Maikos-Research-Project-Le-Minh-Nguyen-Trang

RESEARCH PROJECT

MAIKOS

Le Ngoc MinhNguyen Trang

Subject: Supplements IndustryCalifornia, USA

NEEDSFemale Athletes

Active Women

Female Athletes & Sporty Women

98.7107.9

115 111.2115.6

130.3

144.4150.1

159.5167.6

177.8

0

20

40

60

80

100

120

140

160

180

200

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

NCAA’s Sport Participation per Institution from 1981 to 2011

Average number of female athletes

*The National Collegiate Athletic Association (NCAA) is a non-profit association which regulates athletes of 1,281 institutions in America

The average amount of female athletes and sporty women almost doubled during the last 30 years from 98.7 in 1981 to 177.8 in 2011. And the

trend still continues, indicates a bright future for markets relate to this field

Average working out minutes per week reported by 22 million users age 13 and older (from Map My Fitness, 2015)

Active fitness women California is the #1 state with 87.4 minutes. 41% of them participate in running, 40% in walking, 14% in cycling

and 5% in other activities

12.7% - 15% >15% - 20% >20% - 25% >25% - 27.3%

Percentage of citizens working out at least 2.5 hours weekly per

state (Center for Disease Control’s report, 2013)

Together with Hawaii, California came at #5 place with 23.7%Colorado is #1 state with 27.3%

41%

41%

28%

36%

21%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

To feel better

To improve overall energy

For digestive issues

To boost their immune system

To lower cholesterol

Reasons why people choose to take supplements1

JAMA Internal Medicine – “Users’ view of dietary supplements”

There are many reasons that lead to the bloom of supplement market in the last decade. But the root of any

problem lies in itself. So in 2012, JAMA Internal Medicine took on survey to look deeper into the cause why people

are using packed nutrition products. Below is the result

OPTIONSProtein Supplements

Vitamins

Minerals

Tablets

Capsules

Powders

Softgels

Chewable

Liquids

Protein Powders

Protein Bars

Protein Shakes

Protein Pills

Supplement Options in GeneralIn this part, we collect data about available products in the US market, focusing on 4 forms of well-known protein include

Powders, Bars, Shakes and Pills

For vitamins and minerals existing products, we divided them into 6 main categories. They are Tablets, Capsules, Powders, Softgels,

Chewable & Liquids. More details will be mentioned later

MARKET SIZE

California

USA

18 18.719.8 20.4 21.3

22.523.8

25.426.9

28.730.2

32.434.9

0

5

10

15

20

25

30

35

40

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E

US Supplement Industry Retail SalesUS Supplement Industry Retail Sales Poly. (US Supplement Industry Retail Sales)

%

Growth

01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13

3.8% 5.8% 3.0% 4.6% 5.4% 5.9% 6.4% 6.0% 6.8% 5.1% 7.5% 7.5%

The U.S. supplement industry has experienced an annual growth rate of 7.5% in the last 13 years. Information was taken from NBJ – Nutrition Business

Journal. In 2013, NBJ anticipates a continuation of the strong growth rate seen in 2012E as VMHS – Vitamins, Minerals, Herbs & Supplements continue to

move into the mainstream

External Scale

23%

35%

42%

52%

66%68%

64% 65% 66%69% 68%

0%

10%

20%

30%

40%

50%

60%

70%

80%

U.S. Supplement Usage

Not only recent years that the usage of supplement products has an impressive performance but it has been like this for many decades now. From

the 1970s to 2006, the percentage of people in America use nutrition products had grown rapidly. After that, supplement usage has remained fairly

steady with a sizeable portion of the American population placing their value on their health benefits

76%

18%

6%

0%

20%

40%

60%

80%

100%

120%

2012

Regular Users Occasional Users

Seasonal Users

Supplement Usage by Type of Different Users

Council for Responsible Nutrition 2012 Consumer Survey on Dietary Supplements

Vitamins, 33%

Specialty, 19%

Herbs & Botanicals,

17%

Sport Nutrition, 13%

Meal

Replacement

, 11%

Minerals,

7%

2012E Supplement Sales By Product Type

Internal Scale

In general, the supplement product sector is quite potential and it continues to develop and diversify due to many factors. It’s surprising how Vitamin has the largest portion in this pie chart of 33%, almost one third of the market sales

On an external scale, in 2014 the U.S. nutrition industry is worth $5.95 billion, accounting for more than half of $10 billion global market (Nutraingredients-usa.com, 2015) and the amount of revenue is expected to reach $6 billion in 2018 (Global Industry Analysis). This shows how well the supplement market in America is doing. Now have a look on a smaller, more internal scale

