The TABS Group Vitamin and Sports Nutrition study of 1,015 U.S. consumers geographically and demographically dispersed, was conducted in April 2015, and was designed to examine the types, frequency, and outlets where VMS and sports nutrition products are purchased.
The 2015 survey also analyzed the Sports Nutrition category and found 37% of adults 18 and over purchase from this category; Hispanics are twice as likely to be heavy buyers then non-Hispanics; and the estimated market size is $2.6 billion annually.
Online Sales Lead Category, Share Down
Online vitamin sales hit $1.9 billion surpassing Walmart’s sales of $1.7 billion in 2014, a slight increase over 2014. However, online’s share of occasions (a proxy for share) of the vitamin category dropped from 9.9 in 2014 to 9.7 in 2015, the first time online share has dropped since the inception of the TABS Group survey in 2005. Pure play online retailers (without brick and mortar stores) share surged to 80% of online sales versus 67% the last two years. Amazon alone had 36% of all online sales.
“All online outlets saw declines with the primary cause being the drop in sales among heavy buyers. Amazon’s decline in share was much less pronounced since it draws a disproportionate amount of its sales from light buyers,” said Kurt Jetta, PhD, president and founder of TABS Group. “The decline in online share is the second sector TABS Group has tracked with the other being consumables. Given that vitamins is among the most highly developed online categories in the consumer packaged goods (CPG) industry, this study adds an important data point that suggests online sales in CPG have peaked with the existing online shopping technology.”
The survey found that the growth in VMS is primarily being driven by gains in mass market outlets with Walmart, Costco and Rite Aid leading the pack. These three mass market leaders combined to account for $3.4 billion in sales representing 29% of all vitamin sales. Mass market has recaptured lost share from 2014 due to the surge in light buyer penetration.
According to the TABS Group, there are several reasons for this swing by consumers to buying via the mass market. These outlets are much more convenient and accessible than specialty outlets and the survey bears that out as it demonstrates that light buyers (defined as purchasing 1 to 2 types of vitamins) skew their purchases strongly to mass market outlets. The survey also points to some heavy buyers (defined as purchasing 3 to 5 types of vitamins) dropping down to being light buyers, and therefore more likely to shop at mass market outlets, because they stopped buying certain types of vitamins. But perhaps most significantly is retailer promotions.
“The channel shift from online to mass market affirms the importance of retailer promotions in driving sales. If compelling deals are not available, many consumer just won’t buy. Our investigation of online promotional practices suggests that online outlets are not competitive promotionally,” said Mr. Jetta.
Vitamin specialty, grocery and Sam’s outlets all saw a drop in share compared to 2014. Lower and less aggressive promotional activity was cited as a cause for sales softness among some specialty retailers in their public earnings announcements.
Sports Nutrition Opportunity for Growth
The survey revealed that 37% of adults 18 years and older have purchased sports nutrition products in the last year accounting for a $2.6 billion market. Twenty-five to 29 year old adults account for the highest category penetration rate at 63%, with a gradual drop off occurring in light buyers at age 30 and a sharp drop off at age 60. There is a sharp drop off of heavy buyers at age 40. Fifty percent of all purchases occur in mass market outlets.
The Sports Nutrition category has 50% more men heavy buyers than women heavy buyers and Hispanics are two times more likely to be heavy buyers than non-Hispanics. Among adults in the core 18-44 age group, seventy four percent of Hispanics have purchased a sports nutrition product in the last year compared to 50% of non-Hispanics.
“The results from the survey highlight that sports nutrition is a category deserving of more space and support in mass market outlets. With half of all sales already occurring there, that number has considerable upside, particularly given retailers focus on millennials,” explained Mr. Jetta. “Furthermore, unlike almost any other category of CPG, sports nutrition is an efficient way for retailers to appeal to Hispanics.”
“Our first study in 2005 set out to prove the prevailing industry estimates of a $25B+ category size were vastly overstated. This overstatement had then, and still has today, a harmful effect on many industry participants, primarily through the misallocation of capital by overspending on production capacity. We hope that by setting the record straight, that industry sales are less than half of what is published through other sources, industry participants can make better decisions on how they invest their resources,” said Jetta.