Vitamin Category Development - A Path to Healthier Productivity

Efficacy, education and innovation are the engines of growth for the vitamins/minerals/supplements category and can drive substantial future increases on the current base business.

But just how strong is that base? Is category development worthwhile?

To begin, the vitamin category is large. Dollar sales were $4.5 billion in FDMx in the 52 weeks ended Oct. 30, 2010. Out of the 125 categories typically merchandised in FDMx as tracked by Symphony IRI, vitamins ranked #22, roughly in the range of such heavies as bottled water, hair care and detergents.

The vitamin category is experiencing healthy growth. The vitamin category gained 8.7 percent over the previous year in 2010. This growth rate compares quite favorably to the marginal increase of 0.1 percent for all health & beauty care in drug stores and a flat performance for HBC overall in supermarkets.

Vitamins are a huge contributor to the FDMx industry's growth. The vitamin category added over $356 million to FDMx market in the 52 weeks ended Oct. 30, 2010, the second largest dollar growth contribution of 125 categories in the store. Only fresh produce made a larger contribution. In fact, to put this into an even clearer context, of the 125 categories tracked, just 59 showed an increase last year, and of the roughly $5.3 billion extra dollars they generated for the FDMx industry in 2010, the vitamin category contributed about 7 percent.

Vitamin category sales growth is real. It's due in large part to real unit increases, as opposed to just higher prices. For drug stores in the 52 weeks ended Oct. 30, according to Symphony IRI, for example, vitamin units sold increased by 7 percent, a major factor in the category's 9.3 percent sales increase in that channel. Food stores' vitamin units rose 4.5 percent, an important prompt to that channel's 6.8 percent increase vitamin in dollars.

Vitamins are a high value sale. In food and drug stores last year, average dollars per unit sold were $8.91. This compares very favorably with, for example, analgesics ($5.86) and is even higher than cold remedy/allergy/sinus tablets ($8.77 – a category marked by Rx-to-OTC switches). Gross margins on vitamin sales range around 40-45 percent.

The vitamin consumer is a valuable customer. Household penetration is 79 percent, and the average household spend on vitamins per year is $83.67, according to The Nielsen Company data for 2009, compared to $38.73 for hair care and $24.14 for headache remedies. Item units per item trip were 1.7 and item dollars per item trip were $14.38. The proportion of repeat buyers is 81 percent.

Finally, the vitamin category is key to health & wellness positioning. Vitamin purchasing leads to other health & wellness product sales. GMDC research, Consumer Shopping Habits Study 2010, indicates that vitamins/supplements are a "gateway" category in that "consumers often adopt supplements (including vitamins) fairly early in their evolutionary H&W path; thus the category is a highly relevant H&W gateway product category."

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