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Cost-of-living crisis fails to dampen soaring supplement sales

Article-Cost-of-living crisis fails to dampen soaring supplement sales

© AdobeStock/Right 3 Despite rising inflation, consumer spending on nutraceuticals remains strong, according to recent sales figures.
Inflation may be hitting customers in the pocket – but spending on nutraceuticals remains strong, according to recent sales figures.

The cost-of-living crisis is taking its toll across the world: research shows that the economy and prospects for recovery now outpace the invasion of Ukraine and C-19 as consumers’ top concern. What is the impact for spending on nutraceuticals? Could these products become even more important as people seek out solutions for stress, or have they become unaffordable luxuries?

Cost increases are consumers’ primary concern

Year-on-year global inflation as measured by the Consumer Price Index rose to 9.6% in May 2022, compared with 9.2% a month earlier – the sharpest price rise since 1988, according to the OECD. The increase was largely driven by food and energy prices: the same statistics show that food price inflation reached 12.6% in May 2022 – up from 11.5% in April – while energy price inflation jumped to 35.4% year-on-year, up from 32.9%.

Customers are feeling the pinch: in McKinsey’s latest European Consumer Pulse Survey, which was carried out in June, 53% of European consumers identified price increases as their top concern – up from 44% in April. Pessimism in the economy is high and household budgets are evolving in response, with basic needs accounting for a higher share of spending.

Worldwide, the picture remains gloomy, according to Mike Hughes, head of insights at consumer research company FMCG Gurus.

“Research conducted in 2022 found that 57% of global consumers lacked confidence in the state of the global economy, while only 28% of households say that they have adequate financial savings,” he said. “This means that any expected downturn in the economy and personal finances will hit many people living month-to-month financially, very hard, and very quickly. As a result of this, it is no surprise that 63% of consumers say that they are looking to reduce their spending on food and drink.”

Taking a long-term approach to health and wellness

What does this mean for nutraceuticals? In recent years, the market has bucked the trend seen elsewhere: sales of vitamins, supplements and functional foods have soared since the pandemic, as preventive healthcare and stress management became a higher priority for many. Sales of mood support supplements were up 46% year-on-year in March, US statistics from SPINS show, while the adaptogenic herb ashwagandha was one of the market’s most in-demand functional ingredients, growing more than 160%. Similarly, supplements to support cognitive health were up 40% year-on-year, with nootropics and sleep health products experiencing noticeable growth.

“Health remains a major issue for consumers, as they take a long-term approach to wellness, and disease management remains a priority even at a time when fear of coronavirus is fading,” Hughes said. “A total of 66% of global consumers plan to improve their overall health in 2022, while 42% say that they continue to try and increase the amount of functional and fortified food and drink products with active ingredients and benefits claims.

“Consumers plan to address a variety of health issues over the period (even if they are not suffering symptoms and are satisfied with this area of wellbeing), with priority being addressing immunity (66%) and digestive health (56%).”

However, strong sales do not mean the sector isn’t feeling the squeeze. A month-over-month comparison of February 2021 and February 2022 shows price rises for many items: the largest was among weight loss complex items, which experienced a 10.46% average price increase, followed by vitamin C (up 6.89%) and protein powder (up 5.99%), according to US market research company SPINS.

But it was not the same story across the board – some categories even experienced decreases. Electrolytes dropped by 7.94%, women’s health products fell by 3.14%, and multivitamins were down 1.50%. These variations show that while inflation is affecting the overall market, it is not being felt uniformly.

Strong outlook for supplement spending

But will a squeeze on spending mean consumers invest less in beating stress? The global nutraceuticals market size was valued at $454.55 billion in 2021 and is expected to grow at a compound annual growth rate of 9.0% from 2021 to 2030, to reach $991.09 billion by 2030, according to a Grand View Research analysis.

Hughes doesn’t think so. “The reality is that consumers will continue to seek out health-boosting products. However, they will be more select and value-orientated when seeking out such offerings,” he said. “Multifunctional claims will appeal to consumers because of the association with maximum efficacy, convenience and, as such, value. Scientific claims and evidence on packaging will also sway perceptions of value because of reassurance over efficacy.”

He added: “Proactive efforts to boost health appear to be paying dividends, with 44% of people reporting that their health has improved over the last two years. This is a positive for the industry as it means consumers will be more inclined to continue to follow their health goals, and that the products that they use are having a beneficial impact.”