Sales of vitamins and supplements in 2014 barely eked out a 1.5% increase over the previous year – the lowest year over year growth since 2004, said Eric Penicka, an analyst with Euromonitor. He added sales growth should improve slightly in the next five years, climbing to a 2.9% compound annual growth rate, but this is nothing compared to the peak 8% growth the industry saw from 2008 to 2009.
IBISWorld paints a slightly more optimistic picture with a forecast compound annual growth rate for 2015-2020 of 4.2% to $21.7 billion, but again this is nearly half the compound annual growth rate of 7% in the last five years, which will bring sales to a predicted $17.7 billion in 2015.
Factors contributing to the slowdown
The drop-off in growth is partly due to increased consumer concerns about supplement safety and efficacy, which was triggered by negative press related to mounting recalls and research questioning the value of multivitamins and supplements, Penicka said.
IBISWorld added recalls associated with synthetic stimulants and research chemicals in the sports nutrition category, in particular, as well as controversy associated with product adulteration, tainted extracts and inconsistent quality also contributed to the National Science Foundation’s finding that 51% of consumers say they are concerned about the safety, efficacy and quality of supplements.
Some supplement manufacturers are fighting back against the negative media attention with advertising that aims to educate consumers about existing regulatory requirements and quality standards, Penicka said.
For example, in early 2013, Pharmavite launched an ad campaign for Nature Made supplements that touted the tagline: “Nature Made vitamins are made to higher standards: Yours.” The campaign emphasized the company’s use of third-part certifiers to demonstrate the purity and quality of its products.
Other contributing factors to the supplement sales slowdown include increased competition from fortified food, especially granola and beverages, Penicka said. He also noted that sales growth is slowing because the market is becoming saturated and the base is growing to a level that cannot sustain such a high percentage growth annually.
Increased specialization of multivitamins with added premium ingredients also is slowing sales of some individual supplement products, Penicka said. However, he added, the addition of calcium, grape seed oil and other premium ingredients likely have boosted supplement sales more overall by encouraging irregular users to take the products more often.
Future growth drivers
Going forward, many of the trends that fueled the record growth in supplement sales in the last five years will continue to drive it, according to IBISWorld and Penicka. These include demand for age-related products, condition-specific supplements and an overall growing interested in sports and exercise, they said.
IBISWorld predicts in the next five years the number of people older than 65 years will increase 3.2% annually, driving demand for age-related products such as those that help with memory loss, physical performance, muscle retention and skin care.
Top selling products for this demographic also will include multivitamins with anti-aging antioxidants and ingredients for heart and digestive health, it added.
Other rising stars include probiotics, omega-3s and protein, which speak directly to consumer interest in condition-specific supplements, Penicka said.
He noted sales of probiotics were the fastest growing of all supplements in 2014 – climbing 22% to $1.5 billion. Sales of protein also grew 19% to $487 million and sales of omega-3s grew 6% in the period to $571 million.
While these growth rates are high, they are coming off of relatively low bases when compared to the $5 billion of sales of multivitamins, he qualified.
Still, the interest in protein reflects the increased interest in sports and exercise by mainstream consumers, according to IBISWorld. It adds this likely will continue in the next five years with participation in sports expected to increase 0.5% annually.
A potential dark horse in the supplement space on which to keep an eye is aloe, Penicka added. He noted that it is projected to grow 5% at a compound annual rate through 2019.
Finally, existing trends that will continue to drives sales growth include ongoing innovation in delivery platforms, such as powdered drink supplements, sublingual dissolvable products and gummy vitamins, IBISWorld predicts. This will reflect consumers growing interest in premium, all-natural and organic products as well, it noted.