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The New Realities of the Vitamin Market

Written by TABS Analytics | June, 20 2014

TABS Group conducts an annual study to collect data about consumers' purchases of vitamins, minerals, and supplements across both food, drug, mass, club, and dollar (FDMCD) outlets and non-FDMCD, including online, natural food, nutrition supply, catalogue, and MLM outlets.

The methodology we used has been consistent across each of the annual vitamin studies. We surveyed 1,000 consumers via a TNS panel, either in April or May of each year. The survey covered three key questions:

  • How many types of vitamins and nutritional supplements were purchased?
  • What types were purchased and which ones were purchased regularly (3+ times per year)?
  • At what outlets were vitamins purchased and where were they purchased regularly?

The correlation between the study's results and market data is strong. These results are a good indicator of sales potential and worthwhile for manufacturers and retailers to consider.

A Meaningful Increase in Category Penetration

The increase was across the board: both light and heavy users showed gains. Up two percentage points from 2013, 75 percent of households purchased vitamins at least once in the last year. The increase is even more dramatic when you consider that only 66 percent of households reported even a single type of purchase in 2012.

Two types of households are driving that growth: light consumers (who buy one or two types of vitamins occasionally) and heavy users (who buy three to five types of vitamins regularly). Those occasional buyers likely are buying a vitamin for the first time or are trying a variant of a vitamin they may have used in the past.

But the gender break down is particularly interesting: men drove increases in both buying rates and penetration rates. Heavy usage among women seems to be tapering off. Vitamin use among men grew to 72 percent and the percentage of buyers who buy at least three types of vitamins shot up from 28 percent in 2013 to 34 percent in 2014. More men are buying — and men are buying more vitamins. While the levels still don't match female buyers, it's clear that men are becoming more health-conscious.

A By-Vitamin Breakdown

When we look at the specific types of vitamins consumers are buying, we find a mystery: 56 percent of households purchased adult multi-vitamins (a number that continues to increase), but the number of households buying children's multi-vitamins dropped, from 9 percent to 8 percent of respondents. We expect adult multi-vitamins to do well because it's the most commonly taken vitamin. But why are children's multi-vitamins losing ground?

There are several possibilities. One key consideration is that children may be prescribed vitamins, which means that their parents no longer buy children's multi-vitamins over the counter. Another theory suggests that since so many adult multi-vitamins have rolled out 'gummy' vitamins, parents are choosing to give children adult multi-vitamins rather than purchasing a separate vitamin for their children.

Calcium also lost ground, while the following vitamins all gained ground:

  • Vitamin D
  • Vitamin E
  • Joint Relief
  • Probiotic
  • Melatonin
  • Women's Herb

When looking at the correlations between our survey and the sales figures reported by AC Nielsen, three types of vitamins show up as outliers. In each case, the survey showed growth, while Nielsen showed decline. Those outliers are adult multi-vitamins, fish oil, and joint relief. The data doesn't offer an immediate explanation.

Walgreens Takes the Mass Market Lead

The share of purchases most mass market outlets take home isn't surprising. Walmart, far and away, holds the lead: the company's numbers are held steady by the large number of regular buyers (both light and heavy) that buy vitamins through their stores. Most other mass FDMCD chains performed consistently, when compared to last year's numbers.

But Walgreens saw some major changes. The company's share among heavy (three or more types of vitamins) regular buyers jumped from 5 percent in the 2013 survey to 9 percent in this year's. That dramatic increase can be chalked up to improved marketing strategies: by focusing on strong and regular price promotions, Walgreens engineered a come-back. In particular, purchases expensive vitamins like joint relief vitamins and CoQ10 are very responsive to promotion. According to respondents, letter vitamins, calcium, and multi-vitamins are also sensitive to promotions. Costco and Sam's Club also saw improved numbers.

While many food retailers seem to think that vitamins, as a category, are a lost cause, these numbers show otherwise. The odds that non-FDMCD outlets as a whole could compete with mass market chains are low, with only online outlets presenting an exception.

The Impact of Online Outlets

Non-FDMCD retailers picked up more buyers, particularly in the light buyer category. That uptick is noteworthy because previously, that number hasn't moved upwards in five years. Online purchasing, which falls into the non-FDMCD category, is the key factor moving the needle. For FDMCD retailers, heavier buyers pushed all growth, with buyers who purchase three to five types of vitamins regularly showing the strongest increase. There's a clear migration to online purchasing which we've elaborated on further in a recent article in Chain Drug Review.

The impact of online outlets is born out when you consider buyers' outlets of choice. Survey responses showed that many buyers have slipped into buying through both mass and specialty channels: 24 percent of buyers report using both, up from 20 percent in 2013. FDMCD-only buyers remain in the majority, however, at 64 percent, though that number dropped from 70 percent in 2013. FDMCD outlets pull in roughly 65 to 75 percent of all retail dollars for vitamins.

Those online numbers are bolstered by heavy buyers, who regularly purchase three or more types of vitamins. In fact, online purchases pull up non-FDMCD numbers almost entirely on their own. The share of purchases for all specialty outlets, except online, is down. Online outlets are on a very different path than other specialty outlets and will be treated separately in the future.

Walmart's sales generated about $1.7 billion — which is about the same as how much online outlets generated. But online outlets generated those sales with half the number of purchase occasions: there are about 9.9 visits to online outlets per year, compared to 19.9 visits to Walmart. When buyers go online, they buy a lot.

Amazon's share of the online pie should come as no surprise: the online behemoth pulled in 19 percent of online occasions. Two-thirds of online outlets are pure-play (they sell only online and include such sites as Drugstore.com and eBay). The other third of sites are the online presences of brick-and-mortar retailers.

The Reality of the Vitamin Market

TABS Group estimates the total sales across both mass market and specialty outlets for vitamins, minerals, and supplements at $11.4 billion. That number is up 3 to 4 percent, when compared to a year ago. The study shows clearly that the tracked universe is the largest component of the vitamin market.

But that total sales figure should catch your attention: Euromonitor International pegged the number much higher in 2013. According to the Wall Street Journal, sales of vitamins, minerals, and supplements hit $23 billion — or double our numbers. Other estimates of the market's value go even higher, hitting up to $32 billion.

Those estimates just don't work out, however, when you look at the purchases that consumers report through surveys like ours. The reality is far lower than overstated estimates, leaving plenty of room for savvy retailers to grow.