COMPETITION

Famous Brands

Top Manufacturers

Logo Company Popular Product Logo Company Popular Product

Maximum Human Performance (MHP)

Secratagogue-OneProSource Performance

ProductsCreatine Monohydrate

Universal Nutrition “Animal” Product LineMuscleTech

Hydroxycut HardcorePro Series

CytoSport Cyto GainerOptimum Nutrition Gold Standard Whey

Gaspari Nutrition SuperPump MaxBio-Engineered Supplements & Nutrition (BSN

N.O. – Xplode 2.0

Nutrex Research Lipo-6x BioQuest Tetrazene Extreme

New companies and new products are going into the U.S. market at an insane speed with variety of additional advancements. In the sea of so many

labels and brands, customers will take more time to consider and new manufacturers have to take time to build trust. Under here are top 10 most

valuable names

The research was taken by users from everywhere on WeightTraining.com. People rated these companies by stars and shared theirexperience after

using the product as a way of contribution to the bodybuilding community

1820

1230

560

540

440

440

380

350

320

0 200 400 600 800 1000 1200 1400 1600 1800 2000

NBTY, Inc.

Pharmavite (Otsuka)

Abbott Labs

Perrigo

GNC

Pfizer

Glanbia

Bayer

Schwabe NA

U.S. Top Supplement Companies’ Sales in 2012 (in Million $)

Estimated Sales

U.S. Top Supplement Companies and How Were They Doing In 2012

These companies come from different fields of the nutrition industry involve

protein, vitamin, mineral, herbs, ….

All companies above are published companies

Information were taken from Nutrition Business Journal, 2012

0 50 100 150 200 250 300 350

Natural Made (Mineral Supplements)

Nature Made (1 and 2 lettter vitamins)

Nature's Bounty (Mineral Supplements)

Centrum Silver (Multivitamins)

Nature's Bounty (1 and 2 letter vitamins)

Airborne (Multivitamins)

Emergen-C (Liquid Vitamins/Minerals)

Sundown Naturals (Miineral Supplements)

Osteo Bi Flex Loxin Advanced (Mineral Supplements)

Schiff Mega Red (Mineral Supplements)

Top 10 U.S. OTC brands for vitamins and minerals products in 2013

Revenue in million U.S. dollars

This statistic shows the top ten OTC (over-the-counter) brands for vitamins, minerals

supplements by revenue in 2013 in the United States

In that year, mineral supplements from Nature Made were the best-selling products in this category

The most popular competitor on the Internet that compete for market shares with all of the traditional big

retailers like Wal-Mart, Kroger,… is Bodybuilding.com. Its expertise is mostly e-commerce and it has gained so

much recognition and popularity among its supplement fellows

Founded: 1999 Location: Boise, ID Employee: 785+

Private company majority owned by Liberty Media

Industry: Ecommerce, Fitness Industry, Supplement Industry

CEO: Ryan DeLuca Slogan: We changes lives

Products: An online bodybuilding community, dietary supplements

- A nine-time honoree of the Inc. 5000 ranking of America’s fastest growing company with a reported revenue of

$420.5 million in 2013. Compared to the year 2010, when the company’s revenue was $195.7 million. After 3 years

of operating, the company’s income has increased 115%. At the moment it was ranked at #3091 on inc.com

- The website itself right now is worth nearly 900 million dollars

- 8 distribution centers : in Nevada, Wisconsin, Florida, Idaho, Pennsylvania and in Maarssen, Netherlands too

- Their main operations : Running their own forum

Creating their own fitness network

Online sales channel of fitness supplements like protein, vitamin,… and other equipment

Investing in gym centers

Hosting fitness & figure competitions

- One of the Internet's most-trafficked health and fitness websites, with over 1 million daily visitor

- They have their own fitness-themed network, Body Space with more than 2.7 million active members

- Forum: 123 million posts, 10.6 million members (according to forumrankings.net, May, 2015)

NOTE: In May 2012, the company was fined $7 million because some of the dietary supplements were determined to

contain anabolic steroids. The investigation took place in 2007, but Bodybuilding.com was charged years later

