As we enter the what I hope will be the waning days of the global pandemic, and exiting what can be soundly described as a transformation year for the global food supplements industry, I will try to provide some perspective and insights.
The obvious first section needs to be…
Immune Health Products
The category has experienced meteoric growth – some estimates are greater than 30% growth in category sales, but this growth has NOT been even, and it has created challenges. The biggest benefactors of this growth have been Vitamin D, Vitamin C, Zinc, Elderberry, Mushrooms, and some immunoactive nutraceuticals.
Vitamin D shows some indication of staying power even after the pandemic. The supply chain demonstrated a good degree of resilience and now we are seeing some meaningful innovation with DSM introducing a more bioactive form of this ingredient.
Vitamin C and Zinc both demonstrated serious supply chain problems This is nothing new for Vitamin C which has historically followed a Boom and bust cycle. Zinc was just overwhelmed with unprecedented demand. I fully expect demand for both ingredients to fall back to pre-pandemic levels. The enthusiasm for Zinc was excessive and irrational, the vitamin C boost was pantry stocking and enthusiasm.
Among botanicals the boom in Elderberry could not have been anticipated pre-pandemic and as this is a berry crop from a shrub, supply chain is slow to react. Sales more than doubled year over year and our industry solved this problem in one of its time-honored ways, adulteration! There is a real problem with diluted and misbranded materials with other fruits and sources of phenolic compounds in the market. Caveat Emptor or…Buyer BeWare!!! Alternatives include Aronia berry – a Polish native and fabulous choice. Black current is also gaining in prominence.
Mushhrooms – while the trend was already quite hot prior to the pandemic, this is a structural boost to this category. The deeply immuno-tonic implications of a number of popular and well researched and substantiated botanicals underpins what will likely be both an expansion of the category and much wider infiltration into other categories (more below). The specific immune winners are, and will be, Shitake, Chaga, Reishi, Cordyceps, maitake. Supply is tightening as growing capacity is reaching limits but investment is accelerating growth. The market can largely be divided into indoor cultivated mycelium (common and widely available), Fruiting body extract (less available and superior research) and wildcrafted and outdoor grown fruiting body and mycelium. Some of the standout and best substantiated materials are extracts that are quite concentrated allowing for small form factor and use with other actives. The biggest growth has been in mycelium and fruiting body powders incorporated into drink mixes, coffee beverages, and bars. I suggest a mushroom based product line for consideration for immune and other benefits to include energy, focus, cardio metabolic, and lung/sports applications.
Other big winners in the immune space...
Andrographis is emerging as perhaps the most important anti-covid botanical, this couples with its already impressive pedigree in immune tonic, acute immune, Influenza, common Cold, and chronic inflammation (joint health) begs reconsideration. We previously had this botanical as a major ingredient and I think the trend for this botanical looks very positive. There are also now multiple vendors with robust offerings.
Selenium is also being shown as absolutely critical for healthy immune response and quality selenium. Seleno-methionine and Selenocysteines are the, best choices with a strong advantage to the latter.
The not so impressive
Echinacea and other “Classic” remedies have not benefited as much from the boom in immune wellness. Surprisingly I have not seen a big jump in antiviral herbs like Astragalus, Lomatium, and others.
Stress and Sleep – The Needs of Lockdown
The category was already doing well pre-covid with superstar herbs like Ashwagandha and nutraceuticals like melatonin and theanine and others earning huge followings. The pandemic and its impact on mental wellness has only accelerated this trend and I would anticipate growth to slow a little, but I do not think this market will shrink.
Innovation in Sleep support is an excellent opportunity with new ingredients beyond the “usual suspects” of melatonin, valerian, Melissa etc. I would expect that GABA, specialist mint extracts, alternate sources of Melatonin, and theanine to continue to grow.
I would also expect stress support as an attribute of other products to grow robustly. Traditional Chinese botanicals (skull cap, ginseng, peony) Indian herbs from Ayurveda (Tulsi, Gaduchi, shilajit, etc) and even some western plants such as Hops extract will find homes in this market.
Looking and Thinking post Covid
Vision support and eye health as well as neurocognitive will also continue to accelerate.
While the trend in these spaces was good before the pandemic, they took a brief pause and now are rocketing forward as the economy heats back up and the implications of eternal zoom calls interrupted by cell phone, video stream binges, and e-sports (gaming) are the new normal. This means that all aspects of eye health, not just AREDs but dry eye, reaction time, visual fatigue, blue light induced sleep disturbance, glare irritation, and reaction to changing light conditions present opportunity. It is also important to remember that the eyes are the forward outpost of the brain and what is good for one is good or the other.
