Positioning dietary supplements as affordable alternatives to more expensive treatments, including doctor visits and OTC drugs, will help firms weather the current confluence of rising costs and tighter consumer spending.

The supplement industry is caught "in two perfect storms," said Thom Blischok, president of consulting and innovation at Information Resources, Inc.

In one, manufacturers are struggling with rising commodity, transportation and packaging costs, which are increasing margin pressure, eroding brand equity and triggering a demand decline, he said. In the other, "consumers are doing everything they can to stretch their dollar" because of the high perceived cost of health and wellness.

However, this cloud has a silver lining. Current conditions are creating "a marvelous opportunity" to boost sales by positioning "products around ... affordable health and wellness," Blischok said at the Council for Responsible Nutrition's annual conference in New Mexico Oct. 3

"The single most important thing that is driving the consumer is this new lens of affordability," and some consumers already view supplements as a less costly health care alternative, he explained.

For example, he said, OTC sleep aid sales are "dropping off and being replaced by natural supplements," like melatonin. Sales of the melatonin products jumped 23.6 percent in the year ending Sept. 7, according to IRI data.

In addition, in the last six months 25 percent of consumers opted to save money by selecting self-treatment products over going to a doctor's office, according to a 1,000-person survey IRI's AttitudeLink conducted in August.

These purchasing shifts help explain why supplement sales grew 12.4 percent in the year ending Sept. 7. Blischok said the nutritional category "is one of the few categories in the marketplace where there is sustained growth."

Marketers looking to cash in on this trend by positioning supplements as affordable should realize consumers "are not looking for cheap. They are looking for value," Blischok cautioned.

With that in mind, manufacturers can increase consumers' perceived value of supplements by marketing them as multifunctional.

"There is a radical movement toward multifunctional medicines," because consumers perceive a product to have a higher value if it has multiple uses, Blischok said.

For example, multivitamin sales are up 3.2 percent to $525 million, according to IRI data.

Likewise, sales of fish oil are up as more media attention focuses on the products' multiple benefits, added Randi Neiner, director of market research at Shaklee Corp. This is a good example of why it is important for the industry to advertise the benefits of supplements, she said.

Manufacturers also can increase consumers' perceived value of supplements by making them readily available where people shop.

"Americans are consolidating their trips. For every 25-cents-a-gallon gas prices rise, trips drop 1 percent," Blischok said, explaining consumers are less willing to visit specialty stores for supplements.

He added that the new "quick trip" is occurring at convenience and dollar stores, not traditional grocery channels. Manufacturers also should target super centers to sell products because consumers increasingly want one-stop shopping.

Finally, marketers should feed consumers' desire to control their health.

More consumers are turning to self-care products and supplements because they "want control over something," said Maryellen Molyneaux, president and founding partner of Natural Marketing Institute.

Consumers are "losing faith in the health care system and they are losing money to pay for it, so they are trying to administer their own," Molyneaux said at the conference.

In particular, consumers want supplements that help them control specific conditions that they believe their physician is unable to address, such as energy, stress and other less serious conditions, she said.

- Elizabeth Crawford (e.crawford@elsevier.com)

In Economic Storm, Supplements Surface As Affordable Alternatives

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