Aug 01,2018

Online Sales of Vitamins, Minerals, Supplements Surge 20% in $13.5 Billion U.S. Market

Key Words:

Walmart's online sales propel category as brick and mortar retailers make gains online.

Online sales for vitamins, minerals and supplements (VMS) surged 20%, growing from $2 billion in 2016 to $2.4 billion in 2017, according to TABS Analytics' 10th Vitamins, Minerals and Supplements Study. Much of the growth is due to the performance of brick and mortar online retailers, which outpaced Amazon and other pure play outlets in growth and gained almost 19 percentage points in online transaction share. Brick and mortar stores sales of VMS grew 3%. TABS Analytics estimated the annual U.S. VMS market grew 6% over 2016 and now stands at $13.5 billion in sales annually. 
 
“This is really a breakout year for Walmart's online sales of VMS which have helped propel the online sales for the VMS category to a 10-year high of 17% of all sales,” said Kurt Jetta, PhD, president and founder of TABS Analytics. “Walmart also made substantial online gains in share in baby products in our study earlier this year which is corroborated by its recent earnings report which showed its online sales rising 63% in the company's first fiscal quarter.” 
 
Although Amazon grew its number of transactions by almost 15%, it experienced a major nine-point loss in share as the gains did not keep pace with brick and mortar retailers' online gains in purchases, which nearly tripled from last year.
 
“With our last three studies in baby care, personal care, and vitamins there is mounting evidence that brick and mortar retailers, particularly Walmart, are carrying a larger load at bringing ecommerce retail to the masses,” said Mr. Jetta. “Prior TABS studies have shown a limited market for consumer packaged goods online, primarily focused on upscale consumers. We are now seeing brick and mortar gain share in ecommerce by expanding the demographic base and offering a broader assortment of mainstream brands to online shoppers.”  
 
TABS Analytics' VMS study was conducted in May 2017 by Caravan, part of ORC International, and was developed to examine trends regarding what types of vitamins and nutritional supplements are purchased, how frequently they're purchased and at which outlets they are purchased. The survey panel included 1,010 geographically and demographically dispersed consumers. This was the 10th year that VMS survey was conducted, having started in the spring of 2005 and 2008, and then every year since 2010. 
 
Key findings from the study:
 
Online sales are strong and growing. Online purchasing for VMS grew dramatically, increasing 20% over 2016, led by significant increases by brick-and-mortar retailers' online sales, especially Walmart.com. Amazon and Walmart are the number one and number two online retailers for VMS with Amazon accounting for an estimated 4.5% and Walmart.com accounting for an estimated 1.6% of all market transactions in the category.
 
VMS category shows signs of maturity. Over the past several years, growth has been modest, with the exception in the recent surge in ecommerce in past year. Mass market (food/drug/mass/club/dollar or FDMCD) sales growth doubled to 4% in 2017 due to pricing and volume growth. However, there have been no new types of VMS products that have exhibited sustained growth, and channel shifts have moderated overall. 
 
VMS volume and dollar sales grow. VMS category purchase penetration reached an all-time high of 78% for the TABS study. Following two years of relatively flat growth, VMS sales volume increased slightly as a result of greater purchasing by heavy buyers and higher penetration from those who purchased just one or two types of products regularly. Dollar sales for the category grew 6% to $13.5 billion.
 
Heavy buying gains momentum. Heavy buying increases (consumers purchasing three or more types) were driven by: gains from very heavy buyers (six or more types purchased),younger buyers (ages 18-54) and women.
 
Income not a deciding factor. Unlike in the baby products market and other CPG categories where higher income influences purchasing, income doesn't have a material impact on VMS purchases, except in the lowest income group. 
 
Adult multivitamin reverses declines, with niche products making first-time appearances. Adult multivitamins increased this past year, reversing a three-year decline. This year's survey also includes two new categories—hair/skin/nail multivitamins and brain supplements—both of which appear to be types with niche appeal with 8% and 2% of adults purchasing these types, respectively.

Vitamin outlet trends since 2005 track broader trends in retail. FDMCD penetration grew by 15% from 59% of adults to 68% of adults. Specialty outlets (such as natural food or nutritional specialty outlets) saw a slight decline in penetration from 19% to 18% and ecommerce penetration went from 9% to 13%.
 
TABS Analytics 10th Annual Vitamin Study is now available here.
 
“With 10 years of VMS studies and data to draw from, VMS is showing all the characteristics of a mature category so 2018-2020 gains should moderate to the plus 3-4% range, assuming pricing of plus 2%. At this level, continued dramatic growth in ecommerce would, by definition, come at the expense of brick and mortar store sales although we have not seen that shift yet,” said Mr. Jetta. “With only one year of the recent ecommerce surge, however, continued dramatic growth in ecommerce is not assured.”