Market analysis: Neutraceuticals

by Patricia Mansfield-Devine

[Published in: SPC magazine]

The global market for nutriceuticals is continuing to grow and the outlook remains positive, according to the major market researchers.

One of the main market drivers, noted by a number of analysts, including Datamonitor, Mintel, TechNavio, Transparency, Global Industry Analysts, and Research & Markets, all of which have produced reports on the sector, is the rising global ageing population, resulting in an increase in demand for anti-ageing and anti-hair loss nutricosmetics.

TechNavio forecasts a global CAGR of 9.76 per cent over the period 2013-2018, while Datamonitor, in its October 2013 report ‘The Future of Nutricosmetics’, is even more positive, predicting a growth rate of 10-12 per cent per year to reach $5-6bn by 2018.

“Global consumer research supports this projection,” says the firm.

“In 2013, when asked if they would buy a food or drink that improves appearance using functional ingredients (eg collagen or vitamins), 34 per cent of respondents said yes and 47 per cent said maybe.

“Although consumer interest in this immature sector is relatively static at present, the data illustrate a solid level of demand.”

 

The way to go

Nutricosmetics and nutraceuticals have a number of delivery mechanisms: they can be consumed as foods or as drinks, made into powders added to drinks – a method popular in Japan – or swallowed as capsules. But capsules remain by far the preferred method in Europe and much of the West, where many people are used to taking daily vitamin pills.

“By product form, the foods segment remains the most challenging due to the formulation trade-offs of healthfulness, taste, and calories,” says Datamonitor.

“Beverages are viewed as a better platform, but it is supplements that are viewed as the easiest way to deliver a full dose of the active ingredients necessary to see results.”

Mintel, however, detects a trend towards shot-based supplements, and its research shows that more than one in five European consumers would be interested in taking vitamins and supplements in liquid format, especially younger consumers.

Looking to capitalise on this market, in September 2013, Oceans Omega launched what it claims to be “the world’s first commercially produced Omega-3 fortified liquid health shot”, containing 250mg of pure Omega-3s (EPA & DHA) in a tasty drink (peach-mango, raspberry-lemon or pink grapefruit flavour). The products are available in selected Rite Aid and Kmart outlets across the US.

 

Growth regions

Although all the research companies agree that the market as a whole is being driven by the anti-ageing sector, within that sector, there are further segments for issues such as skincare, hair loss and dark spot removal. Meanwhile, non-age related opportunities include issues such as sun protection, tan acceleration, weight loss and cellulite reduction.

Mintel estimated the global vitamin and mineral supplements (VMS) market to be worth around $27bn in 2013 to November, an increase of 5 per cent over 2012, despite a slowdown in the developed economies. “Stagnation and declining sales in mature markets such as New Zealand, UK and Europe in 2013 reflect consumers’ increasing price sensitivity,” said the firm, “while a decline in Japan’s VMS market can be attributed to the country’s economic gloom and the inability of tonic drinks to maintain the boost they brought to the mass market.”

Growth in the VMS space in the past year principally came from strong performances in emerging markets in Asia and Latin America, says the firm, where increasing numbers of consumers looking for products claiming to improve their general health led to strong performances in Thailand, Vietnam, China and Mexico.

However, despite stagnation in most developed markets, the analyst expects to see global VMS sales surpass $31bn by 2016, with South Korea replacing Japan within the top five biggest markets.

 

Market developments

Mintel notes that mergers and acquisitions are increasing in the nutraceuticals market, and feels that this will affect the emerging markets the most strongly. “One of the latest players to boost its VMS presence is PGT Healthcare, which signed a licensing deal with Australia’s Swisse Wellness at the end of 2013,” says the analyst.

“Under the agreement, Swisse Wellness products will be launched in parts of Europe and Asia in the next couple of years, with additional launches planned in more than 20 countries worldwide by the end of the decade.”

Customers are also becoming increasingly interested in sustainable sourcing, especially of fish oil, says Mintel, and they like to mix and match products, so customisation could be an important trend in the future.

Above all though, says the firm, in an era of tightening regulation, marketers must remember that products have to be able to substantiate the claims they make.

