Whew, what a year. In normal times, we’d be writing with fondness and excitement about the year that was and what is in store for 2021. But as we’ve heard so much over the past 10 months, these are not normal times. Ask any pundit about forecasting, no matter what industry they’re in, and they’ll ultimately admit that all their models are shot and it’s truly difficult to accurately predict next year with so many variables in play.
Here’s what we know:
By and large, the natural products industry has been buoyed by a health halo that has increased sales across multiple health categories, including, of course, immune products. In addition, we’ve been established as an essential industry able to stay open while many other sectors have been decimated by closures. This has meant ongoing business and service to our consumer base, and despite uncertain cash flow, has provided some relief and confidence for cash-strapped businesses and this should continue through 2021.
Heading into the year, we’d expect ongoing health concerns and new social norms to drive our industry. This means immunity and mental wellness (including stress, sleep, focus, nootropics, adaptogens, and e-gaming) will continue to be strong categories, and those that can afford it will increasingly think about healthful options across all categories. The chasm separating those that can afford versus those that can’t afford is widening, meaning more discerning and value-based shoppers, even as they try to take some control over the health of themselves and their families.
On the social scene, we’ve obviously observed the movement towards online, frequently to the detriment of in store. At the same time in the supplements world, we’ve seen increased interest in our products, and we’ve also seen consumers increasing compliance by taking their supplements regularly. New consumers are emerging, especially millennials, and if the supplement marketplace can educate and retain them, the prognosis is solid—for most sales channels.
A casualty of 2020 is the gym/fitness center. Instead, other outlets for ‘active nutrition’ products are emerging and we can expect this to continue through 2021. Expect to see
demographic-targeted active nutrition products continue to emerge and sell well, and since many of our consumers dislike products that make them feel health-compromised, positioning for optimal health proactively makes even more sense.
Products to watch
On the product side, it’s time for mushrooms—not just the hallucinogenic type, but all applications including protein, and polysaccharides and glucans for immunity, inflammation and cellular health. This category will see us beyond CBD as regulatory uncertainty and over-saturation continues to affect that product set. We remain excited about the microbiome—science continues to emerge about how important the microbiome is to so many functions throughout the body, including hot areas like mental wellness and stress and inflammation and immunity. While probiotics and arguably prebiotics are mainstream, the recently defined term ‘postbiotic’ is starting to excite brands and will soon appear on label.
We’ve finally validated, at least from the product side, the premise of nutri-beauty. The concept of beauty from within has been discussed for well over a decade, but really needed a hero ingredient and collagen is it. The challenge will be reining in the claims to maintain credibility as science struggles to keep up.
Innovation and science
Ingredient companies are finding it difficult to engage with new product development departments. When they do, the process is noticeably slower to progress than in years past. The stagnation of innovation in 2020 did accelerate through the back half of 2020, and is likely to loosen up in 2021.
Regulations surrounding clinical trials and the participation of subjects has been impacted by COVID-19. The FDA reported the impact of COVID-19 on clinical trials to include site closures, travel limitations, interruptions to the supply chain for investigational product and occurrences of clinical personnel becoming infected. All of these challenges have hindered the speed and success of clinical trials, although digital solutions have been developed to address this challenge. As limitations are addressed, the return to clinical trials will resume, providing greater evidence of clinical efficacy of ingredients.
The ‘Year of Immune Health’ will open doors for more categories of nutritional supplementation in the future. COVID-19 is classified as a respiratory virus but the long-term effects on survivors are reported to include kidneys, liver, heart, and brain. Fatigue continues long after “recovery” is reported. All of these indications present opportunities for dietary supplements in the areas of overall wellness, immunity and energy.
No organization was unaffected by COVID-19 and the challenges and changes to communication were significant. Communication change was imperative, leaders in the expanded age of remote working will focus on collaboration over charisma. The charming and motivating office leader of the past will give way to leaders more capable of building consensus and cooperation. Organization skills will be more valuable with more limited “face” time meetings.
