It would be fair to say that over the last few years, the world has become considerably more health conscious. People are choosing healthy living as a lifestyle choice and in turn, this has carved a huge market surrounding vitamins, minerals and supplements.
If we were to turn to hard and fast numbers, it’s understood that this market is worth around $82 billion globally. Sales are showing no signs of slowing down either. For example, in the U.S., studies have shown that sales grew by around $6 billion between 2007 and 2012.
It means that the market is awash with companies who are taking advantage of it. Let’s now take a look at some of the reasons behind this growth, as well as possible trends to look out for in the future.
Why is the market growing so much?
As we have already alluded to, the world as a whole is becoming much more health conscious. However, to drill down into specific reasons, let’s take a look at five points on why the healthy supplements market is growing so quickly.
Consumers are more aware about preventative healthcare
One only has to scour the internet or the magazine shelves to see how obsessed the world is with healthcare. Whether it’s the health forums with hundreds of thousands of members, or the celebrity doctors that don our television screens, there’s no doubt that preventative healthcare is thrust into all of our faces. It means that consumers now have more information available to them than ever before and in turn, can react to those persuasive marketing campaigns led by the supplements industry.
There are a huge number of manufacturers
In most industries, we are used to seeing one or two manufacturers completely dominating the sphere. When it comes to supplements, this isn’t the case in the slightest.
One only has to take a look at the leading manufacturer in the industry to see this in its full glory. Living Essentials hold just a 7% share of the market, while if we were to take a look at the top five manufacturers as a whole they consume less than a quarter.
It means that the market is utterly fragmented and there is very little brand awareness. Most sales come from supermarkets, with specialist retailers also in the mix.
Brands are positioning themselves much more broadly
In the past, we have seen supplements carve their brand messaging around ingredients. Usually, they will place a lot of attention on one particular ingredient that is “known” to address an ailment, and go for there. One of the most common examples was how omega 3 was included in supplements for the benefit of your heart.
In some ways, this approach was easy to grasp. In another, and perhaps more importantly, it meant that customers really struggled to see the difference between brands.
The upshot of this is that brands are now focusing more on holistic benefits. They will create a need, and target a specific section of the market accordingly.
The population is getting older
For a number of years economists have been talking about the effect of the baby boomers. The fact that there are so many people in this age bracket impacts markets significantly, and supplements perhaps sees the effects more than others. Unsurprisingly, this is an era which is now more likely to invest in healthcare and similar markets, meaning that opportunities are constantly on the rise.
If we were to drill down into the healthcare market in-detail, we would see that the majority of supplement sales derive from supplements related to the eye, bone and joints. Then, with 36% of the whole supplements market being accounted for by the over-65s, all starts to become even clearer.
This trend is likely to continue for the foreseeable future.
Consumers now make more decisions themselves
Once upon a time, it was the doctor calling the shots in relation to your healthcare. Now, this isn’t the case in the slightest.
Sure, there’s a time and a place for doctors, but consumers are making more decisions themselves than ever before. Through the rise of the internet, they are starting to diagnose problems themselves. Not only that, but they are starting to opt for preventative healthcare – which is hardly surprising when you consider the fact that insures are incentivizing customers to opt in this way.
So, how does this impact manufacturers in the supplements industry? It could be argued that a lot of doctors wouldn’t immediately recommend supplements, so with fewer people consulting them for advice it had the knock-on effect of lifting sales of these products.
There is also a suggestion that this self-direction can impact another section of this market. As consumers conduct more research, they will find out more about what their body needs and ultimately, the demand for personalized products is likely to rise as well. Figures have actually shown that personalization is one of the fastest growing areas of the supplements industry.
What trends are foreseen in the supplements market?
We have just spoken about one possible trend in the supplements market but in truth, there are plenty of signs about others. Let’s now take a look.
The market will continue to be volatile
Something that doesn’t seem to be going anywhere anytime fast is the volatility of the supplements market. This is caused partly by the celebrity doctors, who are quick to recommend so-called “fad” supplements. The upshot is that sales skyrocket quickly – but such an influx rarely lasts.
Ultimately, while revenue for the industry is unlikely to drop, manufacturers will constantly have to be on their toes in a bid to keep releasing unique products to whet the appetite of their consumers.
Regulations will become tighter
Over the last few years, there have been very few regulations in relation to the supplements market.
However, the FDA is taking notice, and they are looking to enforce more rules on this industry. The fact that more than half of Class 1 recalls were dietary supplements tells its own story and the general consensus is that it’s just a matter of time before they introduce more laws to the market.
The rise of e-commerce
In truth, this is something that’s apparent in most industries. Supplements were historically a difficult nut to crack for the e-commerce industry, as consumers were wary without having that elusive knowledge of a product before purchasing.
However, sales in e-commerce have risen over the past five years, with manufacturers keen to enhance the whole online shopping experience. Additionally, personalization tends to be something which is much more easily implemented online.
An increase in mergers and acquisitions
As we have already documented, this is a fragmented industry to say the least. It means that it is a prime candidate for mergers and acquisitions, particularly when you see that a lot of pharmaceutical companies are looking to expand their health divisions.
Private label will become more popular than ever
The final trend revolves around consumer confidence and private labels. Now appears to be the time in which this is really surging; with customers more likely than ever before to turn their back on branded products and opt for private labels instead. This can be emphasized through companies like Walmart and Costco, who have both decided to develop their own private labels.