“The category’s performance remains readily influenced by media reports, both positive and negative,” says the firm, “as well as the ‘seasonality’ of new ingredients. Introducing supplements with clinical backing and investing in PR activity is essential for any player hoping to gain significant share.”

 

New players

One established firm entering the nutricosmetics market in 2013 was US hair loss specialist Toppik, which in November added an oral supplement to its range – Toppik Hair Nutrition 2-in-1 capsules.

The capsules, which cost $19.95 for a 30-day supply, contain a proprietary mixture of vitamins and minerals that the firm calls VitaRenew Complex, along with keratin protein concentrate for dry and brittle hair, biotin, vitamin E, red palm oil and camu-camu, a nutritiously dense superfruit from the Amazon. The products are sold via the firm’s website, through Sally Beauty Co, and, since spring 2014, in Ulta stores.

The firm’s move into nutraceuticals was led by Scott-Vincent Borba, whose own range of nutraceuticals, Borba, is sold by Walgreen’s. Toppik appointed Borba as creative director and executive vice-president of marketing in order to market the product, which runs alongside the firm’s topicals such as hair fatteners and volume boosters.

In April this year, the sector gained celebrity status when supermodel Elle MacPherson launched The Super Elixir, created by her company WelleCo.

A proprietary blend of ‘alkalising greens’ with added enzymes, herbs and probiotics, The Super Elixir is claimed to boost vitality and generally increase wellness, and in contrast to the majority of western nutraceuticals, it is powder-based. It was launched into the selective market in Selfridges, where it costs £98 for a 300g glass caddy, £48 for a refill and £39 for a 150g trial pack.

In the UK, in October 2013, skincare specialist Merumaya launched Skin Brilliance Supplements with RevitElixNutra (echium oil) and vitamin C to help restore dermal tissue, and increase skin elasticity and moisture. RevitElixNutra is an Omega 3-6-9 rich plant source with high levels of stearidonic acid (14 per cent),which the firm says helps to maintain a youthful complexion. A clinical trial carried out on 30 subjects over six weeks showed the product to significantly increase collagen synthesis, and improve skin elasticity, barrier integrity and moisture levels.

Also in the UK, Inner Me, with its feminine branding and handbag-handy packs, launched a new product, Beauty & the Green Coffee Bean, which claims to speed up the metabolism and protect the body from free radicals. The capsules contain garcinia cambogia; matcha green tea to enhance metabolism; green coffee extract for its thermogenic effects; biotin to promote healthy hair and nails; and vitamin C.

In April 2014, Inner Me took a leap forward by moving into the Holland & Barrett chain of healthfood stores, giving it access to a large customer base with a company that is planning to open another 50 UK stores this year.

Meanwhile, on the continent, companies releasing products included French firm Famille Mary, a specialist in “goods made from the hive”, which released a three-step weight loss programme that included two nutraceuticals – Elixir Détoxifiant de Apiculteur (Beekeeper’s Detoxifying Elixir, 19.90 euros for 250ml), meant to be drunk diluted in warm water, and Mincimel Jour et Nuit (Honeyslim Day and Night) capsules, costing 12.90 euros for 60, designed to be taken as a 30-day course.

The elixir drink is based on French birch sap, which the firm claims aids weight loss – along with propolis, acacia honey, lemon balm and pollen – while the capsules are divided into Day capsules with acacia fibre, guarana, green coffee extract, green and black tea extract, cider vinegar extract and royal jelly, and Night capsules containing ingredients claimed to be ’fat-busting’ such as chicory, maté tea extract, more birch extract and propolis powder.

Killing three birds with one stone, the drink and capsules were marketed alongside a topical product, meant to be massaged into areas that have cellulite.

Slimming nutraceuticals are a recurring theme in France, where the majority of such products are released in the spring in order to enable users to obtain a beach-ready body in time for summer. In March this year, salon brand Académie Scientifique de Beauté released a tasty slimming drink, Boisson Drainante Académie Body, costing 18 euros for 500ml, and again designed for dilution in water. It contains raspberry, dandelion, rosemary, fennel, stinging nettle and bilberry, with stevia as a sweetener, and is marketed alongside the firm’s topical body-conditioning products such as Gel Concentré Minceur, based on caffeine and holly extract.

 

View from the players – hair

Thinning-hair specialist Nanogen, known for its topical products, moved into nutraceuticals this year with its four-strong range of Hair Nutrition Supplements.

