Details of the deal, which was announced last week and which is expected to close later this year, were not announced. But the move further cements a relationship that has been under development for some time as the Dr Organic and Organic Doctor (the brand name in the US market up to now) have been for sale in NBTY’s retail outlets for some time.
Higher margins
“The Dr Organic line has, on average, higher margins than what’s typical for the NBTY portfolio, which makes it a very attractive brand financially. Dr Organic has been an exceptional performer in our portfolio for some time. It is extremely popular with consumers and fits perfectly with the “natural” trend in beauty and wellness that consumers are demanding,” Ashley Dickenson, communications manager for NBTY told Nutraingredients-USA.
The US market for dietary supplements has given signs of having reached maturation stage for awhile. Some subcategories are still booming, such as probiotic sales. But sales of other reliable performers, such as weight loss supplements, have softened and former stars, such as omega-3s, have fallen into the doldrums and are recovering only very slowly.
It has left companies with core competencies in dietary supplements looking for alternatives to boost growth and margins. NBTY’s move is one example. In another indication, Natural Grocers, a rapidly-growing Colorado-based supplement and organic foot retailer with more than 90 stores in the western US, recently reported that its “health and beauty” segment, which includes skin care and other personal care items, was significantly outperforming the company’s core supplements business. It is the first time since the company went public in 2011 that the retailer has broken out sales in this segment separately.
Portfolio expansion
“We see the Dr Organic acquisition as a tremendous opportunity to expand our health and wellness portfolio into the natural beauty space, which is a rapidly growing part of the market. Dr Organic will be a new brand to retailers in the US. It will take some time to establish awareness of the brand and build the franchise to its potential; however, we are confident it will add significant top line growth to NBTY. The range of sales will be dependent upon the level of support and engagement from our retailer partners. We do believe the Dr Organic line will contribute approximately $100 million over the next twelve months, with a very strong growth trajectory in the following years,” Dickenson said.
“We believe the acquisition will allow us to accelerate NBTY’s entry into the mass-market beauty and skincare category particularly in the US, an area which we believe can be an important growth engine for our business, as evidenced by the success of our Nature’s Bounty Optimal Solutions product line,” said NBTY president & CEO Steve Cahillane.
NBTY says the Dr Organic line, founded in 2008, is free from parabens, sodium lauryl sulfate, perfumes, artificial fragrances, petrochemicals, genetically modified organisms, animal ingredients and animal testing.