I would suggest exploring the creation of a line of eye heath products. Kids Eyes, Dry Eye, Aging eyes and disease prevention, Blue light blocking, e-Sports, and night time eye recovery and circadian support all present opportunities.
Digestive wellness – Beyond the Bug
While probiotics growth stalled a bit in 2019 it has re-energized in late 2020 and into 2021 but it is different in important ways. Looking at what is working and why provides some useful insights. Some historical perspective is helpful in looking at this segment as market has entered a new phase where clinical support for the product offering is increasingly important. We have witnessed an evolution from got probiotics (we think), we build with live probiotics, we build with lots of live probiotics, we deliver live probiotics, we deliver a live product with strain specific substantiation, to clinically validated product offering. Simultaneously we have watched products migrate from “this is important – it in your digestive tract, to vague digestive benefit claims, to targeted digestive claims, to antibiotic recovery and immune specific, to a full range of therapeutic targets and population specific offerings. We have also seen increasing sophistication in the “other ingredients”, specifically prebiotics that comprise an array of fibers, oligosaccharides, and other compounds. Now we are looking at condition and population specific complex formulations and delivery systems. The market now features clearly defined probiotics, prebiotics with various attributes, postbiotic materials comprised of biologically active heat killed or enzyme lysed cells & probiotic metabolites (short chain fatty acids etc.) & Symbiotics which are combinations of the above. Further this complex market, like our Guut products, there has emerged hybrid products that are probiotic based but leveraging other recognized actives to support health claims. It would also appear that within the next year the very word, “Probiotic” will be allowed across the eurozone. I think we are well positioned with our Guut platform and our MultiLac platforms to develop additional SKUs. Previously we have looked at extensions or revisions of our Estabiom offerings and some vendors have made significant advances with premium strains in a liquid format with little separation and strong stability. Aligning our products on clinical support, complex formulation in the case of Guut, and strain, target, and audience appropriate delivery systems will likely drive success
The Dose form of the Future
I will start by saying that Tablets, Capsules, Softgels, and powders are here to stay But…
Dose fatigue, innovation that allows for a more enjoyable use experience, or delivery systems that allow for disparate or non-compatible materials (i.e. lipids and solids) or unstable combinations continue to grow. Beadlets in capsules with varying release profiles, beadlets in oils, bi-compartment capsules , and multi layer tablets continue to proliferate and economies are emerging fast. Gummies, shots, quick melt tablets, dissolving oral powders, and sachet format continue to grow. Companies are branding on particular dose forms or using novel formats as halo products to elevate a brand.
As delightful is a driving trend in delivery systems I suggest we look at some of these systems as well. The alternative delivery system market is dominated by gummies – looking at non-animal and sugar free gummies may be a way to participate that is differentiated and aligned with our core values. Liquid Format products may also be of value. Most importantly I have presented a chocolate manufacturer that has mastered inclusion of bioactive ingredient in a sugar free chocolate base. This vendor has engaged in extensive R&D in probiotic chocolates and has optimized this system. This is a significant business opportunity as it is new to market and the company is looking for partners to both grow their business and partner with capital to grow requisite infrastructure.
The Future - Smarter Business Models and Products
The merging together of big data, artificial intelligence and personalization is an unstoppable and accelerating trend that will dominate the future of the industry. I will explore a few of these trends, applications, their implications, and the opportunities.
Personalization is the consumer facing part of this equation. With Ritual now selling at Target as watered down version of personalized, of the future is here. Currently there are systems of personalization drive by consumer preference, branched questionnaires and online surveys, testing (genomic, blood, stool, Etc), smart phone and app driven, and device (both wearable and fixed) drivng consumer guidance and solutions that are widely available. Some of the best examples use this rich personal data to create solutions that are highly nuanced and effective, but most currently are little more than Hype. This will improve, remember that the early days of cell phones we 4 kg bags, Laptops were over 10kg with monochromatic screens. This was just 20 years ago. The current challenges to the category are that consumer trust and privacy concerns limit trial, many products are not particularly well fit to purpose, and the cost is typically quite high. All of these issues can be addressed but this is still early days. Strategically there are tradeoffs between first mover advantage and those that allow others to make the first expensive mistakes and trials.
