness and trial its new VMHS product.
While detailing HCPs for O-T-Cs and supplements is not new, GI doctors tend to be challenging and expensive to reach. The increased access to them indicates that they realize their need to be informed, as so many of their patients are combining prescription therapies with supplements. The same thing is happening with cardiologists and other specialists recognizing that their patients are often supplementing literally and figuratively.
Further, while not quantified, it appears that more MD offices are carrying limited lines of highly targeted vitamins and supplements associated with the specialty. The implications are clear: Helping consumers navigate their regimen can give drug chains an edge over less holistic and personalized e-commerce players.
As we continue to reemerge from the pandemic, it will be tempting for individuals and organizations to long for the good old days of 2019. In VMHS, this means high trade spends used on frequent TPRs and equally frequent BOGOs. While these may work short-term, we encourage the more holistic approach of demonstrating to the chain drug consumer that no outlet, physical or virtual, is more committed to their health or wellness.
Steven Robins is managing partner and principal at the New England Consulting Group. He can be contacted at firstname.lastname@example.org.