Interest in vitamins, minerals and supplements as a viable consumer product with strong profit-bearing potential has got to be at an all-time high right now, judging from the number of merger and acquisition deals scrolling across the latest finance news feeds.
And that can only bode well for the future. Sales of total vitamins and supplements were relatively flat (-0.4%) at $5.8 billion across total U.S. multi-outlet for the 52 weeks ended Nov. 4, according to SymphonyIRI Group. But the stars are aligning for supplements overall as a stronger regulatory environment coupled with a gravitation toward better living gives consumers and investors faith that supplements are not only safe, but will help keep them healthy into their twilight years.
That corporate interest in supplements as a viable business going forward was most apparent when Reckitt Benckiser upped the ante and won its bid for Schiff Nutrition shortly after a Bayer Consumer Health play for that same business. Earlier in the year Schiff itself had picked up Digestive Advantage, Church & Dwight bought Avid Health and Procter & Gamble purchased New Chapter.
And most recently Meda Consumer, fresh off of its successful repositioning of its iron franchise Feosol, will be launching into the natural sleep aid category with its recent acquisition of MidNite.
Growth potential in the dietary supplement sector has captured Wall Street’s attention, suggested Steve Mister, president and CEO for the Council for Responsible Nutrition. The supplement industry actually grew through the recession, Mister said. “There is this growing interest by consumers for wellness,” he said. “[Wall Street] is looking for somewhere to put their money that’s going to get more than a 2% return.”
A stronger regulatory environment helps fortify the supplement sector as an attractive investment. “[Wall Street] wants a predictable regulatory environment,” such as good manufacturing practices and mandatory adverse event reporting, Mister said.
Nontraditional drivers of dietary supplements may include health insurers and employers. With insurance mandates driving more potential consumers into healthcare coverage next year, those insurers with larger bases of healthier patients will reap friendlier margins.
The article above is part of the DSN Category Review Series. For the complete VMS Buy-In Report, including extensive charts, data and more analysis, click here.