As we head into 2022, the natural products industry, like others, is trying to return to some semblance of normalcy. One must ask though, is that retro-normal realistic, or have we entered totally uncharted ground? We suspect the latter, and know that the cycle between prediction and outcome has never been shorter. Here’s what we are tracking.
Supply chain challenges persist
Supply chain concerns surrounding ingredient availability were a major concern at the beginning of the pandemic. Those concerns were largely unfounded. However, supply chain issues involving packaging supplies and logistic issues have risen in priority and have impacted many brand offerings. Increased demand for products is impacted by labor shortages to produce the products and transportation issues continue to delay the distribution of products. Most experts do not see relief from the current supply chain issues in the near-term and likely into 2023.
Related to the supply chain issue is inflation and the impact it will have on product pricing. The Bureau of Labor Statistics reported a 6.2% overall inflation rate in the U.S. with food comprising a 5.3% increase in pricing year over year. Most economists agree the supply chain impact on pricing will not be erased in the coming year.
While overall revenue in the dietary supplement industry is expected to increase as a result of higher pricing, consumer growth is not likely to increase at the same levels as we saw in 2020 and 2021. Maintaining brand loyalty will be an imperative and key marketing theme in 2022.
Consumers and demand
Over the past 24 months, we have seen new consumers become buyers of natural products and supplements. And they have stayed with us. This translates to new demographics (age, sex, sociological and cultural, income), retention strategies, product formats, buying habits, and preferences as our industry changes irrevocably. This means priorities and values are changing and companies and retailers must keep up.
Categories to watch
We’ve never been so stressed, and sleep has never been more precious. On the flip side, seeking that surge of energy to give us a necessary lift and focus can be elusive. The term “adaptogenic” is becoming more commonplace as consumers look to manage the stressors in their life and get balance.
Furthermore, immunity has moved beyond seasonal to be a weekly and monthly concern. The cough, cold, and flu season associated with mid-winter has evolved to encompass a slew of consumer behaviors intended to help them cope and be proactive in health management. The rise in popularity of vitamin D and multivitamins, in addition to more holistic snacking and meal choices, are examples of this behavior.
Don’t wait for the FDA
We are seeing increasing signs of frustration at FDA inactivity and lack of enforcement. NOW Foods and others are releasing testing reports with regularity, and both individuals and companies are calling out bad practices when they find them, realizing that if an issue doesn’t pose an imminent safety concern, FDA is unlikely to act on its own volition. However, the agency is in dialogue and prepared to act on occasion—when the “work” is done for them by the marketplace.
Reflections and predictions
The Microbiome: According to Google Trends, interest in the microbiome has tripled over the past four years. The subsets of this interest explosion are obviously probiotics and, more recently, prebiotics and even postbiotics. Over the past 24 months, the association between a healthy microbiome and overall good outcomes has increased significantly, leading to a rise in immunity and wellness solutions that target a holistic microbiome approach. Expect this to continue through 2022 and beyond, with less emphasis on probiotics and prebiotics specifically.
Mushrooms: Trust Transparency Center has been calling the relatively nascent mushroom category one to watch for a few years now. This time we mean it. We are finally seeing differentiation by species, component mix, and science, and formulators are now looking to mushroom-based ingredients not only as a novel protein source, but as a claim-supporting ingredient set. Expect to see new species-based science, and leading
companies looking to hero mushroom ingredients.
Cognitive Health: Trust Transparency Center recently conducted a survey in the U.S. and the U.K., asking: What is most important to you when it comes to healthy aging? In both countries, brain and memory health were the top concerns, with over 50% in both countries stating Cognitive Health as the leading concern. A recent study (COSMOS-Mind) of 2,200 participants over 3 years indicated a reduction in cognitive decline through taking a multivitamin. The multivitamin appeared to slow cognitive decline by about 60%, or the equivalent of 1.8 years. Expect cognitive health to boom through the next few years.
Related to this, another major force driving the cognitive health category is the emergence of e-gaming. A recent Statista report indicates the e-gaming industry will surpass $1B in 2021 with an expected audience of 474 million U.S. viewers and over 1 billion global viewers. U.S. teenagers play video games an average of 1 hour and 21 minutes per day. Over 50 U.S. colleges have established varsity gaming teams, with some of those colleges offering scholarships. Eye fatigue, hand, wrist, neck, and back pain are the most common health concerns reported. Cognitive health is an important concern for e-gamers, and this specific consumer group will be an important emerging target.
…and what’s not:
Pinkification: Women are strong supplement users, but historically have not been catered to. Fortunately, the days of simply pink it and shrink it are on their way out, and good riddance. Manufacturers are recognizing that women have unique nutritional needs and merely changing a label name and color are not enough. Some manufacturers like Stratum Nutrition are even conducting research on women. In 2018, they published a study on their NEM that looked at exercise-induced joint paint in healthy, postmenopausal women, and we predict more manufacturers will do the same as female consumers demand it.
Classic sports nutrition: At Natural Products Expos of the past, the sports nutrition companies, along with their athletic product demonstrators, used to be a significant presence. This has been in significant decline over recent years, probably accelerated by the fall-from-grace of ephedra and other fat burning products over the last decade. At the same time, solutions that allow us to be healthier and more active in whatever we do (sports and otherwise) have been increasing over recent years. We propose that the term “sports nutrition” be formally replaced with “active nutrition” as we recognize that being more active is the real target for many of our consumers.
