Sports nutrition, one of the fastest growing retail categories, has weathered the pandemic and is in a stronger position than before.
On the one hand, products that contribute to health have become more important and work in tandem with the performance-enhancing properties of the category. On the other hand, we see natural progression as the early cohort ages and relies on protein and supplements to maintain muscle and bone.
Nonetheless, the term sports nutrition has probably come to the fore as the industry makes strides in wiping out the image of bodybuilding for men as people seek out protein fillers or meal replacement categories between meals. Or a weight loss tool. However, there is relatively untapped potential for specific products and personalized nutritional options for women.
Hampering these opportunities is the impact that inflation-related costs may have on consumers of already premium-priced products. This is a potential headwind recognized by Craig Kearney, CEO of New Zealand-based Vitaco Health Group, his owner of the Musashi and Aussie Bodies brands and protein powders, bars, snacks and We also offer drinks, Healtheries and Nutra-Life supplements. Australia.
Otherwise, the global sports nutrition market is “pretty big” and is expected to get even bigger.
“Traditionally, we would say men between the ages of 18 and 25, but now it is women and men between the ages of 18 and 40,” Carney said of the evolution of the category. “Certainly, the audience is getting older as more people start to realize the benefits of protein and as people become more health conscious and continue to exercise towards the second half of life.”
Carney estimates that the Australian market is worth about A$1 billion, or about $640 million in US currency terms, and is growing at about 12-13% annually. The UK is similarly at about $840 million, expanding at about 14%, while the US, a more established venue, is growing at about 7-8%, while the valuation puts him at $13 billion. he says.
For Vitaco, which generates around A$270 million, sales of protein bars have flattened or even declined during the lockdown due to lack of on-the-go demand, while powders continued to grow. , growth slowed.
“When life returned to a more normal situation, consumption and purchasing behavior returned to normal. was on a strong growth trajectory. [but] All in all, after a flat 6-8 months, we are now back on a very strong growth trajectory. ”
“Dynamism” in the sports nutrition category
Sports nutrition has evolved from an online domain to a brick and mortar store. Some retailers have adopted their own labels in a highly competitive market that is largely branded, with mixed results. However, some market watchers believe that the category is not necessarily in the best position to match its growth rate or popularity.
James Williams, head of retail for health and wellness at UK-based Supreme plc, says sports nutrition is likely to diversify to new audiences and become a staple in the cupboard rather than languishing in the garage. He said he missed the opportunity. gym equipment.
“An interesting dynamic in sports nutrition is that it is sold alongside condoms and foot rubs. Or should be sold in the food section.We are moving from bulking to maintenance.”
According to John Baumgartner, managing director of Japanese investment bank Mizuho Securities, sports nutrition became more “mainstream” in the United States about two years ago, fueling the growth of protein powders along with energy drinks.
He says the pattern is similar on this side of the pond. “In Europe, we are also seeing an accelerating increase in the volume of powders, but not at the expense of beverages. does not prey on beverage consumption.”
But the industry has seen M&A as growth in the sports nutrition category accelerates.Garyth Stone, UK-based managing director of the consumer, food and retail team at US-based investment bank Houlihan Lokey. It is pointed out that
For example, German food manufacturer Krüger acquired the Maximuscle and Maxinutrition brands from UK-based GlaxoSmithKline in 2018. A year later, Atlantic Group sold his Multipower and Champ brands to Genuport, also a German distribution partner. Also, Sweden’s Humble Group has built up its sports nutrition portfolio with a number of his M&As.
“This is a much more rapidly changing industry where yesterday’s winners are today’s losers,” suggests Stone. Today the British man had a surprise announcement from Science in Sport (SiS). As part of its strategic review, SiS is seeking a cash buffer to effectively bring its business to market while also weathering what the company described as a “challenging environment.” ”.
Supreme is also active, acquiring the Sci-Mx brand from British bakery group Samworth Brothers earlier this year. It also owns the Battle Bites line of protein bars and the Millions Vitamin series.
Williams is owned by Irish food company Glanbia plc.
Glanbia acquired the US-focused business in 2008, but Optimum Nutrition now sells more in countries such as India, China and Australia and is considered the world’s leading protein powder brand. We also own Isopure, BSN (Bio-Engineered Supplements and Nutrition), Body & Fit and Nutramino.
