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Herb Sales Up 1% for All Channels of Trade in 2000
ISSUE:
Page:
63

Retail sales for herbal dietary supplements in the U.S. gained a total of 1% in calendar year 2000 compared to sales in 1999. This data was published in a survey of herb market sales for all channels of trade in the May/June 2001 issue of Nutrition Business Journal.1 The statistics were collected from a variety of market tracking services, some based on econometric data (i.e., data for food, drug mass-market channels) and others based on estimates, sales reports and trends in other markets that are not as precisely measured. The breakdown is shown in the accompanying table.

These figures contrast with sales data provided by Information Resources Inc. (IRI) in the FDM channel (i.e., mainstream market), reported in HerbalGram 51. Those data indicated a 15% drop in sales for this channel for the year 2000 compared to 1999.2 However, the FDM channel is only one market segment, and, although it often indicates purchasing trends by mainstream consumers, it does not represent the entire market for herbs and other dietary supplements. This focus is noted each time HerbalGram reports IRI data. IRI statistics do not measure warehouse buying clubs activity. Price-conscious consumers appear to be purchasing a larger volume of supplements (both herbal and conventional) via these clubs, to the detriment of sales in natural food/health food and other mainstream retail outlets. Some market reports, notably from the Natural Marketing Institute have indicated "channel switching" (i.e., a change in consumers' purchasing patterns. These consumers may have purchased previously from healthfood stores or other channels, to warehouse buying clubs).3

The data reveal another difference: NBJ reports a reduction of only 9% in 2000 compared to 1999 for the FDM channel. This contrasts with the 15% drop for FDM sales in the same period, reported in HerbalGram 51.2 Grant Ferrier, NBJ editor, explains this disparity: IRI data provided to NBJ show total FDM herbal sales in 2000 (52 weeks ending Dec. 10, 2000) down 13.1%. This drop is balanced by reports of flat sales of herbs in warehouse clubs; thus, NBJ adjusted the total mainstream market (FDM plus clubs), resulting in the 9% total drop.4

NBJ also reports strong growth for herbs via Internet sales (up 150% in 1999), with a drop in the rate of growth in 2000, down to 25%. NBJ's research includes the following sources and results:

In Health/Natural Food and Specialty Retail stores

1. Natural Food Merchandiser's survey of 660 mostly independent natural food stores: aggregate herbal supplement sales were up 2% in 2000.

2. SPINS (a market research firm specializing in natural food supermarkets, such as Whole Foods Markets and Wild Oats) "supernatural" sales data: 2% increase for herb formulas, 6% decrease for single herb supplements.

3. Whole Foods magazine annual store survey results: herbs increased from 26% to 31% of independent store sales in 2000 (35% of stores reported herb sales were up, 21% said they were down, the rest reported that sales were roughly the same).

4. NBJ annual surveys of wholesale sales of manufacturing/marketing companies with more than 50% of sales in herbs and more than 50% of sales in natural foods: grew an aggregate 3% in 2000. According to Ferrier, NBJ tallies whole sales of manufacturers/marketers to obtain breakdowns by product and channel. These manufacturer data are combined with retail/consumer sales data to derive NBJ's annual list of top supplement manufacturing/marketing companies, which is published in the magazine and on NBJ's website data products section, <www.nutritionbusiness.com>.4

In Mainstream Market

1. IRI tracking of sales of single herb supplements: 13% drop to $604 million (52 weeks to Dec. 10, 2000).

2. IRI tracking of sales of weight-loss products: 99% increase to $347 million (1/3 to 1/2 of these are herbal-based, estimates NBJ).

3. Costco (a warehouse buying club not in IRI data) reports growth in supplements overall; although glucosamine sulfate, a non-herbal supplement, is the top gainer in sales. While no hard data are available, NBJ estimates club sales in herbs were flat or only slightly negative.

4. NBJ manufacturer surveys of companies whose wholesale supplement mix is at least 30% herbs and 50% sales in the mainstream market channel: sales fell an aggregate 5%.

Multi-level Marketing (MLM)

1. NBJ surveys: aggregate sales of herbs up 2%.

2. Direct Selling Association (DSA) reports "health and diet products" sales up 5%.

Other sources for these channels included company-by-company manufacturer sales data in those channels measured, and interviews with executives from various companies.

1. Ferrier G. NBJ's Annual Nutrition Industry Overview. Nutrition Business Journal, 2001; VI(5/6): 6-7.

2. Blumenthal M. Herb Sales Down 15% in Mainstream Market. HerbalGram 2001;51:69.

3. Natural Marketing Institute. The Health and Wellness Trends Report, 2001.

4. Ferrier G. (pers. comm.) to M. Blumenthal, July 17, 2001.