Across multiple industries, the COVID-19 pandemic accelerated trends and caused tremendous change in market approaches. In the food supplement space, sales grew faster than expected in nearly every market, driven by an interest in immune support, greater understanding of the gut-immune connection, and discussion of the critical role of baseline nutrition to resilience. Quantifying that growth and projecting what the future holds can be challenging; fortunately, the team at Nutrition Business Journal has experience tracking the sector, and looking for the trend patterns. In this podcast, Rick Polito, editor in chief and lead author of NBJ’s new Global Supplement Business report, offers context around the growth patterns and what to expect next.
Tune in to hear more about:
- Why there were such variations in growth rates between the European, Asian and North American markets
- How the approach to the pandemic in different geos affecting supplement sales and consumer interest in nutrition
- Continued supply chain challenges and considerations
- Shifts in the go-to-market strategy and buying patterns that will continue to affect sales across the industry
Editor-in-chief at Nutrition Business Journal
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Vitafoods Insights 00:06
Welcome to the Vitafoods Insights podcast. Join us as we explore the latest science and innovation, helping the global health and nutrition industry, connect, develop, and progress. Today's host is Heather Granato, vice president of content.
The global pandemic caused chaos across multiple markets, hitting the supply chain, accelerating changes in workforce and work styles, driving adoption of new tech and much more. The chaos it caused across the food supplement market was, in many ways, what other industries could have hoped for: spikes in sales, greater growth across the industry, talk of baseline nutrition and wellness on every website and media outlet around the world. But how do you quantify the impact? The team at Nutrition Business Journal recently released the 2021 Global Supplement Business Report, which is expecting to see global sales of supplements hit $167.4 9 billion by year's end—about $2.5 billion more than projected just a year ago. As companies look to meet consumer demand, they're navigating their own challenges and opportunities. Joining me today is Rick Polito, the editor in chief of NBJ and lead author of the Global Supplement Business Report. He's a trend watcher and nutraceutical industry expert whose commentary, and sense of comedy, are known across the industry for unique insights and a fresh perspective on the market. Rick, thanks for joining me today.
Thank you so much for having me in. I appreciate the chance we have to communicate this way.
It's fabulous. Absolutely, please. So, let's dive in. You say in the global dietary supplement market, it's difficult to measure sales and growth and, in turn, difficult to predict. So how did you do that in 2021, assess this tremendous growth?
Well, I think that there's, there were assumptions that were made early in the pandemic that seem kind of naive right now. For many of us, how many people here thought they were gonna be back in the office last summer, some of us are still like me sitting in a basement talking to a screen. So, there's so many different parts that were hard to predict. But we started to get a better idea on things because NBJ is so deep in the ingredients of this industry, we can sort of see where the demand is going there that predicts what's going to sell into finished products. So that's part of the NBJ model. In our way, we bring together these numbers that touch across these different points of the chain that allow us to bring, you know, better numbers. But early on, people were scrambling for whatever ingredients they could and they were buying way more than they needed at times. They were just trying to chase after every bit. And it made it really hard for us to untangle that and make a solid prediction, especially when things were changing so fast. And God they keep changing.
Indeed, they do. It's something else. And certainly, you know, what you're predicting now, I'm going to bet on it. But I'm not going to bet all of my money on it. I'll bet that $2.5 billion additional.
I'm just waiting for that variant that gives me rock hard abs and you know, erases fine lines and wrinkles. It's a mess.
Right? So, let's dive into some of the specifics of the report. You know, we saw the growth rate in Western Europe was faster than originally expected—7.4% compared to what you had looked at a projected 5.7%. But it still lagged behind this reported 14.5% growth in the United States. What's behind the disparity in those growth rates?
Well, it's a hard thing to really nail down because Western Europe is not just one market, let's put out there for starters. But, also, I mean, there's the different sales channel mix, the way it came out United States where ecommerce was so established. Ecommerce, for all the complaints that many have in the industry about it, its effects, that's what made this possible. That's what made that 14.5% possible. So, you had sort of one arena, one playing field with one set of rules. I think, in Europe, it was different. There was also this whole mix of different responses to you know what happened with the virus. You had Italy and then you had a much more controlled situation in West Germany or Germany. They don't have West Germany any more, do they?
Well, you have western and eastern, but they're all one country. Yeah.
Yeah. So, forgive me that. So, we had all these different responses across there. And, also, just the market wasn't set up the same way with the sort of clarity that we had in the United States. And the United States is just the leading market for a reason, because there's so much adoption, so much trial, so many new people coming in and out the industry. All those things are what helped drive the difference.
Yes, we have seen that innovation adoption across that US market. So, let's turn then to Asia and especially China. So, the growth rate in this market was lower than most other markets even lower than seen as recently as 2017. So maybe you could comment on how China approached the pandemic, how it affected consumer confidence and even just the sheer scale of the Chinese market.
