Although the herbal supplement industry has experienced severe downward trends over the past two years, market indications look good for the near future. The Natural Marketing Institute’s (NMI) Health and Wellness Trends Report (HWTR), an annual, nationally projectable survey of more than 2,000 households, showed fluctuating household usage levels over the past three years. Consumer usage of herbal supplements dropped drastically (-12%) during the 12-month period of mid-1999 through mid-2000, but over the past year that usage is now trending upwards (+3%). Consumer confidence and attitudes towards herbal supplements are also on the rise, indicating more positive sales growth opportunities for 2002 and beyond.
The HWTR revealed several reasons for decline in market penetration and soft sales evident over the past two years: decreased consumer confidence, and decreased consumer belief of the importance of taking supplements. Consumers also related that during this same period, the media had less influence on their purchases as result of conflicting messages. Not to say the media had no influence; in reality it had a negative effect. Conflicting media messages deflated consumer confidence, increased their confusion, and reduced understanding of herbal benefits, which led to a decline in attitudes towards herbs and health, and ultimately, reduced usage.
The size of the total herbal supplement market was $4.1 billion in 2000, according to NMI, with 35% of those sales occurring in health and natural food stores, and 33% of sales in food, drug, and mass outlets. The balance of sales is via direct sources such as multi-level marketing, practitioners, mail order, and the Internet. In the year 2000, 37% of all households reported using herbal supplements, while 64% of natural channel shoppers indicated the same. Self-care seekers of personal health solutions drive this higher penetration of herbal users within the natural channel. They are the market for more than one-third of all herbal supplement sales. They also set trends and drive increased mainstream activity within herbal supplements. While they may seek information and first purchase from natural channel stores, they are increasingly channel switching (i.e., shopping for herbal products at mainstream outlets as products and brands become more widely available, often at lower prices).
As an overall group, herbal supplements users tend to be older (almost 60% over 45 years of age and in older lifestages), and well-educated (a significant number have post-graduate degrees). More than 42% live in large cities (defined as having populations over 2 million), and they have slightly higher income levels than the general population, a fact most likely driven by their education levels. Their reasons for maintaining a healthy lifestyle are rooted first in prevention, followed by enhancement, and treatment. This relates to the overall health benefits they seek from herbal supplements. They are self-care seekers: 65% more likely than the general population to use alternative healthcare services and 18% more likely to use over-the-counter (OTC) medications. However, while 37% of shoppers indicated herbal supplement use over the past year, only 16% use herbal supplements regularly (i.e., on a daily basis). Therein lies a significant inconsistent or lapsed user consumer base, with an obvious opportunity to double sales by increasing usage. Increasing usage or attracting new herbal product users will happen only as manufacturers respond to consumers’ need to understand such aspects as dosage, quality, and efficacy. Manufacturers must also improve brand building by becoming more consumer oriented.
The HWTR survey also captured changes in specific product usage patterns. Of all herbal supplement users in 1999, 49% indicated they had increased their usage during that year; in 2000 only 28% increased consumption of herbal products. Likewise, in 1999, 44% of all vitamin users indicated increased usage in that year; in 2000 this increase dropped to 26%. This dramatic drop in "increased usage" of supplement products from year to year clearly indicates that issues of belief in importance, understanding of usage, dosage, and benefits, as well as perceptions of overall quality, are impacting product usage.
The good news is that increased herbal supplement usage patterns and their importance to maintain a healthy lifestyle are stable or rising for 2001, again predicting an upturn. For example, the HWTR showed in 2000 that the importance of taking herbal supplements to maintain a healthy lifestyle dropped from 16% in 1999 to 14%. However, consumer confidence is trending upwards in 2001 and the importance of taking herbal supplements is up to 17%, a good predictor for positive growth in year 2002 herbal sales.
The influence level of all "media" sources of information has declined during the past two years. For example, the percentage of general population consumers who indicate that magazines have "a lot/little" influence on the purchase decision declined from 75% in 1999 to 61% in 2000. However, this is not to say that magazines don’t have significant impact. In fact, 85% of herbal supplement users list reading as a lifestyle or hobby activity, compared to 79% of the general population. In one-on-one interviews, consumers relate feelings of confusion over conflicting messages. From consumer interviews, it can be hypothesized that the quality of the message is driven by editorial and advertising. Is the message believable? Is it presented with consistently high standards? Does the accompanying advertising relay a quality message? Analysis by specific consumer groups can actually show that magazines play a significant role in converting new consumers to core, brand-loyal consumers. For consumers it is a function of meeting their long-term needs with believable information.
