Competition between food, supplement firms heats up in functional segment

“There has been a push in recent years to eat more fruits and vegetables instead of buying supplements,”​ which has prompted food companies to fortify more products and the sales growth of some supplements to slow, said Monica Feldman, head of consumer health research at Euromonitor.

For example, she noted that sales of DSM’s popular probiotic Culturelle declined slightly in 2014 partly because consumers are changing their eating patterns to consume probiotics through yogurt and kiefer instead.

Her observation mirrors data from a Packaged Facts report released in mid-2014 that found almost 90% of Americans now consume vitamin- and mineral-fortified foods and 20% of adults who said they were reducing supplement use as a result. (Read more about what Packaged Facts found HERE​.) 

“But this doesn’t mean supplement companies are doomed,”​ Feldman said. It just means that they will have to adapt.

One way that firms are doing this is by narrowing their portfolios of supplements to those where demand is strong and not competing with functional foods and also focusing on niche products, such as CoQ10, which are not easily formatted into foods and beverages, Feldman said.

Another route some supplement makers are taking is to expand their offerings into the food space, Feldman said.

For example, Procter & Gamble extended its iconic supplement Metamucil fiber into the food space in July with the launch of Meta Health Bars, which contain psyllium fiber to help lower cholesterol and promote heart health. The bars come in two flavors – cinnamon oatmeal raisin and cranberry lemon drizzle. The bars sport a Nutrition Facts label and will compete against breakfast and nutrition bars.

Feldman also noted more supplement firms are exploring functional drinks, although they need to be careful about where they draw the line between liquid supplement and a beverage and use the correct labeling. But rather than going up against sports drinks or refreshing electrolyte type beverages, supplement firms are more likely to move in the shake and meal replacement segments, she predicts. (Read more HERE​ about when FDA deems Supplement Facts and Nutrition Facts appropriate on products.) 

Confections are another challenging but popular category for bridging the gap between foods and supplements. Feldman warns that consumers can become confused in this space about what is a food and what is supplement, leaving them vulnerable to consuming too many highly-concentrated supplements that they erroneously consider food. This is particularly a risk with gummies and chews.

Developing “whole food”​ supplements is another emerging trend that is trying to tie supplements more directly to the food category, of which they are a part, Feldman said. These supplements claim, for example, to be made from powdered whole foods that are otherwise minimally processed.