DISTRIBUTIONCHANNELS

Online Sales

Retailers

10773

10000

7442

4671

3700

1778

1320

1221

700

612

576

332

311

200

198

57

47

0 2000 4000 6000 8000 10000 12000

Wal-Mart

Dollar General

Family Dollar

Dollar Tree

Army Air Force Exch. Service

Target

Sears

Kmart

Fred's

Sam's Club

Costco

Shopko

99 Cents Only Stores

Meijer

BJ's Wholesale Club

Marc's

Hammon Stores

Door Counts for U.S. Mass Retailers

Number of Doors

Into U.S. Supplement MarketU.S.A. supplement market was distributed mostly through 2 channels – online and offline. And in the second case,

mass retailer, grocery chains, drug stores along with specialty chains are the big 4 which proved to be a great help

for nutrition manufacturers who want to get in touch with a large audience

Mass retailers continue to be the most competitive, most concentrated and have the highest

proportion of private-label sales. And Wal-Mart is the number 1 channel right now in this specific field

36191641

15221300

1093874

775485

395335315

243211207

157128

816859

31

0 500 1000 1500 2000 2500 3000 3500 4000

Kroger

Saupervalu

Publix

Ahold USA

Trader Joe's

H-E-B

Harris Teeter

Srouts Farmers Market

Wegmans

Vitamin Coltage

Door Counts of U.S. Grocery Chains

Number of Doors

Natural/Specialty grocery: Natural tends to be a breeding ground for industry innovation. The channel employs a more experiential

customer-service and information-based model, and offers greater variety of products. Kroger is most popular name when it comes to

U.S. grocery market with 3619 stores around the States

It’s true that mass retailers like Wal-Mart and grocery chains like Kroger play an important role in the chains of

distribution around America. But Drugstore Network actually is the one with the largest number of doors counted in this

country with nearly 12600 stores. So have a look picture below, drug retailer chain is pretty promising as well

12600

8385

7300

4667

257

95

76

58

32

32

26

24

0 2000 4000 6000 8000 10000 12000 14000

Drugstore Networks

Walgreens

CVS Pharmacy

Rite Aid

Duane Reade

Kinney Drugs

Kerr Drug

Barteli Drug Company

Lew is Drug

Navarro Discount Pharmacies

Fruth Pharmacy

Pharmaca

Door Counts of U.S. Drug Chains

Number of Doors

5987

2181

579

446

0 1000 2000 3000 4000 5000 6000 7000

GNC

GNC LiveWell (within Ride Aid)

Vitamin Shoppe

Vitamin World

Door Counts of Specialty Retail Chains

Number of Doors

For the Specialty Retail Chains in America, GNC is the biggest player with almost 6000 stores

Online ChannelsAmazon.com

Bodybuilding.com

Drugstore.com

HSN.com

iHerb.com

Luckyvitamin.com

Mothernature.com

Puritan.com (NBTY)

QVC.com

Supersupplements.com

Vitacost.com

Vitaminshoppe.com

Walgreens.com

Fitnessfirstusa.com

Mysupplementstore.com

Scienceinsport.com

The boom of the internet and what it can do have opened up many opportunities for companies all around the country in many

different industries. This has led to a new way to sell your products indirectly and cost-effectively. From the view of a provider, this

is the one key channel you must explore and can not ignore

Bodybuilding.com is currently #1 e-retailer in selling protein, vitamin and mineral supplements. Beside of being a channel to sell, they are also a

famous network of bodybuilders everywhere to get together and share their experience in training, playing sport. This is one plus point of

Bodybuilding.com to gain more popularity and to keep customers stick with them. It’s not just about the sales

RECOMMENDATIONS

Trends

Market Gaps

Market Gaps

Market Trends in Customer

Low-Income Athletes

Teen Athletes

2 Undeveloped Products

Non-meat Protein Products

Female Sport Nutrition

Other Market Trends

Product Trends

Channel Trends

Mind Map : Market Gaps in the Industry

U.S. market is one of the most open and also the most competitive market in this world. However, trends will always be created and if

there is a shift going on somewhere, there is a chance for new ideas to come in. New products will be developed and new audiences will

be found. Together, we have figured out a few gaps and uncovered/undeveloped needs in the market. And here are our suggestions

27 75 256724

1377

2600

180.7205.1

226.5249.6

282.2

309.3

0

50

100

150

200

250

300

350

0

500

1000

1500

2000

2500

3000

1960 1970 1980 1990 2000 2010

U.S. National Health Expenditure

Health Expenditure U.S. Population

7%

33%

63%

9%

35%

62%

0%

10%

20%

30%

40%

50%

60%

70%

18-44 45-64 65 and over

Incidence of Chronic Health Issues by Age

Men Women

The trend of need

The supplement industry will likely benefit from the aging U.S. population and an increasing focus

on preventative health and alternatives to prescription medicine

National health expenditures have outpaced overall population growth over the last 50 years. The

