Years from now, historians, economists, and even consumers will look back at the spring and early summer of 2020 with a mixture of amazement and dread. The COVID-19 pandemic’s effect on the economy has been devastating for most, but a boon to some.
For the dietary supplements industry, which has fought for mainstream appeal for years, this might be the moment the former niche business crosses the Rubicon.
In 2019, dietary supplement sales grew an estimated 5.7% to hit $48.7 billion, with vitamins holding steady as the market leader, according to the Nutrition Business Journal.
While conventional wisdom might suggest that the coronavirus pandemic would threaten that growth, historically speaking, supplement sales tend to surge during traditional economic downturns. And with the growing popularity of e-commerce, the fastest-growing driver of supplement sales with nearly 18% growth over the last decade, those numbers should only improve.
Overall, NBJ expects supplement sales to surge past $50 billion in 2020, driven by the increased popularity of immunity support supplements in particular, sales of which are expected to jump more than 25% in 2020. That’s against a much more modest 8.8% growth rate for the category last year. NBJ Senior Industry Analyst Claire Morton Reynolds revealed in a recent webinar that 17 of the top 20 selling vitamin products last year focused on immune health.
But the sudden surge in supplement popularity isn’t reflected in just sales numbers. NBJ recently surveyed consumers about their supplement use and found that 20% consumers who’d never taken supplements before admitted they would start sometime over the next three months.
“Is this crisis bringing new customers into this industry?” Reynolds asked. “Anecdotally, the answer is yes. And this data shows this is the case.”
Two pivotal dates
Around Feb. 23, according to data collected by SPINS, a provider of data and insights for the natural, organic and specialty products industry, the first spike in sales appeared, when proactive consumers hit the stores in search of immune and other health maintenance categories, including vitamins, supplements, and homeopathic medicines.
The second surge in consumer buying hit the week of March 15, as the number of cases in the United States neared 13,000 and quarantine orders started coming down from state and local governments. The second wave targeted staples, as consumers shopped for prolonged stays at home.
Functional ingredients, such as elderberry and vitamin C, and other immunity-related ingredients saw huge sales increases during the second wave of stockpiling, but probiotic ingredients sales were up sharply as well.
But what does it mean for the future?
During this webinar, SPINS EVP of Business Development Kathryn Peters pointed to a number of long-term ramifications as a result of this spring surge.
While many questions remain, she did suggest that consumers’ “heightened awareness of self-care for immunity” will persist. This echoes Reynolds’ earlier point that this crisis had drawn a wealth of new supplement users.
Peters also hinted that the industry will experience a sharper divergence between value and private labels vs. premium brands, based on consumer preferences.
“Value brands and private label have an opportunity to add ‘features,’ such as functional ingredients or packaging,” Peters explained. “And, on the other side, for premium products, there’s an opportunity to push the innovation envelope for new ‘features,’ and expanded categories.”
Finally, Peters suggested that there’s an opportunity within the industry to provide consumers with more approachable solutions, including packaging and labeling that are easy to read and understand.
In light of the unprecedented demand for dietary supplements during this crisis, several industry trade organizations argue that supplement manufacturers and retail locations that sell their products should be classified as “essential” businesses.
In a letter sent to all 50 governors in the United States, the trade associations proposed modifying stay-at-home orders to include: “companies and institutions involved in the research and development, manufacture, distribution, warehousing, and supplying of pharmaceuticals, biotechnology therapies, consumer health products, medical devices, diagnostics, equipment and services.”
The letter was signed by the leaders of Council for Responsible Nutrition (CRN), American Herbal Products Association (AHPA), and half a dozen other trade groups.
“On an ordinary day, these products play an important role for the health and well-being of consumers, and it is critical that we ensure continued consumer access to these products during this public health pandemic,” CRN President and CEO Steve Mister wrote in a release announcing the move. “This is not the time to jeopardize consumer access to these products. Simply put, they matter more than ever right now.”
This is the industry’s time to shine, and it can only do so with a strong regulatory compliance program, especially for companies that work with co-manufacturers. Non-compliance can not only put consumers at risk, but it can threaten the viability of a brand. The adverse publicity of receiving a warning letter from the Food and Drug Administration can be far more damaging than the letter itself. The next step, an injunction, can put brands out of business altogether.
But CRN’s Mister said it best, when he wrote recently that “Now is the time for companies to double down on their quality controls.”
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