Well, China’s so different in its approach to anywhere else. Let's say they have levers of control of the society that are not available in the West. We can’t even get people to wear masks in the supermarket in the United States and people weren't allowed to leave their house on certain days in China. So that ability to sort of tamp down the virus a lot faster and these draconian measures wasn't going to happen anywhere else. So, you had that. That brought down some of the demands brought some of the panic off, because the measures were being taken, that didn't allow the virus to spread as widely as it could have. The other part of the China is travel has been cut down. So international travel where people were coming back with products in the sort of side market that happens from international travel, that's mostly disappeared. I saw something today that travel was down to 2% international travel, so people being able to leave the country and go places. So, there's a bunch of different measures there. But I think the biggest one is probably the sort of the confidence that people got from this is going to be controlled.
Right? So, let's look at some of the bigger macro issues, including this persistence of the pandemic. You know, we're seeing the emergence of more serious variants. How do you expect that it's going to impact the supply chain, both on the ground in the fields and production facilities, all the way through to shipping manufacturing and go to market?
Well, I think that the initial sort of scramble and panic that seemed to set in where people were chasing about, oh, you have to vitamin C and buy all that, that seems to have subsided. But I think that the costs and complications haven't gone away at all. People are talking about shipping cost being six times what they were before. Everybody’s seen the footage of those boats bobbing in the ocean off of Long Beach Harbor, you know, that's going on all over the place. So, I think the supply chain thing has not been figured out. I think it's getting better. What we're hearing is it's starting to get better. And part of that just certain companies are starting to figure out how to make it get better. I don't know if all the bumps are being evened out, but all it's not running smoothly anywhere. It's not start running smoothly tomorrow, you have something here that showing us just how interconnected everything is how you know, plastics in India, could we be facing how much bottles cost in Western Europe, bottles was one of the biggest things that surprised everybody, you can't get containers to put your supplements in. So, all of this is showing your longer lead times for new product development. People who are used to calling a contract manufacturer and having maybe having some bottles a few weeks later, are now looking at months of lead time. All the innovation has been turned towards immunity. So, I don't know how much is eaten up there. How tired people going to be immunity when this is ever going to be over? You know, where's that rock hard abs variant we’re waiting for coming. But I think there is a huge thing. That's just like I said, from bottles and caps that slows down some new products. But shipping cost delays, people trying to figure out just basic logistics that weren't the challenge they are now.
So, do you expect this is going to have a long-term impact on the supply chain and shipping type challenges? We had this just in time ordering for so long. And now it's boy, maybe you need to stockpile in for three to six months, because you're not sure whether they're going to get those ships out of the harbor.
I think that will vary so much by company. I mean, a lot of people are just going to be short term. They're not thinking past the next quarter, there's other companies will be thinking, these long-term relationships that we've built over years, they serve us well. Let's get more of those. So, let's strengthen those. So, I think it's going to be a very, very mixed bag for how long this effect is because some people took lessons here and be ready for the next one people who didn't or not. And of course, there's costs associated with either of those strategies. My bet would be yes, there's some long term and there's some new relationships built and there's some new systems and there's some new diversification of sources.
So finally, can we turn to consumers themselves? You know, they're buying more supplements in more markets, but how are they buying? And you alluded to this earlier, this rise of online shopping and tech that's affecting the market. What does this mean for the future of supplements at retail?
Well, it depends on how you define retail. My thoughts are the future is, of course, going to get is a subscription model where one of the biggest challenges for this industry has always been getting people to keep taking their supplements or maybe if their supplements keep showing up on their doorstep, they will and everybody won't have a half dozen bottles of stuff they just started and then never finished off with. So, I think ecommerce is going to be a big thing. I think subscription is going to be an increasingly large part of it. Some companies have figured that out. I don't think anybody has laced that in with tech as well as they could. You have some of the personalization like companies like care of or persona that have apps but you don't see very many other people showing reminders showing a way to integrate this into, you know, a lifestyle as we always say. So, I think that there's the specifics is going to more stay on the shelf and stores. No one's planning on having, you know, an upset stomach next July but I can tell you how many multivitamins I’m going to need next July.
Of course, you know, if you actually did get people to order their multivitamins on a regular basis, imagine what we could do with continued growth across the entire supplement market.
Absolutely. And that's one of the things from the pandemic is showing that immunity is not just something you take when you feel sick. It's something you take to keep from feeling sick. That's why the resulting growth, which has slacked off, of course, as you can't grow like that forever in immunity, but the general wellness is going to be the long-term beneficiary of this because what's the best way to stay healthy is to be healthy in the first place. So, I think there's a lot of opportunity that comes out that this lingering, we're not going to see, you know, this huge growth rates that we did, but we're gonna see them from this much larger base.
Lots of opportunities ahead of us of the future. Thank you, Rick. And thank you to our listening audience, you can order the full 2021 global supplement business report online at store.newhope.com. We've got information in the show notes to link directly. And for more information to follow the Vitafoods Insights podcast. Thanks for joining us.
Vitafoods Insights 10:59
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