Sonja Matthews, Senior Manager, Strategic Insights for EMEA and APAC at Glanbia Nutritionals, a division of the parent company, said: just food.
“Over the past few years, it has been an area of strategic focus for the CPG organization due to the acquisition of a number of snack and ready-to-mix brands. This activity will undoubtedly continue, with the entry of new brands driven by
“Sports nutrition is expected to continue its upward trajectory, fueled by continued category expansion as consumers come to the category seeking nutritional solutions that support their health and wellness goals. .”
Area of Opportunity
The solution, as Matthews says, is the opportunity shared by Baumgartner, who explored a category he suggests is the underserved female consumer.
Of the scientific sports studies that have been conducted on nutrition, he says, one-third are for men and only 4-5% are for women. Meanwhile, only 2% of women’s sports nutrition products are in areas such as iron, calcium, vitamin B12 and folic acid.
“If you look at vitamins, 20% of the vitamin market is women-specific, but only 2% of the nutrition market,” says Baumgartner. “So there is a huge opportunity to sell more ingredients that are tailored specifically for women, and a huge opportunity to grow over time.”
Similarly, he points out protein shakes and drinks. For example, home penetration is only 28-29% compared to his 90% for breakfast cereals.
The U.S. sports nutrition market is growing at a mid- to high-single-digit pace, which is sustainable to “get out of the recession we’re experiencing,” Baumgartner said, adding that the category pointed out that softening is seen in some parts of . During Covid-19.
But he believes there are opportunities around age-related diseases, caffeine products, and functional ingredients for personalized nutrition.
Baumgartner adds: It’s hard to understand why they stop buying them as they get older. ”
Granvia’s Matthews suggests that protein snacks are becoming more and more popular, as are products that cater to other health needs.
“Innovations that support overall health and well-being, including physical and mental health, will spur market growth for core sports nutrition consumers and the larger active nutrition lifestyle market,” she suggested. doing.
“Most consumers in these categories prefer a natural, short deck of ingredients and this will create demand for new products. We expect to see healthier snacks, including savory snacks, as consumers want more options.”
ghost of inflation
Meanwhile, there are inflationary hurdles to overcome. However, according to Stone, the impact on sports nutrition varies by market and income.
The category is growing in Asia, the Middle East and Africa, and perhaps even faster in India, but often from a lower base relative to more established markets, he suggests. I’m here.
In some emerging markets, protein powder makers are offering smaller, more affordable pouches rather than the expensive tubs sold elsewhere, but on a cost-per-serving basis they’re not as bad. there is no.
“Purchasing power is not an issue in some of the very large growth markets like Japan and South Korea. Even in China,” he said, adding that “the middle class is growing.” Because alcohol is banned in some regions, such as the Middle East, young people tend to go to the gym as a social pastime, Stone notes.
Given that raw materials are so expensive, he said, “a volume growth of 10% to 15% year-on-year over the next three, five or seven years is realistic for the European industry, with some ups and downs. There is broad consensus that there is
In the U.S., “economic pressure”, largely due to inflation, has weighed on sales of meal replacements and sales of weight-loss products such as bars and shakes, each down 7-8% this year, Baumgartner said. 4% down. Meanwhile, protein sales are holding up, pricing he’s around 10-12%, with some impact on volume.
As SiS similarly noted, Supreme’s Williams said there were “significant cost increases” in ingredients such as whey and creatine, and that shrinkflation was a countermeasure against rising retail prices.
For example, the size of the bars in grams has decreased. “The market reacted. Either they moved to slightly smaller packs, or a lot of people rearranged their recipes. We did both,” he explains Williams.
“Right now, everyone is trying to cost engineer. There are some major brands that are losing market share to retailers. They’re stepping back. And maybe in the same way, because shoppers aren’t buying it.”
In Australia, Vitaco’s Kearney is optimistic over current inflation challenges, and like his colleagues, businesses are being forced to raise prices.
“Sports nutrition is one of the fastest growing consumer health areas globally,” he says. “Most countries in the world are experiencing double-digit growth and we expect this level of growth to continue in the near future.”
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