Globally, supplement and dietary companies have been navigating a treacherous sea of unforeseen economic, financial, supply chain, and consumer-related challenges in recent years. 

During the last several years, companies endured uncertainty in the face of the COVID-19 pandemic, which further led to an onslaught of supply chain woes, coupled with increasing consumer demand and the rising cost of materials and production output. 

However, as we steadily enter a new year, perhaps not without its own set of challenges, industry experts and leaders predict that some of these waves experienced during the last several years will steadily begin to subside, and provide business leaders and investors with a more clear forward-looking path as they navigate an evolving market landscape. 

A Review of The Supplement and Vitamin Market in 2023

While this year brought the onset of new developments in the production and manufacturing of new supplements, herbal medication, and vitamins, with the onset of more advanced technology and digital infrastructure, many companies have positioned their corporate strategies to continue leveraging digital investment and a strong flow of equity capital funding. 

Robust growth in sales was expected, as many companies moved more towards online and digital platforms, including e-commerce. Overall, spending per consumer in the United States remained steady, despite the wider impact of elevated inflation eating into consumers' disposable income. 

On average, Americans spent a robust $12.8 billion on “natural products” out of pocket. This accounted for roughly $129.58 per purchase average for the whole market, with younger consumers, such as Millennials (born 1982 to 1996) spending roughly $62 per purchase for vitamins and other natural supplements. 

In total, North America remains the biggest, and perhaps latest continental market for supplements and vitamins, accounting for 34.8% of global sales. 

Peter McMullin, President of Sibu Sea Berry Therapy, a natural supplement and functional foods brand, says, “ Americans have a more holistic approach towards their health and well-being, and this includes the use of organic and natural supplements as part of their daily healthcare routines.” 

Sibu Sea Berry was founded in 2004 by Peter’s father, Bruce McMullin. Both Peter and his brother, Dusty McMullin are now part of the corporate management team of Sibu and are helping to steer the company in a more innovative direction as they continue their father’s legacy. 

Furthermore, industry statistics revealed that the vitamin market, which encompasses a broad variety of over-the-counter and prescription medications accounts for nearly 30.2% of the total market.

Increased sales were largely driven by a change in consumer behavior, with many now seeking to purchase products closely related to organic, natural, and environmentally-conscious efforts. 

More importantly, following the pandemic, research claims that more consumers have become concerned regarding their personal health, well-being, and the direct environment having an impact on their long-term health. 

In fact, one study found that 61% of consumers think that poor health in the environment is negatively impacting their personal health. More than this, 64% of those consumers surveyed did however clarify that they will be willing to pay more for products that further drive social efforts, including the support of minority communities.

Brands have remained fairly responsive to this change in consumer behavior, especially in terms of consumers’ personal health and well-being. Many more people are now looking towards supporting brands that can deliver highly effective, quality, and cost-effective remedies for immune health, including subcategories such as women’s health and more natural remedies. 

The response from brands has been outstanding, further allocating more adequate resources towards the research and development of highly effective natural products. The launch of new product segments, such as vitamin gummies, witnessed perhaps the fastest growth in popularity, mostly due to its effective results, and convenience of accessibility.

Historic market analysis indicates that the gummy segment is expected to grow at an annual rate of 54% in the coming five years, with gummy supplements related to immune health (38%); brain food (23%); skincare (21%); energy (21%) and child-friendly gummy vitamins (18%) will remain among the fastest growing categories. 

Delivery methods of vitamins and supplements remain a key area of focus for many brands in 2023 and in the year ahead. Traditional pill or capsule-based delivery played a significant role, while other segments such as gummies continued to experience strong growth. 

Many suggest that the coming year will provide suppliers with a competitive edge to improve their delivery methods as technology enables them to develop more effective remedies and treatments. 

Aside from product development and consumer sales, merger & acquisition (M&A) activity remained relatively steady, despite macroeconomic challenges causing overall M&A volume to slide by 38% year-over-year. In total, roughly 31 deals were announced or completed in 2023, with corporate strategies geared towards profitability, recurring revenue, and customer loyalty for M&A deals. 

Perhaps the most notable M&A deal in 2023 was Pfizer's (NYSE: PFE) acquisition of Seagen, with an all-cash transaction offer valued at $43.8 billion. Although Pfizer is more related to the pharmaceutical side of the health, well-being, and supplement industry, following the pandemic and the production of COVID-19 vaccines, Pfizer continued its investment in areas such as oncology and immunology, which helped to propel deal activity in the industry. 

