Founder's Message

The Global Nutrition Industry continues to demonstrate strong fundamentals that make this an exciting and dynamic industry.  Although on a global-basis the market is approaching $170B, it continues to exhibit superior growth to the mainstream food and beverage markets, and other select consumer health products.  This growth, coupled with a growing focus on wellness and a trend of proactively managing one’s own health, continue to fuel consumer demand.  But with a host of strong fundamentals supporting the growth the market, winning in the competitive landscape still requires a rigorous level of knowledge on the market and how it operates.

Like most industries, ours was affected by the “dot.com” craze - both positively and negatively - but our industry is not unique in that survival can only be secured by having a product or service that is desirable to a customer.  Even though it has been some four years since the bubble burst, we are still seeing the results of over investment in less than sound business models.  The market has already begun to cycle back and investors are returning to the market, but now they are much more rational.  Significant increases in capital availability for mid-to-small sized players, is forcing companies to ensure that they have sound business models with the ability to drive positive cash flow.  Company valuations are rising, but good value purchases for companies in an acquisition mode continue to exist.  Significant consolidation in has occurred for certain segments of the market, and although good opportunities are harder to find, they are still out there.

The success of our industry is highly dependent upon having high-science, validated, credible, and efficacious products.  This need to continually develop and market products has created an increasing sophistication by industry insiders in their pursuit of intellectual property that drives the commercialization of really unique products and technologies.  Going forward, the discovery and introduction of new products, plus positive media coverage, are necessary elements to sustain the industry’s growth trend. 

Significant changes are occurring in how products enter the consumer market.  Distributors and Wholesalers are increasingly being bypassed by more direct sales to the consumer from Multi-Level Marketers, Internet retailers, and to Practitioners.  While the majority of sales for these types of products continue to in Food, Drug and Mass Market channels, other channels are growing rapidly and grabbing a significant amount of attention from the industry.  Additionally, Retailers are continuing to grow store or private-label brands to grab market share from successful nutrition brands. 

Regulatory strategy must be tight given the current FDA campaigns against dietary supplements and functional foods.  The burden of proof is shifting from the agency to the manufacturer, and significant scientific agreement lacks clarity.  Organic foods are well positioned for sustained growth for many reasons including the new USDA standards, and the increased attention placed on organic products and the organic supply chain.

Although Food, Chemical, Nutrition, and Pharmaceutical companies are beginning to look similar with respect to their presence in the nutrition marketplace, their individual core competencies are quite different – each approaches the nutrition space differently.  Typically, large food companies are not aggressively creating new brands or technologies, rather they are buying them.  Pharmaceutical companies have made several bold attempts at creating new brands, some more successful than others.  In general, companies that have incrementally improved the functionality of an existing brand or product line have met with more commercial success than those trying to create new brands or categories.  There continue to be many sound examples of large, global companies entering this industry and all eyes are watching the integration into these companies of major health food brands such as PowerBar, Ben & Jerry’s, Balance Bar, Boca Burger, Odwalla and Hain.

Regardless of where a company plays in this industry, it is essential to in mind that a successful product must not only have a health component, the product must be effectively and aggressively marketed.  There is no substitute for properly identifying a market and competing for share in a unique way. 

– Tom Clough, Founder and Managing Director of Health Strategy Consulting, is a recognized industry expert and leader.  He often shares his industry insights at conferences and in publications.