While category growth was predicted to slow from an average of 6.9% per year during the period 2006-2011 to 4.1% a year over the next five years (with sales rising to $2.7bn in 2016), it still outpaced many other sectors of the grocery market, IBISWorld analyst Mary Gotaas told NutraIngredients-USA.com.
And although it was still technically cheaper to cook up a nutrient-rich, calorie-controlled meal than buy a protein shake, meal replacement products remained very cost competitive, despite rising whey, milk and soy protein prices, she added.
“They are also cheaper than many other weight loss strategies such as pills and weight loss centers; therefore, the industry has continued to grow even in times of tight spending.”
Growth opportunities in private label
Major players such as Unilever (SlimFast), Herbalife (Formula 1) and Abbott Laboratories (Ensure, ZonePerfect, EAS, Myoplex) had carved out sizeable shares of the market, noted Gotaas. However, it remained quite fragmented with relatively low barriers to entry and more than 230 firms estimated to be manufacturing such products in the US, she said.
“There are particular opportunities in private label, but also in targeting people that are looking for a fast, convenient way to increase their protein and mineral intakes after a workout.”
SlimFast and Abbott have both lost market share
Abbott had been “negatively affected by the influx of private label brands”, while SlimFast had been hit by a major recall on ready-to-drink cans in late 2009, although it had since staged a recovery owing to “increased marketing efforts and modest economic improvements that positively affected consumer spending”.
That said, both firms had lost market share during the 2006-2011 period, she claimed. “Over the five years to 2011, revenue for Slim-Fast is estimated to fall at an average annual rate of 1.1%.”
Three key categories (powdered drink mixes, ready-to-drink beverages or bars), would continue to drive sales, she predicted, however, drink mixes were likely to lose share to ready-to-drink products as shoppers sought greater convenience.