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Vitamin Shoppe CEO: A lot of CPG companies are looking at the dietary supplements space

By Elaine Watson , 07-Jun-2012

Procter & Gamble is probably not the only consumer packaged goods company looking very closely at the dietary supplements sector right now given how much faster it is growing than mainstream grocery, according to the boss of Vitamin Shoppe.

Speaking at the 32nd annual Piper Jaffray consumer conference in New York City on Tuesday, Vitamin Shoppe chief executive Tony Truesdale said: “We saw that Pfizer bought Alacer [maker of vit C brand Emergen-C].

You’re seeing a lot of CPG companies looking at this space and saying, hmm, I need some growth.

“I think Procter & Gamble looked at [wholefood supplement maker] New Chapter [which P&G announced it was buying in March ] and looked at this space and thought... there is some interesting growth here…"

He added: “We’ll have to see what they do with the brand, but over the years, being in retail, I watched P&G buy [petfood brand] Iams and take that to mass market.

“I’ve seen their behavior and kind of have the routine down as to what typical CPG companies will do [when they make such acquisitions].”

DMAA: We’re waiting for the FDA to tell us what to do

Asked to comment on the recent FDA crackdown on pre-workout supplements containing the stimulant DMAA, he said: “In general when the FDA gives us some direction on what we should do we will do that.

“I don’t think it is a significant thing. We have more than 8,000 stock keeping units [in stores].

“To date, the FDA has asked the companies for responses and they have responded and I have not heard anything from the manufacturers or the FDA.

"So at this point we continue to sell the products and wait for directions.

“We’ll wait and see but I don’t see a significant impact to Vitamin Shoppe.”

True Athlete success has been beyond our expectations

Asked about the retailer's private label strategy, he said sales of its True Athlete NSF certified for Sport sports nutrition range had significantly exceeded expectations.

The range, which is targeted at everyone from elite athletes to fitness enthusiasts “with a passion for natural products”, will be followed by other new concepts, he said.

“We’re on a journey of evolving corporate brands at Vitamin Shoppe. It takes a long time to do what we did with True Athlete. It’s a unique formulation that you can’t buy anywhere else. We’re not duplicating a third party.”

“Its success has been beyond our expectations, it has been very very enthusiastically received, so we are working on a couple of other concepts as well.”

Who shops at Vitamin Shoppe?

Vitamin Shoppe customers are typically divided into “three core segments”, said Truesdale.

First, the “vitamin, mineral supplement health and wellness-focused user, slightly older, more likely to be female”, he said.

Second, the sports nutrition customer, who “tends to be young and male”.

And third, men interested in physical fitness and health and wellness that span the above two categories age-wise, he said.

Q1 results breakdown

Vitamin Shoppe’s results exceeded expectations during the first quarter, driven by higher traffic and strong sales in weight management, sports nutrition, meal replacements, on the go drinks and natural proteins, said Truesdale.

Net sales rose 14.4% to $248.1m in the three months to March 31 driven by a 9.6% rise in like-for-like sales in its store estate, 15 new stores and a 15.5% rise in e-commerce sales.

Net income surged 58% to $18.3m, added Truesdale, who said Vitamin Shoppe employees had the edge over those at other retailers because they are incentivized to learn (they can earn more per hour if they pass tests).

He added: “You get paid for knowledge. You can go very quickly from a base wage and earn a dollar more an hour. The more you know as an associate, the more likely you can provide customers with what they need.”

52 new stores in 2012

As of March 31, 2012, Vitamin Shoppe operated 543 stores and aims to open a further 37 new stores this year (making a total of 52 new stores in 2012).

A prototype store – around 20% smaller than standard Vitamin Shoppe stores – will also be tested this year in two locations.

Based in North Bergen, New Jersey, Vitamin Shoppe sells vitamins, minerals, nutritional supplements, herbs, sports nutrition formulas, homeopathic remedies, and health and beauty aids.

The company carries national brand products as well as exclusive products under the Vitamin Shoppe, True Athlete and BodyTech proprietary brands.  

 Click here and here to read about P&G's acquisition of New Chapter.

 

 

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