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Strategic Analysis of the U.S. Nutraceuticals Markets
Frost & Sullivan, Oct 2004
Increased Health Consciousness Enhances Focus on Benefits of Nutraceuticals
The huge wave of health consciousness that started during the 1990s in the United States has drastically changed the factors dictating nutritional behavior. Consumers have started subscribing to diet regimens that reduce the risk of chronic diseases. People have begun to use dietary supplements merely as foods that will prevent diseases and enhance performance rather than consuming them to meet the recommended dietary allowance. They are taking fewer synthetic ingredients and opting for natural and organic foods, functional beverages, and natural supplements. The media has drawn people’s attention to scientific developments in the health and nutritional field and the nutraceutical market has benefited immensely from this greater consumer awareness.
This Frost & Sullivan strategic analysis examines the status of the U.S. nutraceutical market with a focus on its drivers, restraints, industry challenges, and upcoming trends. The different segments in this study include functional foods, functional beverages, and dietary supplements. This research enables companies to align their positioning strategies to benefit from the changing markets and obtain maximum return on investment.
Rising Influence of the Media on End Users Underscores the Need for Better Media Management by Manufacturers
Market participants are offended with the media for its largely negative portrayal of dietary supplements and the functional foods market. Various unfavorable reports between 2000 and 2003 have caused a huge revenue decline in the herbal supplements industry. The media has incessantly called for stricter regulations in the supplements industry but research and objective assessments are not always the basis for these demands. To ensure that the media presents an unbiased picture and reports on emergent positive developments, the industry has to establish cordial relations with it.
Manufacturers must proactively use the media for effectively communicating the complex technologies involved in manufacturing nutraceutical products. Neglecting establishment of interactive relationships with the media can impede the flow of clear and concise scientific information. Industry participants should see the media as the closest and most effective link to consumers and they need to learn better ways to coexist and benefit from their interaction with it, says the analyst of this research.
Co-branding of Ingredients Helps Suppliers and Manufacturers Reduce Costs and Enhance Product Credibility
Many ingredient suppliers and nutraceutical manufacturers adopt co-branding strategies to help them share the manufacturing and promotional costs. In such an arrangement, ingredient suppliers acquire customers that buy exclusively from them, while nutraceutical manufacturers gain from the brand value of the ingredients. The nutraceutical products that contain branded and well-promoted ingredients sell at higher prices in the market.
Over all, the brands gain high visibility through the thrust from the finances of both the ingredient supplier and the nutraceutical manufacturer, notes the analyst. This approach has helped the manufacturers in consumer awareness and product differentiation.
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