Schiff Nutrition anticipates 'significant decline' in private label sales as brand building strategy gathers pace

14-Sep-2011 - Last updated on 15-Sep-2011 at 15:21 GMT

Schiff Nutrition recently acquired the Sustenex and Digestive Advantage probiotics brands from Ganeden Bioetch

Schiff Nutrition expects a “significant decline in private label sales” this year as it continues to ramp up investment in branded products and evaluates acquisitions that could further boost its brand stable.

In a conference call with analysts on Tuesday and a presentation at yesterday’s CL King Annual Best Ideas Conference in New York, chief executive Tarang Amin said a surge in sales of branded products in the three months to August 31 had beenpartially offset by a29% decline in its private label business.

Acquisition trail

But this drop was fully anticipated, said Amin, who told analysts earlier this year that Schiff would continue to play in the private label supplements market but would “step away” from “crazy” tenders and pump all available funds into its brands from MegaRed krill oil to Sustenex probiotics.

Schiff now had strong, branded propositions in three of the fastest-growing areas of the supplements market: vitamin D, omega-3 oils and probiotics, and was actively evaluating acquisition opportunities that could further boost its branded portfolio and help it move into new markets, he said.

Branded sales grew 25% over the first quarter of 2012 - above expectations - as new products Move Free Ultra for joint health and MegaRed Extra Strength krill oil hit shelves earlier than expected, he said.

Amin, who plans to increase sales and marketing investment as a percentage of sales from 16% in 2011 to 22-24% in 2012 as part of his brand-building strategy, said consumers had proved “highly responsive” to increased advertising, with sales of MegaRed up 45% when advertised on air.

Integration of Sustenex and Digestive Advantage now complete

Meanwhile, the integration of the Sustenex and Digestive Advantage probiotics brands recently acquired from Ganeden Bioetch, was now complete, he added. “In the first quarter we turned on advertising support and are continuing to drive distribution.”

Schiff, which posted a 27% rise in net income to $4.7m and a 13% rise in net sales to $58.2m over the quarter, is based in Salt Lake City with a sales office in Bentonville and a sourcing office in Beijing.

Its stable of brands includes Move Free, MegaRed, Mega-D3, Tiger's Milk, Sustenex and Digestive Advantage.