“Nanogen’s mission is to make people feel better about thinning hair,” says the firm’s hair biochemist Toby Cobbledick.

“This can’t be done with a one-size-fits-all solution. Some clients will need topicals, some want nutritional support. Others do not want treatment at all, so we offer instant concealers. When our customers demand a product we’ll do our best to deliver it.”

Nanogen targets its oral products at four market sectors: new mums, menopausal women, men over 20 and men over 40, with a separate formulation for each.

“The nutriceuticals project was very exciting,” says Cobbledick.

“Early on in the three-year development process we realised that different life stages were more prone to hair loss than others, and had very different nutritional requirements. Targeting guarantees we can deliver the best formula to each person.”

Although the largest market for hair supplements is men with male pattern baldness, the firm foresees strong growth in hair products for menopausal women.

“Much of the demand for the new products came from customers who gave the menopause as the reason for thinning hair,” say Cobbledick.

“Our research confirmed that thinning hair is surprisingly common during the menopause, with up to 40 per cent of women noticing it to some degree.”

The firm sells its products in Boots, because of its large UK footprint, and also via independent pharmacies, hair replacement centres, and hair specialists’ offices.

“To make people feel better about thinning hair requires solutions that are readily accessible,” says Cobbledick.

“To us, purchasing concealer for thinning hair should feel no different than concealing makeup, so they should both be available at your local Boots.”

Cobbledick also believes people like to do their research online for this particular subject, so the firm focuses on having a strong digital presence.

“Beyond that I speak at conferences to dermatologists and other specialists to make sure they know what we offer,” says Cobbledick, “and we run above-the-line advertising campaigns, currently focusing on women’s press titles.”

The branding and packaging is also designed to make people feel better about thinning hair, says Cobbledick, so the firm chose premium-looking packs to make the product feel like a high-quality cosmetic, not a medicine for a problem.

“Tailored versions for men and women mean they are comfortable to purchase,” he adds.

“A woman with thinning hair may feel she has a ‘man’s problem’ – the last thing she wants is to have to keep a product that looks like it’s for a man in her bathroom!”

 

View from the players – skin

In November last year, British skincare specialist Merumaya launched Skin Brilliance Supplements, which costs £34.50 for a 45-day supply and is marketed specifically as a nutricosmetic, not a vitamin.

“I considered that most people interested in a beauty supplement are already taking a multi vitamin and so there is no benefit to duplicate that,” says the firm’s founder, Meleka Dattu.

“The exception is Vitamin C because the European Food Safety Authority approved the claim for collagen synthesis and it is not a vitamin we store in our bodies so there is no possibility of having too much.”

One ingredient that is not included, however, is the much-vaunted hyaluronic acid because Dattu believes there is not strong enough clinical evidence for its benefits on the skin when taken orally.

“That may of course change,” she says, “and we do use hyaluronic acid in our topical products because of the well-documented benefits it has on the skin.”

Nutricosmetics and topicals both have their place in the market, she believes. “The echium oil in the Skin Brilliance Supplements is also in our Iconic Youth Serum,” she says, “and they work holistically, inside-out and outside-in to bring the best results.”

The firm also sees both women and men as its target market and does not target by gender. “It is about ageing youthfully rather than anti- ageing,” says Dattu.

“Ageing is positive in many ways. We only stop ageing when we are dead! We are for those who don’t necessarily follow the crowd but who make informed choices. Through the recession people have really thought about how they spend their money and they make more considered choices now.”

In January this year, the firm launched on shopping channel QVC and Dattu says the channel’s customers have responded well to both the brand and products. The firm is also increasing distribution in John Lewis and looking at international markets.

“All the time we are learning and implementing digital and social strategies and tactics,” says Dattu.

“That is time-consuming as it is not my natural strength but I love the social media side and I do all my own Facebook posts, write the emails, tweet etc.”

Merumaya completed its first full year in business in spring 2014. “Getting your brand in front of an audience is a painfully slow process,” says Dattu, “because everyone is a competitor and it is about how you, as a new brand, get your message to that audience without the budgets that some brands have.

“But Merumaya has a very clear distinction on  a number of levels and that is where I put most of my concentration.”