Market forecast: natural care growth to level off

Drug Store News, August 24, 1998 by Elizabeth Beezer

Elizabeth Beezer is associate vice president of Nicholas Hall. OTC Update is a monthly publication on the OTC drug industry, published by Nicholas Hall & Co. For more information, call (215) 402 0344. In the past year, the exuberant vitamins and minerals market has continued to grow, with sales through all retail outlets passing the $2.4 billion mark.

Multi-level and mail-order sales expand the market by another $1 billion-plus (these figures represent sales at manufacturers' selling price). OTC Update's Market Forecast, published by Nicholas Hall and Co. prognosticates the future of key categories in this market. The multivitamins category is the most significant in the retail trade-- and drug stores account for more than 30 percent of sales. The category can be split into adult's and children's multivitamins. The former segment is far more substantial than the latter, which generates sales of only $106 million. Bayer leads this segment with Flintstones and Bugs Bunny. Multivitamins on the upswing The multivitamins market is thriving, after many years of stagnation, with sales up 10 percent in 1997-98. In the mass market (food, drug and mass merchandise outlets), Centrum dominates the category with a 27 percent share of sales. Whitehall-Robins supported Centrum, including Centrum Silver, with almost $33 million in consumer advertising last year. In second place, Bayer continues to adjust the positioning of the consumer group-specific products included in the venerable One-A-Day line. It has replaced One-A-Day 55-Plus with 50-Plus variant to appeal to a slightly younger consumer. Bayer has also pumped 10 minerals into One A-Day Men's Formula. Of course, pharmacists will continue to recommend high-margin private label products, which account for more than 30 percent of multivitamin retail sales. Additionally, multi-product brands, such as Nature Made (Pharmavite) and Year Life (Leiner), were an increasingly important alternative for consumers Last year Pharmavite spent more than $12 million on consumer advertising for Nature Made. In its Market Forecast, OTC Update predicts that the multivitamins market will grow by 7 percent in 1999, leveling out to 5 percent in the following two years. In the single vitamins section of the market, vitamin E continues to gain popularity with consumers. Sales of these products in all retail outlets grew by 30 percent in the past 12 months, on top of the 20 percent growth in the previous period. Vitamin E has been the focus of more media attention than any other vitamin in recent years. This product will continue to perform above average in a very healthy overall market--OTC Update's Market Forecast indicates that sales will increase by 20 percent in 1999, then level out at 10 percent over the next two years. In the mass market, when sales of private labels are excluded, Nature Made is the dominant brand, followed by Sundown and Nature's Bounty. TV advertising for the Nature Made line spurred growth of 35 percent for the vitamin E variant last year. Vitamin C is the most important single vitamin, although its growth has not kept pace with multivitamins or vitamin E. OTC Update's Market Forecast expects sales to increase by 5 percent in 1999, then slowing to 4 percent over the next two years. Antioxidant and immune function claims will support this category. One of the factors that dampens the category's prospects is the domination of private label competitions, which do not tend to invest heavily in promotional or educational programs. In terms of brands, Nature Made is a key player in the mass market, with Sundown and Nature's Bounty also maintaining respectable shares. The zinc boom of the past few years has been very profitable for retailers, but it's unlikely that these sales are sustainable over the very long term. Sales of zinc products have soared from $40 million in 1996 to $153 million in 1998. Quigley pioneered the zinc lozenges market with Cold Eeze, and in the past year, major players have entered the segment. Warner-Lambert even added a zinc line to Halls. OTC Update's Market Forecast estimates that sales of zinc lozenges and supplements will grow 25 percent in 1999, but will slow to 5 percent growth. In comparison, the long-term use of calcium is recommended by doctors and pharmacists. In addition, powerful players Whitehall-Robins and SmithKline Beecham have invested a great deal of money in their well-established brands, Caltrate and Os-Cal, respectively. These factors, supported by scientific research on the benefits of calcium, contributed to OTC Update's Market Forecast: 10 percent growth in 1999, slowing to 6 percent in 2001. There are many other supplements--selenium, for example--that will begin to gain consumer acceptance, and promise long-term growth for the vitamin and minerals market. Currently there are some gray clouds hanging over the industry, especially in Washington. However, hopefully dietary supplements manufacturers and the scientific community will continue to prove the benefits of these products, and will present the Food and Drug Administration with the solid evidence that will guarantee the health of consumers--and the market.