Consumer Insights

After a period of growth uncertainty, the U.S. vitamin, minerals and supplements market continues to grow at a healthy 8% clip and is now at $12 billion in retail sales annually.

That’s according to Shelton, Conn.-based TABS Group Inc., a leading marketing research and consulting company. “The double-digit increases we saw in the category in Q1 and Q2 2010 trailed off to low single digits at the end of last year,” said Kurt Jetta, TABS Group CEO and founder. “The growth trend has now stabilized in the high single-digit range.”

The growth has been equally divided between an increase in the number of buyers in the category and the spending per buyer. In particular, category incidence grew from 67% of adults in 2010 to 70% in 2011, a 5% gain in buyer count. Additionally, the percentage of adults claiming to buy at least three types of supplements increased from 20% to 25% in one year.

In addition to the growth in the category, TABS Group also noted that the migration of consumers to traditional channels continues, although not as dramatically as in past years.

“We saw significant gains in sales in virtually every mass-market outlet, except for Walmart,” Jetta said. “In particular, there were strong promotion-related gains in food, drug and Target, and there was a general increase in value consumers in club. By contrast, Walmart’s share dropped sharply due, in our estimation, to a combination of reducing promotional support in the category and reduction of selection on branded offerings.”

Other key highlights of the study were as follows:

- Walmart lost 1.4 share points in the largest HBC category, going from 16.3% to 14.9% of category sales. It is still the largest retailer in this category.
- Club is now the largest channel for VMS at almost 18% of sales, but sales are still highly fragmented across numerous outlets. Food, drug, mass, vitamin retailers, health food and online/catalogue each account for at least 7% of sales.
- Vitamin specialty retailers, particularly the smaller ones, saw a significant decrease in buyers. This is consistent with a general migration in the category to mainstream outlets.
- Online/catalogue continues to see strong gains in the category as they capture a greater percentage of the heaviest category buyers (6-plus types per year). Share in these outlets is now over 15% of retail sales.

In explaining the channel level results, Jetta noted, “The results of this year’s study reinforce two dynamics that we have seen in VMS: First, it is a highly promotion responsive category with high category expansion potential from aggressive promotions. Retailers that promoted more won, and those that didn’t lost.

“Second, vitamins, more than any other HBC category, has what we call high space elasticity. That is, sales are highly responsive to the addition of more space and more SKUs, particularly more branded options. Again, much of Walmart’s weakness can be traced to their over-reliance on the private label program and the reduction of branded presence.”

The 2011 TABS Group Vitamin Study was conducted among 1,000 representative respondents age 18 to 75 in the TNS panel. The responses were combined with TABS Group’s proprietary modeling capabilities to derive the market size estimates for the vitamin category. The study was fielded in May 2011, and it replicated studies that were completed in May 2010, January 2008 and November 2006.