The second layer of smarter business models is one that I personally don’t like to discuss as the reality is that I already face competition in product development from supercomputers and smart AI. There are already fielded products that are a result of AI driven Product Development. They have not yet fully disrupted the industry but this is a brief matter of time. Life Extension and others have fielded and continue to develop smart systems that provide insights and ultimately IP and product.
The base layer of AI driven innovation is looking at botanical biomass, microbial fermentation, and synthetic chemistry against a massive database of known human cellular, endocrine, and other leverageable mechanisms of action to impact health outcomes. Specifically the known health impacts of plant medicines is attributed to less than 3% of botanical based compounds found in “medicinal plants.” This presents a massive untapped resource. Digital bioprospecting is already resulting in novel and previously unidentified compounds being identified in know (and approved) plant materials. This presents new opportunities for therapeutic tools, IP development, and exclusive products. There are multiple players in this space, some have silos of data and IP already developed, and I am aware of at least one that is in need of capital.
My suggestion is to create a working group around this “Smart Business” model. It would necessarily need input and support from Marketing, Regulatory, Brand leadership, Innovation, Sourcing, and Information Technology. A first step is data collection of what we know and on the users of our product. We can then make thoughtful strategic decisions about where and how we would want to play in this emerging reality. We must participate as the risk of not engaging is existential. This said I feel there is plenty of time to be strategic and thoughtful.
The Popular Trends and things I am seeing a lot of...
Plant Based – This is the new normal from foods to beverages and certainly in supplements. This trend is especially true with protein and meal replacements. I think we have strong offerings with From Plants and VegaVero. I have spoke with Ole about Meal Replacement Powder (MRP)/Protein Mix. In the US clearly the use of MRPs and Protein has moved outside of the tradition gym crowd and become a common item for dieters, busy folks without the time for a traditional meal, aging customers with sarcopenia (frailty and muscle loss), and as a replacement for unhealthy snacking along with protein bars. I see a huge overlap with Vegans need for protein and the plant based MRP opportunity for VegaVero. I also see an untapped market for both From Plants and our Wimin offerings for a range of plant protein based bars, snacks, Protein drinks and MRPs – perhaps with added actives for dieters.
Sustainability – the twin sister of Pant based is sustainability. This trend is particularly difficult to operationalize during the time of the pandemic as the biggest and best opportunity is to optimize packaging but currently we have a global packaging component shortage. The actionable options include Post Consumer Recycled (PCR) Plastics, plant based polymers (not yet fully competitive), and pouches and laminate bags versus bottles for solid and powder dose. As much of what we sell in “On Shelf” I am hesitant in recommending plant based and compostable options as they do not have the glossy shelf appeal that consumers expect. PCR is workable for this market. The more “advanced” options however are perfect for Amazon and DTC (Direct to consumer) models of commerce and very harmonious with our brand messaging.
Woman’s Wellness – I am delighted that our company is committed to serving this market as it has been two long ignored and not effectively served. I would urge hast in establishing a leadership position in this space and offering a comprehensive suite of offerings for all aspects of Wellness for Women. I sense a good deal of organizational priory and energy and I would hope that we can effect significant product launches with our Wimin, Telemena, Medilage, and other associated brands.
Hydration – This category used to be the purview of elite endurance athletes, it appears to have jumped this boundary and there is a significant upsurge in awareness of how important hydration is for all aspects of total wellness. I could envision a powder based line of functionally specific powder based hydration solutions for every day wellness. Common concerns such as Joint Health, Gut Health, Energy, Rest, anxiety, basic nutrients, and inclusion of fruits and vegetables just to name a few.
Collagen is still strong – I think it is important to note that despite the boom in plant based and sustainable, collagen remains a robust and growing category. Solutions for Skin, Joints, Hair and Nails, Digestive Function, Bone Health and Muscle Recovery abound. I almost regret to recommend but this is a viable category for product launches and perhaps a dedicated line of products.
Minority and Woman owned business – The social upheaval of the last year has put a spotlight on equality and nowhere is this more accessible that Women owned and led organizations. I lack the awareness of this dynamic in Poland and your core markets so I tread cautiously here. This said, our VegaVero launch in the US can easily leverage the authenticity of a Vegan Female CEO. The fact that Kasia is photogenic, a Mother, and leads multiple organizations with multiple women in senior leadership roles and has been doing this for decades is incredibly powerful from a social media perspective.
Social Mission – Beyond the basic value for money that is essential to any CPG company, creating emotional engagement and modeling social leadership and corporate responsibility is becoming increasingly important, especially in competitive spaces where loyalty and general “Feel Good” emotions about a brand can be determinative.