On the side of supply chain management, companies continued to experience some disruptions well into the year, leading to many brands either discontinuing specific items or retracting traditional stock-keeping units (SKU). 

Per a survey conducted by Nutri-Ingredients USA, a relatively large proportion of those companies surveyed said that they experienced mild to severe supply chain disruptions for much of 2021 and well into 2022. 

A robust 80% of those surveyed said they experienced some disruptions in 2022 compared to the year before. Furthermore, 12% said that in response to this, they incorporated a second or alternative supplier of raw materials and ingredients, while a smaller nine percent claimed they changed their suppliers completely to meet consumer demand. 

Still, in the same survey, around five percent had said they managed to overcome supply chain woes by discontinuing SKUs or had to completely reformulate their products for effective resolution to disruptions. 

The big question now on everyone’s mind is whether 2024 will see some improvements across the board in terms of supply chain management and delivery of raw materials and ingredients. 

This year has already witnessed brands and companies shifting their demand from international to local suppliers in an attempt to sidestep tariff hikes and supply chain woes. Another crease that could require further improvement in the months ahead is a better understanding of wants and needs, but matching this with more effective supply and demand efforts. 

Although U.S. consumer spending continues to steadily retract on the back of sticky inflation, high interest rates, and a challenging pricing environment, supplement and vitamin brands will need to navigate these challenges more effectively, by applying short-term solutions that can steadily follow along with forward-looking strategies. 

Supply chain disruptions remain at the top of the list of concerns for companies, however, many would expect these wrinkles to fade out in the latter half of 2024, and begin to stabilize as companies begin to take up a more localized approach to their needs, and further boost domestic development of raw materials and ingredients. 

When we begin to tie all these various strings together, we see how the supplement and vitamin market continues to ride out the waves of uncertainty, however, developing a key forward guiding strategy would be key to their long-term success and overcoming different obstacles that can ripple the water at any given moment. 

Perhaps now, more than ever, many business leaders are considering the potential future of the industry against a backdrop of slowing consumer activity and highly volatile markets, as central banks across the world are expected to cut interest rates at a phenomenal pace in the months to follow. 

Yet, the ripple effect thereof would only hit at a later stage, which would call for business leaders and strategists to develop a near-term resolution that could allow them to overcome sudden market shifts directly tied to the well-being of the global economy. 

Expected trends in the vitamin and supplement market in 2024

As we begin to look at the year ahead, brands are strategically positioning their corporate guidance to continue the forward-looking development of current market trends, including consumer buying behavior and broader economic challenges. 

Personalization

As the supplement and vitamin market continues to seek new channels through which it can deliver a more engaging customer experience, many brands have already or will continue to increase their scope of personalization throughout the value chain. 

From product ranges, packaging, and marketing messaging, companies are spending a lot of effort trying to perfect their personalization strategies and investing heavily in the potential of providing clients with a more tailored experience. 

The majority of brands nowadays have some sort of personalization strategy as part of their marketing efforts. Roughly 90% of marketers will continue to help improve company profitability, and it’s for good reasons as well. McKinsey research claims that around 71% of consumers now expect a personalized experience. 

However, more than marketing and messaging, personalization always reflects on the product level as well. Consumers want to utilize tools and resources that will help them discover more supplements and vitamins that are tailored to their needs, including nutrition, diet, and well-being. 

Organic and Plant-Based Supplements

Already there’s been strong demand for more organic and plant-based supplements in recent years, as consumers become more aware of the direct impact production activities are having on the environment and contributing to the effects of climate change. 

As more and more consumers take on conscious buying habits, including the type of supplements and vitamins they’re using, so will brands look to accommodate these types of demands where possible. 

Vice President of Operations at Sibu Sea Berry, Dusty McMullin shares, “There’s already been a significant shift for plant-based supplements. In our own business, we’ve seen our top-line products reach record sales over a shorter period due to being vegan-friendly and plant-based.” 

Dusty and Peter recently launched a natural and organic Omega-7 supplement that contains doses of Sibu’s proprietary T7 Sea Buckthorn Oil, a highly effective and natural ingredient that helps alleviate symptoms related to vaginal atrophy, commonly found in menopausal women. 

