Is Selling Protein Powder Worth It?

by Christian Duque

Protein powder is the foundation of every supplement company – or is it? Why not start this article by questioning one of the most basic premises in our industry? Customers love protein, they swear by it, and everyone wants to have their own brand, with all its flashy labels, and all the fun that comes with bragging about which brand, flavor, and type you like. There’s whey protein – splitting off into concentrates, isolates, and hydrolysates. There’s casein – which some believe is garbage and others believe to be “time released”; then there’s egg. Old school guys love egg protein – real old school guys love milk & egg protein. Vegans have their own split.

Frugal lifters will suffer a little GI distress and go with wheat isolate, while the rich kids will pay top dollar for overpriced pea protein. Collagen is making a huge surge as well, even though it’s iffy how much it helps. Typically those protein shots back in the day were collagen and of very low quality; however, collagen is now considered “anti-aging” and seemingly justifies price spikes. There’s basically a protein for everyone, some have high biological value, others not so much; some taste good and mix well, others not at all. I may write an article about the nutritional properties of protein and/or of specific products in the future; however, this article is about business. It’s about dollars and cents. In this article I’d like to discuss whether it makes business sense for companies to have protein powders, where I see the future for the concession going, and how external factors continue to play an undeniable role.

Supplement companies have to be profitable – seems pretty obvious doesn’t it? Well, you’d be surprised. One of the very first questions new or potential customers have upon learning of a new supplement company is what kind of protein the company has. Typically, the more varieties and the flavors of each, will seemingly raise the profile of the company among these type of consumers. Others are even more demanding. They want to see flashy labels, flashy names, and scoopers that rest at the top of the jug. Because we all know, it takes a lot of hard work to dig a scooper out of some whey protein – nonetheless, successful businesses must study & appease their consumers; the whole point of good business is finding a demand for something and meeting those requirements as best as humanly possible. Businesses don’t get rich by telling their customers that what they want is silly. Second-guessing the consumer can easily result in lost sales. Again, all of this makes perfect sense. It’s all but irrefutable.

Now let’s get ready for a curveball. So far, we’ve established the basic tenet of supply and demand, but what if the demand isn’t real? Then what? To many companies this very question makes no sense. Many will probably read this article and dismiss it as fluff. They will only come to the painful realization that that which they dismiss could have saved them from bankruptcy. No one is buying protein. They want it, they’ll even demand more flavors, but no one is buying it. People want preworkout powders, natural muscle boosters, and BCAA’s. Even aminos are undergoing a massive battle between BCAA’s and EAA’s. The fact is, many companies are taking protein supplements off their catalogs, as consumers are opting for cheaper, more readily accessible brands at Walmart, Target, and local supermarkets. Amazon is also making a killing – as it’s doing on pretty much every front.

The failure of protein has many factors. For starters, weight and volume. In terms of size, protein needs to be in expensive tubs, which present issues for shipping. Whereas pre’s and aminos usually ship in 300g tubs (or smaller), protein typically ships in 2lbs ones or bigger. The cost of shipping can be astronomical. The tubs also require a substantial investment and in today’s ever-competitive market, generic tubs will not suffice. Consumers want to be feel special at every turn; the more unique the tub, the better! The problem is – unique’s expensive. Another factor that cannot be denied is the cost of whey. Whey is a highly sought-after commodity whose prices vary depending on industry conditions. There have been times when the price of whey is so high that companies operate at a loss. It’s bad business to change prices often and many times when a company is out, they find themselves having to order when protein prices are high. They simply can’t leave customers hanging. On the one hand, it can be good PR to run out of a hot product, but protein is typically not in the “hot new releases” category. If a company runs out of protein powder – a staple in any arsenal – it starts to look like amateur hour. The last thing a company wants is for consumers to be nervous about ordering from it. It’s just a lose, lose for the companies. There’s one more losing issue.

Typically supplement companies have minimum orders for protein powder. Many manufacturers won’t pick up the phone for less than their minimum order. The reason for this, is because private label companies would prefer not to be nickel and dimed, especially when they don’t need to be. Companies selling to retailers, on the other hand, are subject to industry prices, minimum purchase amounts, and then have a very high likelihood of watching their product expire before their very eyes. Oh, that’s yet another issue! Once protein expires, it can’t be re-sold. This creates even more issues for companies looking to be able to eek out a living.

In the end, there are a series of external factors at play. It’s no longer just competition, but now everyone has supplements. It’s gotten to a point where Walmart could have anywhere from 8-12 different protein companies all sharing shelf space. Among those numerous brands, each one may have 2-3 different protein types, with each type having 1-2 flavors. Additionally, now companies like Walmart, are bringing out their own store-brand (Equate) products to further drive prices further down. The companies who initially saw dollar signs by releasing cheaper versions and/or dropping their prices altogether to sell at Wally World, now find themselves in a really tough bind. No one can compete with Walmart and ultimately no one can compete with Amazon – not even Walmart.

Supplement companies who have been around a long time, can survive as specialty brands; however basic products like whey protein and creatine, are losing ventures. Fewer and fewer small to medium sized companies are taking the plunge. Large and giant corporations who have the ability to sustain major losses, may continue the grueling process a bit longer, if even just to keep appearances, but the protein market as we know it, is on life support. I don’t see it coming back any time soon. Then again – you never know. If and when the market comes back, companies will scramble to meet the demand. Then again… what if the demand isn’t real?

As always, I hope you enjoyed reading this article, here at Iron Magazine. Please leave your comment(s) wherever you may see this article.

 

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