Report: Suppliers need to take holistic merchandising approach to health and wellness products

CHICAGO — Health and wellness not only is the most compelling trend in today’s consumer packaged goods environment, but it also is among the hardest on which to capitalize, noted IRI Consulting in its new executive briefing, “What’s in Store for Health & Wellness.” Growth trends indicate that a number of products with individual health and wellness claims have recently experienced declining sales; however, there is evidence that products providing a holistic approach that advances general health and well being are gaining market traction. 

“It is critical that manufacturers of health and wellness products peg their value proposition to comprehensive health and well being, an umbrella that covers multiple attributes like natural, low calories per serving and organic,” stated Dr. Krishnakumar Davey, managing director, IRI Consulting. “Products with ‘one-off’ claims are much less likely to succeed. CPG marketers must focus on several factors that impact health and wellness to achieve long-term, sustainable success.”

While six of the top 20 products with health and wellness claims enjoyed a dollar sales growth rate higher than the food and beverage industry average in 2009-2012, just three maintained that growth momentum in 2012 alone, indicating a significant slowdown.

The report notes that dollar sales’ compound annual growth rate of six health claims grew faster than the food and beverage industry average of 3.4%. However, when dividing these results into 2009-2011 and 2012, that growth for several of these is slowing substantially, and even turning negative for some, IRI Consulting reported. For example, products with natural claims achieved a CAGR of 8% in the combined 2009-2012 period. However, in 2012 alone, this slipped to 3.9%. Dollar sales of products with natural sweetener claims grew 5.3% in 2009-2012, but when broken down into the two timeframes, sales grew 11.8% in 2009-2011, but had a negative CAGR of 6.5% in 2012.

“To achieve greater levels of success, manufacturers and retailers should develop a cohesive brand strategy that addresses questions, such as whether the company should execute against an overarching claim of well being or implement a strategy that covers both mainstream and niche products,” Davey said. “Marketers should also focus on being first to market, creating a multi-year innovation pipeline, developing a clear go-to-market and channel strategy that increases accessibility, and redefining pricing to increase affordability.”

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