New and improved diet supps tone down cure-all approach - H&BC - Target introduces line of dietary supplements - Statistical Data Included

DSN Retailing Today, July 29, 2002

The tale of the tape for dietary supplements clearly shows this category no longer relies on the next knockout ingredient to lift sales off the tarp. However, it's just as evident that retailers are not ready to throw in the towel on the billion-dollar sales driver. To be sure, talk of the natural health business in mass retail has been somewhat negative. Dietary supplements have been much maligned by the press, having lost favor with the consumer media whose "miracle cure" coverage helped feed the double-digit sales surges that characterized the business through the mid- to late-1990s.

Yet, the category is rebounding slightly, especially between sales of multivitamins and non-herbal supplements. Sales of glucosamine and chondroitin have leveled, dropping from a hefty double-digit growth pace just last year to a more moderate growth rate in the low single digits. Multivitamins are showing significant growth--albeit small gains on a large base--as suppliers and retailers reach out to specific demographics. Among herbals, black cohosh root and milk thistle are the only ingredients to show any significant growth on a substantial dollar base.

Still, it is a business no longer driven by the next big blockbuster ingredient. These days, it is a game of basic blocking and tackling for retailers, most of which have turned their attention from last-minute product cut-ins to the challenge of SKU optimization. Retailers have not pulled back on spatial commitments to the category, but are actively massaging the mix to weed out underperformers and maximize turns.

Indeed, Target earlier this month refurbished its entire line of dietary supplements, consisting of more than 115 individual SKUs, and renamed the line Origin, a supplier source told DSN Retailing Today. The transition was at least apparent in several stores in the New York metropolitan area.

To sell through its older dietary supplement packaging, the mass merchant positioned these products on a nearby clearance endcap, along with several branded SKUs that appear to have been discontinued (they were not in the new planogram).

Unlike the previous dietary supplement labeling, the Target bull's eye logo is nowhere to be found on the new packaging--seemingly marking a move from a branded private-label appearance to more of a control brand look and feel. However, the company does identify itself as the manufacturer among the small-type copyright information on the label. The new look features more medicinal labeling--traditional typefacing on an off-white background--and has discretely color-coded its supplement line by supplement type. Orange-colored and pink-colored labels are slated toward non-herbal supplements, addressing such conditions as bone/joint health or heart health; the color blue encompasses its entire letter-vitamin and single-mineral offerings; and its green-colored supplements feature herbals.

Based on observations at four Target locations in southern New Jersey, the chain is leveraging their private-label offerings almost exclusively against branded dietary supplement supplier Pharmavite to the exclusion of many other dietary supplement suppliers, an outbreak of the mass marketer's drive toward efficient assortment.

There are a few Nature's Bounty supplements toward the bottom of the supplement section. In addition, Wyeth's Centrum multivitamin line and Bayer's One-A-Day line of multivitamins and children's vitamins still lead off Target's dietary supplement selection, each with its respective branded block of vitamin products. Supplements with consumer equity, such as Pharmaton's Ginsana, Wyeth's Caltrate or Rexall Sundown's Osteo Bi-Flex, to name a few, still enjoy prominent placement.

Likewise, suppliers are not shying away from providing innovation through new product introductions with regard to dietary supplements, a key growth driver in any category. For example, even though Leiner Health reorganized its debt-structure earlier this year through a pre-packaged bankruptcy filing, the company has promised a renewed focus on growing the supplement business.

"[Although] new products is not something Leiner has done a very good job at over the years, we've rededicated our company to make a difference in terms of levering distribution and adding value to our partnerships through new products for both Your Life and Nature's Origin, [as well as] private-label brands," commented Bob Kaminski, ceo of Leiner. New products will represent as much as $120 million in sales this year, he added.

At Wyeth Consumer Healthcare, one of their new dietary supplement-based initiatives isn't even going to be placed in dietary supplement sets. The company launched two Centrum Performance Energy Nutrition Bars in June, parlaying its brand identity from its Centrum multivitamins into the meal replacement arena. The bars are formulated with carbohydrates, protein, vitamins and minerals and are available in chocolate nougat and chocolate peanut butter flavors.

And Bayer Consumer launched a pair of One-A-Day Kids chocolate-flavored calcium chews featuring the Warner Bros. licenses Scooby-Doo and the Flintstones, marking the first calcium chews targeted toward children.