Marketing excuses: The Age of Apology has descended upon us, and consumers are growing tired of the litany of excuses offered by marketers. The current “age of apology” in retail is a result of supply chain issues, staff shortages and divisive ideals and attitudes. Experts warn the current supply chain crisis is not strictly related to the pandemic. Consumer buying attitudes and labor force reckonings have contributed to the “Great Resignation.” Hoarding has caused runs on inventories. Logistic issues have swapped the previously popular JIT (Just-In-Time) inventory program with a “Just-In-Case” strategy.
Experts agree the fundamental reaction, response, and forward action hinges upon the ability to effectively communicate responsibly and transparently with all levels of your supply chain, including the consumer. No question is insignificant, and no response should be filtered. Consumers are saturated with excuses and their meaning has become diluted. Smart marketers will complement excuses and apologies with evidence of action and improvement.
Avoiding errant comments and giving proactive attention to real-time mistakes in judgement will be imperative. Heartfelt contrition combined with a plan and action of changed behavior will be the new social norm for apologies in 2022.
False marketing: A Trust Transparency column would not be complete without a call and applause for transparency efforts. Despite rampant misinformation on the Internet and in other media, we do see a continued decline in practice and tolerance for deliberate and obvious false marketing. Consumers are and will continue to be quite punitive when they come across attempts at deception and we as an industry need to continue to call out these practices when we see it—even amongst our own.
Hot: The selection, pricing and ease of shopping allows
Amazon.com a comfortable advantage over other e-tailers and legacy natural product providers.
Not: 2021 has seen class action suits claiming absent ingredients, a new Amazon “quality” initiative that fell short of industry support, and multiple lawsuits indicating adulterated, fraudulent, and counterfeit products.
2022-Amazon.com will continue to be the etailing juggernaut it has become, but increasing pressure for quality and
responsibility will continue to plague the platform.
Hot: Gummies are a continuing hot trend in the dietary supplement industry. It has been estimated that 70% of children who take vitamins consume a gummy form. The idea is that compliance improves when taste is improved. If a person has problems swallowing pills or experiences “pill-fatigue,” gummies are a good option. The Wall Street Journal recently reported the gummy vitamin market was at $5.7 billion in 2018 with an expected growth to $9.3 billion by 2026.
Not: The reality is the sweet temptations of gummies versus tablets or capsules come at a price and many consumers are starting to see through the convenience. Gummies have long been criticized for their sugar content. Gummy vitamins typically offer 2 to 8 grams of sugar per dose. The American Dental Association has pointed out that not all of the sugar in the gummy makes it past the mouth and can coat the teeth, resulting in increased cavities and compromise oral health.
Additionally, gummies typically have shorter shelf life and can carry smaller dosages than is typically considered adequate. For example, comparing two Nature Made Omega-3 products: The Nature Made Omega-3 gummy vitamin costs $.57 per dose and provides 57 mg of Total Omega-3 Fatty Acids and 4 grams of Carbohydrates. The Nature Made Omega-3 softgels cost half as much as the gummy alternative at $.28 per dose, offer over 12 times the amount of Total Omega-3 Fatty Acids at 720mg per dose, and only 1g of Carbohydrates.
We’ve become so weary and de-sensitized and used to the news cycle, yet at the same time hard-wired to respond to it. This cycle will not abate in 2022 and in fact, this wiring will only accelerate in our ever-smaller world. From fears of lockdowns and restrictions to home or other workplace decisions, it’s not only travel that is literally up in the air. Expect budgets to be in continual flux, ROI calculations regarding marketing and other spend decisions to be challenged, collaborations and partnerships to increasingly be based on geography, and the overall business environment to be subject to a level of uncertainty that is not for the faint of heart. Having said that, our natural products and supplements industry has weathered the past 24 months rather well (perhaps with the exception of supply chain issues) and we would expect it to continue to do so through 2022.
The past 24 months have seen an influx of consumers, and compliance increases for those taking supplements. Several categories have seen steep jumps that will continue for the foreseeable future. All in all, this is a good time to be in the natural products and supplements marketplace.
We’ve got to learn to nurture our newest consumers. Some have come to us during the pandemic, others are newly gaining access to our products. Our product development, marketing, product placement and messaging needs to evolve to recognize that they are different from the consumers we could count on in the past. In certain pockets they are younger. In others, they are Hispanic or Asian. In still others they challenge our gender norms. As a forward thinking, solution-driven industry focused on providing more health and healthy products for more people, it is incumbent on us to recognize the new consumer diversity and the opportunity (and challenge) it provides.
In our 2022 Success Toolkit, industry experts share their insights and expertise on top issues to know to set you up for greater success in 2022, from trend forecast to merchandising issues, regulatory updates, and more. Start where you’d like, or read straight through:
- 2022 Overview, by Maggie Jaqua, WholeFoods Magazine Content Director
- Exploring 2022 Trend Drivers, by Scott Dicker, SPINS Senior Market Insights Data Analyst
- 2021 in Review & What’s Ahead for the Natural Products Industry, by Scott Steinford and Len Monheit, both with Trust Transparency Center
- What Happened Last Year… and 4 Predictions for 2022, by Jay Jacobowitz, President and Founder of Retail Insights
- Calls to Action for 2022, from leading industry associations
- Better-For-You in ’22, by Rakesh Amin, Partner at Amin Talati Wasserman
- Before You Speak, Consider These Critical Communication Steps, by Amy Summers, Founder of Pitch Publicity