Category boosting versus immunity: interesting times in Vitamins

Topics: Category Strategy, FMCG, Home Previews

Double-digit growth in the vitamins category in grocery present a channel conundrum for suppliers, and a question around the ‘health’ of the category in the bigger picture, according to ShopAbility. For Retail World Magazine.

As category growth goes; vitamins have been a consistent performer in grocery in recent times. In 2011, volume was up 16.4 percent and value up 9.4%. Which is great news for retailers, but the landscape is somewhat more complex for suppliers.


Historically, health food stores were the original champions of the category, followed later by pharmacy. In recent years, the decline of the health store channel and the emergence of discount pharmacies has presented more than a few challenges for suppliers in the vitamin category.


How do you retain value in your category when your products are being used as loss leaders in baskets at the front of store, or in below-cost catalogue promotions? And how does that educate shoppers in the category who were previously prepared to pay full price?


Then, enter the grocery channel. Whilst grocery has always had a few basics, in recent years the vitamin and supplement category in grocery has grown exponentially, in response to macro consumer trends around health and wellbeing. The tricky part for suppliers: some of that expansion has involved 50% off price promos in supermarkets which have then effectively killed category sales in other (higher value) channels for up to a quarter, and annoyed a bunch of loyal-to-supplier, non-grocery channel retailers who believe their role as ‘expert advisors’ to shoppers in the category provides the encouragement to trial that starts many shoppers on the vitamins journey in the first place.


There’s no doubt it’s a complex category, and the role of ‘advice’ is a differentiator versus more standard categories in grocery.


Where’s it all heading? Like other high emotional involvement categories, playing in the grocery channel does present a ‘race to the bottom’ risk, and the devaluing of the category. Is there any way around that? It’s a tricky question.


One way to look at it is that it is now inevitable that some sub-categories within vitamins have now become commoditised. Looking at the segment shares for grocery sales in 2011, the top #3 are Multi-vitamins, Vitamin B and Fish Oil. Together, those three alone account for more than 53% of value, and 52% of volume. Fourth on the list is Glucusamine. Fish Oil and Glucosamine in particular have also become commoditised because of the sheer volume of it that needs to be taken on a daily basis to address long-term, chronic conditions like arthritis. Hence bulk packs doing so well as loss leaders in discount pharmacies.


It seems that suppliers, in order to survive the channel / category killer conundrum, need to apply channel-specific strategies to their product ranging. Primarily, offering only the major, commoditised lines in grocery (preferably in grocery-specific pack formats) and saving the specialised lines for pharmacy and health food stores, complemented by advertising and marketing support for each of the channels and their tailored strategy. It’s clear the larger players are already on this track.


Looking at the new line introductions in grocery during 2011, they all belong to the ‘commoditised’ subcategories. We had Blackmores launch Liquid Fish Oil into the channel in August, Centrum Advance with a Multi-vitamin line extension also in August, and Caltrate launching a new Vitamin D supplement in September.


Compare and contrast with some of the more specialised lines, like Gingko Biloba for brain function or Evening Primrose for women’s health. One thing that stands out is, again, the role of advice. It has now become common knowledge that Fish Oil and Glucosamine are good for joint health, Multivitamins are a good general insurance, and Vitamin B is good for stress.


But when it comes to the herbals and more specific products, more advice is often sought, and also desirable, given the possible contraindications with other medicines. Back to specialised products in channels where more advice is available, and commoditised, mainstream products only in grocery.


This category really is its own animal. And analysis of its performance also raises interesting questions about the future of other health-related categories where products are available in other channels that are more advice-driven, but then price promoted (without the advice part) in grocery.


Interesting times ahead. The ‘healthy’ part, as far as a genuine holistic vision for the category is concerned, is going to be a tricky balance to achieve. A bit like health in general, really.