Blurring the Line: The Evolving Food-Supplement Gap in the United States
Following the US Food & Drug Administration's (FDA) August 2012 announcement to provide the industry with more complete guidance distinguishing between beverages and liquid dietary supplements, Euromonitor International examines the growing convergence between foods and vitamins and dietary supplements and its impact in the world's largest consumer health industry - the US.
Supplement usage high and growing in the US
According to a 2011 National Institutes of Health (NIH) study published in the Journal of Nutrition, 54% of all American adults took dietary supplements in 2006 (the last year figures were available). That figure, which was up by nearly 10 percentage points in the last decade, trails more recent industry survey results, many of which point to usage in 2011 hovering around the 70% mark. VDS enjoy broad acceptance in the United States, where nearly half of all users reported using more than one supplement daily, and nearly 10% took five or more supplements a day. While all-in-one multivitamins remain the most commonly taken supplement, a rising consumer interest in nutrition and the skyrocketing popularity of daytime health and wellness television programs like “Dr. Oz” have helped spark a new mass interest in specialty supplements, such as vitamin D, fish oils, and probiotics, especially among the category's traditionally less-sophisticated consumers.
Food and drink formats appeal to both consumers and producers
As consumption of vitamins and dietary supplements increases, suppliers are facing growing pressure to differentiate their products, while also combating the dreaded phenomenon of “pill fatigue”. Resultantly, the VDS category has seen a significant blurring of the lines in recent years between supplements and foods and beverages. The US VDS category has historically featured a high rate of innovation, aided greatly by the country's lax regulations regarding pre-market approval. On the consumer side, demand for more easily ingestible formats remains high across a number of key demographics. Among baby boomers and the elderly (who consume the most supplements, according to the NIH study), the number of supplements and prescription medications they take, combined with aged-related swallowing issues, makes liquids, mixable powders, and gummy or soft-gel formats particularly popular. On the opposite end of the spectrum, younger consumers, including the much ballyhooed Millennials, appreciate the greater on-the-go convenience and more modern aesthetic of supplements in food/beverage formats.
On the supply side, new format uptake has been rapid. While many vitamin brands come in gummy or soft-gel varieties, the category's heavyweights, including Pfizer Inc and Otsuka Holdings Co Ltd, are increasingly taking cues from more niche producers by introducing supplements in even more innovative formats, including powders that can be sprinkled over food or added to drinks and standalone RTD liquids. Big Pharma's recent supplement acquisitions also show a trend toward alternative formats, as witnessed by two of the most well-known predominantly non-pill supplement producers – Alacer (maker of Emergen-C) and Airborne – both being acquired in 2012 (by Pfizer and Schiff Nutrition International Inc, respectively).
Innovation has outpaced regulation
However, regulators have struggled to keep pace. The FDA's main supplement regulation, the Dietary Supplement Health and Education Act (DSHEA), was written into law in 1994, years before many of these new formats went mainstream. Drink formats have provided the greatest challenge for the nearly 20-year statute, which stipulates dietary supplements may not be “represented as a conventional food”, but does not define “represented”. Liquid dietary supplements have been growing strongly in the US recently, and a host of traditional juice sources – such as aloe and bitter cherry – have become popular as platforms for liquid dietary supplements. Current guidance exists only in (non-statutory) draft form, and while the inclusion of non-traditional food additives would seem to provide clear delineation between beverages and supplements, some exotic fruit juices (Noni, Mangosteen, etc.) are marketed as dietary supplements, despite being 100% fruit juice.
Spot the Supplement – The Blurry Line between Supplement and Beverage
Furthermore, the rise of energy drinks and energy shots has only compounded the problem. While energy shots are generally small, concentrated mixes of caffeine and b vitamins, energy drinks are often larger format and sold next to standard sodas and juices in US retail outlets. This lack of transparency in labelling and in-store positioning has led to a generally low level of understanding among consumers vis-à-vis supplements versus beverages. Given the high levels of caffeine and other stimulants in these drinks, lawmakers and consumer advocate groups have raised concern. In April 2012, US Senator Dick Durbin called on the FDA “to take regulatory action to address the rising health concerns around energy drinks." While the FDA announced in August 2012 that it did not see energy drinks as a public health risk, it acknowledged that guidance is lacking and implied it was close to finalizing its standards for beverage vs. supplement labelling.
The magnitude of the issue is clear. Tonics and bottled nutritive drinks (under which Euromonitor International tracks energy shots and similar liquid dietary supplements) is expected to be one of the fastest-growing categories in US consumer health throughout the forecast period, far outpacing the rest the overall VDS category. By 2016, retail value sales are expected to increase 54% in constant terms to US$2.1 billion. Without comprehensive guidelines from the FDA, the explosive growth of the category driven by manufacturer desire to appeal more strongly to consumers alternative format demand (as part of a greater health-and-wellness-focused lifestyle) will invariably lead to more launches, more blurring of the lines, more confusion and, possibly, more adverse effects from over-usage.
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