STATE OF THE INDUSTRY SURVEY
State of the US Dietary Supplements sector in 2023
These questions and more form the basis of NutraIngredients-USA’s survey report entitled, ‘State of the Industry 2023,’ now available to download.
The survey is an annual assessment of the dietary supplement industry’s economic performance, key trends, challenges, new products and opportunities for growth, among other subjects covered. This year it was conducted in association with IFF.
Back in November, NutraIngredients-USA surveyed industry professionals working across key areas within the industry to gain insider opinions into know how the industry is performing.
The insights gathered give a snapshot of how the industry is returning to normal – or not – after a couple of years of super-charged growth.
Supply Chain disruption
The cost of shipping containers was a key industry talking point for months in 2020 and early 2021, and photos of cargo ships lined up waiting to unload at major ports will remain one of the enduring images of those years, but 2022 was supposedly the year that supply chain constrictions eased.
However, a whopping 80% said that they experienced high or some disruption compared to 2021.
Twelve percent of responders told us that they have added a second qualified supplier of raw ingredients, while a further 9% said that had actually switched raw material or ingredient suppliers.
In some cases, companies just couldn’t find an alternative and they either discontinued specific SKUs (5%), or reformulated their products.
Interestingly, 36% said they had adopted a combination of two of these approaches, while 18% said they had implemented all four.
Another big question from 2022 was how inflation-proof the dietary supplements is. It is accepted that the industry is relatively recession-proof, but the United States had not experienced such levels of inflations for many decades, well before the introduction of DHSEA and the creation of the modern industry.
And it would seem that inflation remains the biggest stress for many companies in this space. Fifty percent of responders ranked it the leading stressor for their company, with a further 22% ranking it second.
Keep calm and take a stress management supplement
Our survey also explored the sentiments around health conditions and product positioning, and the results validated much of what we’re seeing and hearing in the marketplace.
Stress management ranked No. 1 on the list for new product development for many people. All kinds of microbiome modulation – probiotics, prebiotics, and postbiotics – were a close second for NPD, followed by immune support.
Linked to stress management, sleep support came in fourth place. This category experienced huge growth in 2020 and 2021 (recent data from SPINS showed year-on-year increases of 40% and 22% respectively, and while sales contracted a bit in 2022, the category is still significantly bigger than in 2019 when it was valued at $432 million.)
Rounding out the top five is cognitive function and nootropic products, which in many ways are linked to both stress management and sleep, showing that there’s an overarching link between mental and physical health.
Given the hot categories for new product development identified in the previous question, it should come as no surprise that the different microbiome modulators and ingredients linked to stress management and sleep were ranked so highly by our respondents when asked to identify 2023’s hottest ingredients.
Three of the top five are microbiome modulators: Prebiotics, probiotics, and postbiotics. The other two are ashwagandha and mushroom-derived ingredients.
Ashwagandha (Withania somnifera) is a well-known adaptogen — a substance believed to increase the body’s ability to adapt to different forms of stress. According to the most recent herb market report by the American Botanical Council, overall sales of ashwagandha totaled almost $109 million in 2021 (HerbalEGram, Volume 19, Issue 11, November 2022). Most ashwagandha products in the market are positioned for stress management but we are starting to see more sleep products containing the herb.
And despite ongoing regulatory uncertainty around hemp-derived CBD, many of our respondents also predicted 2023 could be a good year for the herb…
We also asked a number of questions around regulatory issues, namely the highly divisive issue of a mandatory product listing, plus CBD.
We also asked if recent FDA actions against ingredients like NAC (and NMN more recently) are setting a worrying precedent for industry, and 66% of our respondents said yes.
To understand this, it’s important to understand the context: N-acetyl cysteine (NAC) is a derivative of the amino acid L-cysteine and a precursor of the cellular antioxidant glutathione. It is naturally occurring in foods like onions and garlic. Despite documentation showing its use in supplements since the early 1990s (and therefore pre-dating the Dietary Supplement Health and Education Act of 1994), the FDA declared in July 2020 that NAC was not a legal dietary ingredient because of its prior approval as a drug (it was first approved as an inhaled mucolytic drug in 1963).
This led to Amazon removing NAC-containing supplements from its virtual shelves in 2021. After much pushback from the industry, the FDA announced it would exercise enforcement discretion for NAC, basically turning a blind eye to the sale of NAC supplements so long as products are not making non-compliant disease claims. Amazon started reselling NAC-containing supplements in August 2022.
We’re now seeing a similar, but not identical story unfold for NMN.
It’s easy to understand why some stakeholders would see such action – and disruption to business – as a dangerous precedent.
Download and read
This year’s survey also explored topics such as NPD pipelines, insights about delivery formats, and gummies in particular, plus industry Equality Diversity and Inclusion efforts.
Download NutraIngredients-USA’s 2023 survey report here.