Shoppers state that the reasons they first started using herbal supplements were primarily for overall health and wellness (58%), followed closely by performance and energy, specific treatment, and prevention. Herbal products must deliver this expected overall health benefit, and marketing efforts must address the benefits that lie beyond consuming specific herbs. The question could also be raised, "Do consumers understand the benefits of specific herbs such as St. John’s wort or echinacea?" Recent NMI studies indicate that consumers need and want more information on herbs.
Consumers’ lack of understanding also affects the credibility of herbal claims. The HWTR reveals that 50% of all consumers indicate vitamins and minerals have extremely credible/believable product benefits, while only 30% state that herbal supplements have extremely credible/believable product benefits. Educational communications must be considered in light of the high number of new users of herbal products, which will aid the believability ratings, benefits delivered, and repeat sales. Thirty-one percent of all herbal supplement users in 2001 indicated they had been using herbal supplements for less than one year.
Lack of benefits delivered, both immediate and long term, is the most frequent reason given by consumers for discontinued use, while lack of value or high price, credibility and safety issues are lesser issues. Overall, 89% of all herbal supplement users are not concerned about the safety of these products, but they are concerned about product efficacy. While only 22% agree completely/somewhat that they’ve tried herbal supplements and found they were not effective, another 52% are not sure they derived any benefit from using herbal products. With more than half of the user population sitting on the fence about efficacy, marketers need to be sure they are delivering the benefit, and addressing these issues with credible evidence.
The challenges of delivering "consumer defined quality" are multi-faceted, complex and dynamic. For starters, the concept of quality is emotionally based, and is therefore subjective. Further, the definition of quality varies dramatically across product categories, and even from one consumer to the other, as it is derived from consumer experiences before and after the sale, as well as during product usage. With regard to herbal supplements, consumer perceptions of quality are driven by several factors: the manufacturer’s reputation and length of time in the market, clinical research, branding, retail channels, consistency of product appearance, delivery of the stated label content, availability, and consistent marketing messages, among others. Any inconsistencies can leave consumers overwhelmed and confused. Quality is not a short-term tactic to bolster sales, but a long-term advantage. It is therefore crucial for supplement companies to convey quality with a consistent message across all marketing communications in order to attract customers and ultimately turn them into core, loyal brand users.
Quality is strategically positioned at the center of consumer purchase criteria within dietary supplements. It directly affects how the consumer looks at the effectiveness, the value, the nutrition, and the convenience of using a particular product. Within herbal supplements, consumers further define quality by measures of ingredients, potency, benefits derived, and dosage form and/or dosage amount. Consumers who did not realize the benefit, found the value and nutrition quality suspicious, or found the product inconvenient to use may be reluctant to purchase again. Therefore, quality is vital to establishing both product trial and repeat purchase.
As some of the previous information has indicated, consumers remained confused about some herbal supplements. Recent results of a Harris Interactive study1 for the Dietary Supplement Information Bureau (DSIB) indicated that while 95% of Americans are satisfied with the supplements they take, a fairly high number of consumers (21% to 58%) did not understand the benefits, and 29% were not always adhering to recommended dosages. The DSIB website,<www.supplementinfo.org>, provides consumers with simplified monographs and information from the latest clinical and scientific research about supplements. This is a step forward for the nutrition industry to provide a single, accurate, scientifically based information center for consumers. It has the backing of an alliance of numerous industry members, within a larger purpose of presenting positive, consistent messages to supplement consumers.
These benefits will be forthcoming as NMI continues to track market activities and consumer understanding, attitudes and supplement usage. Increases within herbal product sales will be driven by manufacturers delivering consistent, believable messages with strong clinical evidence and products that deliver effectiveness, nutrition, value, and convenient dosage forms.
Maryellen Molyneaux is president of the Natural Marketing Institute, a market research, consulting, and business development firm located in Harleysville, PA. For additional information on the health and wellness consumer and marketplace, please call 215/513-7300 ext. 226 or visit <http://www.nmisolutions.com>.
Figures are drawn from NMI’s annual Health and Wellness Trends Report (HWTR), which includes information on consumer attitudes, behaviors and motivations across 16 shopping channels, more than 90 product categories, more than 80 attitudes/beliefs, plus much more. This proprietary data can be utilized in specific applications and analyses. Both the general report and customized studies are available for purchase.
1. Hunt L. Consumers satisfied with supplements, need more information, survey says. HerbalGram 2001;53:10-11.