East meets West
For the next bold prediction, we’re a tad torn. We’ve long been fans of traditional medicine and its connection with culture. Whether it be ethnobotany broadly, or traditional Chinese medicine or Ayurveda specifically, this link between product and experience has never been more important. TCM and Ayurveda are both holistically about lifestyle, including stress mitigation, relaxation and proper forms of energy, and if you think about it, those things have never been more important. From adaptogens to nootropics—including teas, ashwagandha, turmeric, ginseng and others—these products play a lifestyle and culture role, and consumers will increasingly respond to effective positioning in a format that we’ll call ‘East meets West.’ Countering this, we have current supply chain challenges and disruptions creating calls for repatriation and in the U.S., increasingly nationalistic tendencies—so ‘buy domestic’ will increase in importance.
Let’s talk plant-based
While we accept that the plant-based or plant-forward movement is here to stay, like others, we noticed on store shelves earlier this year that while traditional choices and staples may have been sold out, novel alternatives like many of the plant-based alternatives remained. While we’d agree that there is a huge future in smart, plant-centered products, for many consumers, there’s a practical driver at play, and so a good proportion of the population will never move down that path. Here’s the thing—our industry tends to be forward-trending and our values tend to be a significant driver of purchase decisions, frequently more than in the general population. As another example, for much of the population, sustainability and environmental consciousness as purchase motivators have been displaced by more immediate and practical concerns, at least for the time being. We’d expect these values to return to prominence as other urgent issues settle.
Signs and opportunities
Over the past two months, we’ve seen the latest wave of big CPG interest in our industry, with Bayer purchasing Care/of and Mondelez acquiring SmartyPants. On the one hand, this should serve as renewed validation of our products and potential. On the other hand, it should propel new life into independent and especially well-positioned legacy brands.
Off the cuff
Diagnostics and personalization are not going away. This doesn’t necessarily mean “my product for me” exclusively, but it does mean “a product positioned and with a demonstrable benefit for people like me.” Finally, despite what we noted earlier about disease versus wellness, the term co-morbidity has entered consumer lexicon in 2020 and will continue to influence behavior in 2021. Brands and retailers that position around that concept will do well in 2021 and beyond. WF
Len Monheit has been in the industry for 20 years, initially as a cofounder of digital media leader NPIcenter, which was ultimately sold in 2006 to New Hope Natural Media, As part of New Hope’s senior leadership team, Len assumed responsibility for digital media operations, then the ingredient portfolio of Functional Ingredients, Engredea, and Nutracon, initiating international market preparation workshops in Japan, China and India and finally, in market analysis as part of Nutrition Business Journal and the NEXT insights platform. Len has guided ingredient and supplement companies on strategy, is a sought after speaker on multiple continents on topics such as: ingredients, the supplements market, supply chain and sourcing as well as emerging trends. Len is currently CEO of Trust Transparency Center.
Scott Steinford has built a career of leading, learning and mentoring. Through immersion in many aspects of the supplement and pharmaceutical industry Scott has worked to redefine and improve business practices within the healthcare industry with an emphasis on transparency. His experience ranges from entry level to CEO and positions include organizations representing ingredient supplier, ingredient manufacturer, retail brand, private equity, M&A due diligence expert and trade organizations. Scott has a Pre-Law Bachelor’s Degree from the University of Texas at Arlington and a Master’s of Science Degree in Law from Champlain College. Scott currently is Executive Director for the CoQ10 Association and President of the Natural Algae Astaxanthin Association (NAXA) and Founder of Trust Transparency Center, a boutique consulting organization dedicated to assisting companies seeking to improve both their internal and external trust transparency. Scott’s prior experience includes CEO of Doctor’s Best and maintained a pivotal role with a variety of ingredient manufacturers including Eisai and Kaneka, and was a founder of ZMC-USA.