Sep 30 2020
The Vitamin and Supplement Manufacturing industry (IBISWorld report 32541d) has experienced a surge in demand in 2020 as consumers look for health supplements to keep a healthy lifestyle in response to the COVID-19 (coronavirus) pandemic. As a result, this has caused industry revenue to increase an estimated 8.2% in 2020. The growing interest in wellness and nutrition has incentivize a new wave of retailers that cater to specific markets, including online shoppers. As a result, IBISWorld anticipates that revenue for the Online Vitamin and Supplement Sales industry (OD5091) will increase 14.5% in 2020 alone, reaching $18.3 billion. These companies are building “Instagramable” vitamin gummies and pills by focusing on trendy and millennial women-focused digital marketing. For example, brands like Ritual, Care/of, SugarBearHair and HUM Nutrition have been selling related products through their respective e-commerce channels and emphasizing the importance of social media and digital personalization.
The price point of these trendy vitamins and supplements tend to be higher than that of an average brand retailed through supercenters or online. For example, the aforementioned brands have an estimated price point of $30.00, while the price point of the same vitamin by a generic brand are often an estimated $10.00. Most of these companies have professional influencers and celebrities promoting their products through social media channels, increasing exposure and establishing brand recognition. The direct-to-consumer business model has been working as they target specific audiences directly through their e-commerce platforms. As a result, in August 2020, Bayer AG, a pharmaceutical company, agreed to buy a majority stake in Care/of, an online personalized vitamin and supplement startup, which has a $225.0 million valuation. The acquisition comes to no surprise as brick-and-mortar establishments have experienced increasing competition from online retailers, which have been satisfying a larger share of demand for dietary supplements from health food stores (44619).
Demand for sports nutrition and herbal products from consumers between the ages of 24 to 44 has also increased, boosting the performance of online retailers since this age demographic tends to be more tech-savvy than older ones. However, most of the statements declared by the new trendy vitamin and supplement wave have not been evaluated by the Food and Drug Administration (FDA). While most brands clearly state it on their website, the vitamin and supplement industry is not as regulated as medicine. The Dietary Supplement Health and Education Act of 1994 permits for vitamin manufacturers to make marketing claims that do not have to be approved by the FDA. Due to the lack of regulation, more companies have entered the niche online vitamin market. In the near future, industry operators will likely encounter more product-specific regulation as public scrutiny over the safety of some herbal and sports nutrition products continues to grow.
Edited by Alexandria Valenti