Schiff Nutrition: Our brands now account for 9 out of every 10 dollars of revenue

Speaking on a conference call yesterday to discuss the Utah-based firm’s fourth quarter earnings, chief executive Tarang Amin said 89% of Schiff’s sales came from branded products in the three months to May 31, 2012, compared with 73% during the same period last year.

Schiff is focused on four key areas: Heart health (MegaRed, which contains Aker BioMarine’s krill oil), joint care (Move Free), immune support (via new acquisition Airborne) and digestive health (via recent acquisitions Digestive Advantage and Sustenex - which contain Ganeden’s ultra-resilient probiotic BC30).

Deep price discounts don’t build brands​

Greater focus on these brands also explained a sharp rise in gross profit margins to 49.5%, compared with 38.2% a year ago, added Amin, who has been steadily ramping up sales and marketing investment as a percentage of sales (16.2% in 2011; 22.7% in 2012) as part of his brand-building strategy.

He added: “We believe that the category and our leading brands are better served through advertising and innovation rather than by the deep price discounts that are prevalent in our industry.​

“This quarter, we started a new Move Free campaign including TV, print, digital, in-store and a new website. Early results are promising… ​

“We will continue to refresh each of our key brands. We are gearing up the marketing for Airborne and look forward to applying the same brand-building capabilities that we’ve used with other brands.”​

Accelerated sales growth for our brands and lower levels of price discounting​

Schiff is also working more closely with retailers, he said. “Our most important focus is to help grow the category for our retail partners… ​

“We participated for the first time in many of their key themed promotions. Our efforts resulted in accelerated sales growth for our brands and lower levels of price discounting.”​

IRI: FDMx supplement sales up 4%; Schiff Q4 sales up 30%​

IRI data for the 12 weeks ending July 8 show that the overall supplements category grew by about 4% in the food, drug and mass merchandise (FDMx) channel (excluding Walmart), said chief finance officer Joseph Baty.

 “Joint care was down 6%, probiotics grew 10% and fish oil and overall immune support were relatively flat.​

“But Schiff Nutrition net sales increased 30% for the three months ended May 31, reflecting significant branded growth and new product contributions from MegaRed Extra Strength and Move Free Ultra and the impact of the probiotics ​[Digestive Advantage and Sustenex] and Airborne acquisitions.”​

Full year sales up 21% to $258.9m​

Schiff posted a 35% drop in net income to $2m and a 30% rise in net sales to $67.4m in the three months to May 31.

For the full year (52 weeks to May 31, 2012), net income rose 8.7% to $13.7m and net sales rose 21% to $258.9m.