NBJ content director: Predicting changes in dietary supplement market is wild ride

by Bill Giebler 

“Tri-phasal, time-dependent fluid mechanics are hard to predict,” my ex-father-in-law, a rocket scientist (no, actually), used to say about weather forecasting, particularly when one of his daughters was aghast at the weather’s failure to cooperate with their expectations.

The business of predicting market dynamics is similar. Sales forecasts are necessarily time-dependent, are influenced by multiple erratic inputs that freeze or vaporize supply and demand and, indeed, are hard to predict. Doing this through a global pandemic, into the highest inflation in decades and toward a potential recession makes for a wild ride.

The aim of market predictions is to assess the relative strength—or at least size—of a brand, a company or, as we do at Nutrition Business Journal (NBJ), entire overlapping industries. For the dietary supplement space, NBJ’s predictive methodology gathers hard and soft data across categories and companies, harnessing our legacy networking position to produce broad industry forecasts better than anyone we know. But it’s still an assessment of multiple dynamic inputs over time, it’s still a wild ride through fitful global economic factors, and it’s not always aligned with hopes or expectations.

A look at the numbers published in our 2023 Supplement Business Report will validate the storms many readers have experienced over the past three years. The nutrition industry did great during the harshest portions of the pandemic, showing stronger growth in 2020 than in any year recorded in the 26 years NBJ has been reporting. But by 2022, growth was the lowest ever, swinging from that 14.5% down to 1.9%.

Categories were erratic, too. The industry’s second-largest category, herbs and botanicals, achieved the second-largest growth in 2020 (behind vitamins in both cases), bringing in $817 million beyond expectation. By 2022, the category was in decline, also shrinking by 1.9%. Sports nutrition saw less than half the growth rate of the overall industry in 2020 but surpassed the overall industry growth in 2021 and grew more than five times as fast in 2022, clocking in the highest growth among categories. In some ways, it’s predictable: the biggest pandemic stories are experiencing the harshest whiplash.

The mechanics of the industry coming out of the second half of 2022 are anything but fluid. As we enter the second half of 2023, some of it is darn near frozen.

In the upcoming NBJ Finance issue (available Aug. 3 by subscription through the Nutrition Business Journal app or at nutritionbusinessjournal.com), financial experts look at the dismal state of M&A transactions in 2023. Early-stage funding is down. Valuations are down. Noting Q1 of 2023 as “the worst quarter ever” in the investment realm, investment banker William Hood calls it “a walloping hangover after a 12-year party.” Stimulus fueled the party and inflation is fueling the throbbing effects of the hangover.

“This is the first time in 20 years that the dietary supplement industry has faced challenges on both the demand and supply side,” Hood adds.

Still, while 2022 failed to cooperate with expectations for many, the industry is stronger than it would have been without the pandemic. Well, it’s bigger anyway. Despite the freeze, NBJ predicts the industry closed 2022 at $61.06 billion, 4.5% higher than we predicted pre-pandemic in 2019. Sports nutrition, which saw declines in 2020, closed 2022 4.2% larger than previously expected.

Looking forward, NBJ sees growth hovering around 4% through 2026. Hardly record-breaking territory.

But maybe the industry could use a break from breaking records. Record growth rates of the past three years have been tough on the industry—the record highs stressing every aspect of the value chain, the record lows leaving the industry with excess inventory, staff and capacity.

Still, yes, the industry is bigger because of the pandemic, and growth remains positive. But is it stronger? It’s easy to conflate the two. 

What elements characterize the strength of the nutrition industry? Is it resilience to damning headlines or the absence of fraudulent products? Is it transparency and traceability or the care taken through the value chain to protect the resources—human and otherwise—that bring products to market? Is it the products themselves, that make lives better without tradeoff to other lives? Is it a financial structure that creates wealth equitably among all stakeholders? I’d say yes. It’s inherently and primarily those things.

If and as the industry settles into the modest growth rate NBJ predicts, let’s applaud the entities that are addressing these questions within and for the industry. Let’s also celebrate the ways, however small, each of us is participating in strengthening the industry, and not just growing it. These efforts, pooled collectively, benefit everyone.

Hood and other experts see the thaw coming soon. And maybe a thaw is enough. It’s likely that the greatest hope for the industry is that it finds a few years of fluidity. That, spared from volatile gaseous spikes or halting freezes, the industry grows stronger. Multi-input, time-dependent market dynamics are hard to predict. But, if accurate, the modest growth NBJ forecasts for the coming years might be the best news in a while.

An award-winning writer and seasoned natural products industry veteran—with decades of experience in food and supplement retail, lifestyle mail order and textiles product development—Nutrition Business Journal Content & Insights Director Bill Giebler manages the NBJ business with a keen focus on the what, where and why of the dietary supplement market.