Vitamins: profitable pills for retail

Discount Store News, Jan 3, 1994 by Dawn Wilensky

Vitamins and supplements are enjoying a sales renaissance at retail with discounters sharing in the rewards.

Fueling the growth is a wealth of new products and promotions that satisfy and encourage consumer interest in leading healthier lives. At the same time, vitamins, minerals and supplements have gained legitimacy in recent years thanks to qualified scientific research, large-scale consumer education programs and favorable attention from the press.

Although the market for these products was largely the terrain of drugstores, mass merchandisers have surpassed drugstores and supermarkets as the preferred outlet for vitamins, according to a survey by Chicago-based Nielsen Marketing Research.

Mass merchants posted sales increases in vitamins of 23.3% in 1993 vs. 1992, while drugstores and food and food/drug combo stores recorded sales gains of 11.9% and 2.9%, respectively.

"The vitamin category is really growing," said a Wal-Mart pharmacist. "We always have to make sure our top three sellers--a generic Centrum multivitamin, vitamin E and Ginsana--are in stock because customers come in specifically to buy them."

At Target's Westland, Colo., store, vitamins have also been steady performers, especially Target's own brand. "Our store brand sells best. The top sellers include vitamin C and our own brand, which is similar to Centrum," said Shannon Swarts, team leader.

"Discount stores have realized that vitamins are a growing and important segment of the business," said Aruna Dorin, field marketing director for Leiner Health Products, the largest full-line supplier of branded vitamins and nutritional supplements and private label vitamins in the United States. "The category has heated up over the past two years with retailers aggressively developing the private label and branded side of the business."

While private label and branded vitamins almost share the market equally, new vitamin users typically shy away from private label brands, opting instead for the national brand.

One of the most recognizable national brands is One-A-Day, manufactured by Miles, which is about. to launch the biggest re-stage in its 53-year history with new products introductions, reformulations and repackaging.

The new line is segmented into five forms, including multivitamins for men and women, 55 Plus, Maximum (for active individuals) and Essential (for those want basic vitamin supplements with 11 essential vitamins). It is designed to make vitamin selections easy for consumers who are confused by the numerous options available today.

"Many consumers have responded that buying vitamins today is especially confusing, considering the proliferation of product and lack of information available to make wise decisions," said Steve Levy, senior product manager, One-A-Day.

The company is introducing One-A-Day Extras, a line of supplements that can be taken alone or with a multivitamin.

This introduction takes advantage of the burgeoning trend toward the single vitamin segment. "Consumers are beginning to realize that a multivitamin alone doesn't provide enough of a dosage for the health benefits most consumers are looking for," said Nickolas Palin, president of sales and corporate vp of Rexall Sundown.

Rexall Sundown, which markets the Sundown, Rexall and Thompson name brand vitamins and nutritional supplements, has had a lot of success with the single entity segment and now is exploring private label opportunities.

"Private label has a place today because retailers need to make margin and to offer customers another way to recognize the retailer. The best programs are where private label is merchandised with one or two branded programs because it is the brands that push the vitamin business. Private label by its very nature is not as reactive as branded programs," he observed.

The major discounters have definitely found a place for private label in the vitamin section.

At Wal-Mart, the chain's own label, Spring Valley, far outsells any of the national brands, the pharmacist said. And the same holds true at Target, where its own vitamin label sells very well in both multivitamins and single supplements.

Also important to the category's growth is the health benefits of beta carotene, a supplement that reportedly fights cancer.

Beta carotene has caused the supplement segment to explode, soaring 37.5% to a $550 million business, according to a March 1993 report by Packaged Facts, a New York-based research company. At the same time, the mineral segment grew 4.3% to $600 million and vitamins increased 2.8% to $2.35 billion. But it was the supplement segment that was most responsible for the total market's 7.4% gain, said Packaged Facts.

Also getting headlines are vitamins C and E, also cited for prevention of heart disease and cancer.

Skeptics still linger and in response, Leiner created the "Your Life" product line, which has a proven release formula, referring to two very hot topics in the vitamin business--disintegration and dissolution: the ease with which vitamins and minerals will break down when ingested.