U.S. population has increased about 1% each year after that. Meanwhile, health expenditure have

accelerated at a compound annual growth of 9.5%, largely because of the aging people and the

rise of obesity and other epidemics

Data from Center for Medicare & Medicaid Service and Center for Disease Control and prevention

29.7 29.9 30.4

21.2 20.9 30

21.7 22.823.1

20.2 21.122.6

21.7 20.520.4

21.1 22.121.314.5 17.519.611.8 13.416.4

0

20

40

60

80

100

120

140

160

180

200

2015 2020 2025

U.S. Female Population Trend from 2015 to 2025 (in Million People)

Under 15 Age 15-24 Age 25-34 Age 35-44Age 45-54 Age 55-64 Age 65-74 Age 75+

Female Population Growth 2015-2025

Under 15

15-24 25-34 35-44 45-54 55-64 65-74 75+

+2.36% +41.5% +6.45% +11.88% -6.3% +0.95% +35.17% +38.9%

163M 169.5M175.8M

The trend in consumers (Target: Women)• U.S. government forecast showed the potential growth rate of American female from the age range 15-24 and 65-74 are very high. This promising scenario should be

taken seriously. Data from U.S. Bureau of Census

• Adults 60 years or older are related more to heart, bone, joint and eye conditions. They are more likely to use supplements. According to the same JAAMA Internal

Medicine research in 2012, 45% of those 50 & under are using supplements and 67% of those over 50 are using too

• New company also should focus on teen athletes, because the population of girls and women (15-24) might grow the most in the next 10 years, the forecast rate is 41.5%

14.80%

11.60%

8.20%

5.60%5.20%

3.70%

MealReplacements

Sports Nutrition Specialty Herbs & Botanicals Vitamins Minerals

2012E Supplement Sales Growth By Product Type

2012E Supplement Sales Growth By Product Type

Even though vitamins had the biggest sale number in 2012, but it is the second slowest growing sector in the same year. Meal

replacements, sport nutrition and specialty are accelerated quickly at the rate of 14.8%, 11.6%, 8.2% a year respectively

According to Nutraingredients-usa.com, in 2015, Protein remained the most lucrative category within sports nutrition, with global sales up

10% to reach $8.1 billion in 2014 - with 65% of that coming from the US

The trend in product

1.702

1.7595

2.7485

5.29

0

2

4

6

8

10

12

14

DTC Customer Sales by Channel

Mail, TV, Radio Internet Practitioner MLM

2012 Direct to Customer Sales by Channel (in Billion $)

11.5B

11 – 12 GrowthPercentage

Total Segment Mail, TV, Radio Internet Practitioner MLM

+10% +4% +15% +10% +9%

The trends in channelRetail outlets are still the main market where products were sold and bought, and it won’t go away any time soon. But by distributing your

products to different stores, you will be charged by margin, contractual price with the chain owners. This is why direct-to-consumer channels

come in handy. Especially for supplement manufacturers who doesn’t want their profit to be divided with someone else. These can be their

alternative options

2012E Supplement Sales by Channels (in Billion $)

4.20%

15.30%9.50% 9.50% 7.30% 5.40%

0.00%

20.00%

2012E Supplement Sales Growth by Channels

Mail Order Internet Practitioner MLM Retail - Mass Market Retail - Natural & Specialty

1.68481.7496

2.6892

5.2488

9.234

11.7612

0

5

10

15

20

25

30

35

Mail Order Internet Pratitioner MLM Retail - Mass Market Retail - Natural & Specialty

32.4 Billion USD

• The majority of supplement sales take place through retail outlets

• Internet is the fastest growing channel

• Supercenters and mass merchandisers top the charts for supplement sales, due primarily to Wal-Mart’s massive footprint in the sector

21.20%

37.20%

16.80%

24.80%

19%

24.20%25.50%

16.40%18.20%

11.20%

15.30%

30.70%

26.70% 27.40% 25.30%23.80%

20%

3%2.10%

16.30%15.20%

15.80%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Internet Supplement Sales Growth

Total U.S. E-Commerce Growth VMHS Internet Sales Growth

The growth from the Internet has been steady for the last few years, even though it doesn’t grow as much as it did in the beg inning of the 20th century. It

still remains the fastest growing channel. Bodybuilding.com is an example of how well you can do if you penetrate the market right. They have 2.6 million

likes on Facebook, half a million followers on Twitter and 647k followers on Instagram. Marketing has a key role in a company’s success nowadays

The 4P suggestion, implication for growth, ideas about the industry dynamics and possible suggestions about products, geographies, marketing,

customers and supply as well as 10 new trends in food and nutrition for 2015 will be mentioned with details in another document