Per the National Institute of Health, around 66% of vegans and 25% of vegetarians consume vitamin supplements, while nearly 30% of omnivores take at least some form of vitamin supplement. 

While the demand for organic and plant-based products remains relatively skewed toward a market segment that follows a strictly plant-based diet, there have already been noticeable changes in those consumers who don’t follow or live a strictly vegan lifestyle. 

Natural Products and Supplements 

Similar to the trend of plant-based products, natural ingredients are now a key component in selling supplements and vitamins to consumers, and this is especially true among younger market segments including Millennials and Generation Z (born between 1997 to 2012). 

“Consumers want to have access to healthier and more natural choices, and brands need to consider how this change will impact their business direction in the long-term,” said Peter McMullin.

Following the pandemic, there has been a shift in the way younger consumers view their health, with many of them looking to experiment with different eating styles, such as veganism, vegetarianism, or gluten-free. Research found that Millennials and Gen Z were among the biggest cohorts open to experimentation compared to their older counterparts. 

Since the pandemic, there has been a strong increase in Americans taking vitamins each day, with roughly 78% of Americans now consuming at least one type of vitamin each day. Among these, Millennials were found to be the biggest cohort to increase their daily usage, with 47% saying that they’ve increased the use of vitamins since the pandemic.

Overall, there’s been a strong shift towards consumers having a more holistic approach regarding their health and diet. This has fostered the concept of buying more natural and organic products, supporting brands that produce products using ethically sourced ingredients, and companies that are opening new channels to prioritize natural and organic ingredients more effectively. 

Product Novelty 

Along with the demand for more natural supplements, the market could see a shift in product novelty, with more consumers looking for brands that can deliver products that are unique and are more flexible regarding their product ranges. 

Take for instance the upward trends of vitamin gummies. During the last two to three years there has been a strong demand for gummies, especially for vitamins. While traditionally, vitamin gummies were more geared towards younger consumers, such as children and teenagers, gummies have now seen wider popularity among older consumers as well. 

Product novelty would take into consideration how quickly brands can develop more unique product ranges, or find different ways of improving delivery methods for existing products. Novelty items are also helping brands drive influence, and separate themselves from competitors. 

As with anything, product novelty brings a new set of challenges, including things such as regulatory compliance and having to adhere to consumer product safety standards. While these frameworks could become potential obstacles for some companies, trying to find workable long-term ways to drive innovation and uniqueness can potentially help them raise their bottom line and lead in an already competitive market. 

“This is perhaps one of the more difficult challenges that we will need to tackle in the coming years,” told Dusty McMullin. “However, we can’t ignore these changes, and while we’re not sure if there will be a roof for product novelty if any, innovative product delivery and more creative changes will help deliver improved consumer engagement for brands.”

Ethical Supplements and Sourcing 

Another trend we could expect to see take shape in 2024 is the demand for ethical supplements and sourcing. This is especially true among younger consumers, and perhaps more so with those classified as Generation Z. 

In 2019, a Forbes State of Consumer Spending Report found that Gen Z shoppers are willing to spend up to 10% more on sustainable brands compared to older cohorts, including Gen X (born 1965 to 1980) and Boomer (born 1945 to 1964). In fact, in the same 2019 report by Forbes, only 23% of boomers said that they’re willing to spend more on ethical and organic products, compared to 54% of Gen Zs. 

As the consumer market begins to shift, and younger generations now begin to represent the larger majority of the market share, many of them will continue supporting or buying from brands they believe in.

Some 70% of Gen Z consumers said that they try to purchase more products and items from companies that are considered to be more ethical, or at least have some ethical practices. Things such as environmental concerns, social impact, and ethical business transparency have become important business aspects that younger buyers are now looking for in the brands and companies they buy from. 

Looking Forward 

As we stretch into a new year of opportunities and challenges, the supplement and vitamin market is poised to witness yet another extraordinary period of growth. While there’s growing optimism that the coming year will hold new possibilities in the delivery of new products, companies and brands will need to align their strategies with that of a shifting consumer market. 

There’s already been a significant change in the direction in which companies are moving, and seeing how this has helped shape the next several years of the industry marks only the beginning of change, innovation, and advancement. 

The coupling of technology, including Artificial Intelligence (AI) could further lend an opportunity for supplement and vitamin brands to develop more forward-looking methods to enhance product delivery, increase market visibility, and influence competitors as they fast-track the development of a contemporary marketplace.