Supplement Brands Disrupt the Market When Leaving their Roots

by Matt Weik

Supplement brands across the US are looking for ways to increase their business. While the gyms and the specialty sports nutrition retailers are plentiful, there’s always room to grow. Many brands are turning to c-store in order to create a new channel for their growth. They might think this is a good idea, however, sometimes it comes back to bite them in the butt. Do I think it’s a smart move? Yes and no. Let me explain.

Crushing your existing retailers

As some of you know, I worked with a large supplement manufacturer for nearly a decade. I’ve seen many changes—some of which killed the specialty channel that I was a part of.

When brands decide to take existing products, and move them into other markets it can completely disrupt all of the other channels. If any of you remember EAS, they were a huge brand owned by Abbott Nutrition and had huge sales in the specialty sports nutrition channel. They then decided to go mass market in order to grow, and just about all of their specialty retailer dropped them for turning into sell-outs. They forgot about who actually helped them build their business and who supported them from day one by bringing in their product line.

While many brands are still entering FDM (food, drug, and mass) markets, it leaves a bad taste in the mouths of current retailers. The buying power of these types of businesses is enormous compared to specialty sports nutrition retail stores, and because of this the FDM retailers demand better pricing—which they get. Understand why sports nutrition stores drop these brands?

Let’s say you go to the gym and purchase a MET-Rx Big 100 Colossal bar for $3.00 (or more). If you drove home and on your way stopped by the grocery store, you could generally purchase that exact bar for under that price and could even find them on sale 2 for $4.00. See where I’m going with this?

Sports nutrition retailers want to carry products where they don’t need to compete with grocery stores, convenience stores, wholesalers, etc. And I can’t blame them for wanting to drop lines who forget about the little guys who actually create the demand in the market.

Supplementing with some “C”

Just like the above where we discussed FDM and how it hurts the little guys who were the first to support these supplement brands, now these same brands are looking to move more into the c-store (convenience store) side of the business.

Unfortunately, the same result is going to happen from specialty sports nutrition retailers. Their loyalty to brands will further be broken and eventually brands will be phased out little by little and these retailers will only cherry pick from the line on items they know will sell or that won’t compete in other markets.

Glanbia Performance Nutrition seems like the next major player to be entering the c-store space. Their director of sales made a comment saying, “We’ve traditionally only had our products in GNC, Vitamin Shoppe, and gyms. The health and wellness trend, which is now mainstream…[yet] the consumer really wants both snacks and drinks in a grab-and-go, very convenient format.”

That is true, but in my opinion there needs to be clear separation of church and state when it comes to products. If a brand has a 100g bar, then come out with a specific 50g bar for FDM and c-store. Glanbia has already launched in 1,200 Speedway gas stations with their new Optimum Nutrition Cake Bites. I’m not going to lie, these bite-sized bars are very tasty, but I can’t help but be disappointed that, they too, are hurting the retailers who were first to support them and bring in these new products. Now, they are going into c-store and will probably sell to that channel cheaper than the specialty sports nutrition channel.

In addition, Glanbia is planning on releasing other Optimum Nutrition products into c-store as well as products from their other brands such as BSN and Isopure. Some of these products include: Optimum Nutrition Amino Energy RTD, BSN Endorush Energy Drink RTD, and their Isopure RTD.

One thing to note (which is appreciated), is the fact that Isopure isn’t giving up on their current retailers. In gyms and specialty supplement stores, you can purchase Isopure RTDs in a 20-ounce bottle. For the c-store (and FDM) market they will take the same existing flavors and turn them into a smaller 12-ounce bottle.

“It’s not just for fitness-minded individuals…”

You should already be seeing a roll out from Glanbia in c-store locations across the globe, as they forecasted to push heavily in Q4 and have marketing in place come early 2018 to help c-store retailers know “who they are.”

One thing to mention is that Glanbia did research and found that blue collared workers are using c-store locations to pick up products that not only provide them good nutrition, but can help energize them so they can perform out on the job. Glanbia felt it was a perfect fit to enter the space with some of their products. Their goal is to reach more than just the sports nutrition demographic of users, and become more of a household recognizable name.

How will this turn out? We’ll just have to wait for Q1 reports to come out, I guess? But, if Glanbia and some other brands can stick to their word about only bringing new sizes (of products) to these markets, it could yield some pretty high revenues early in the year while testing the waters. But, the key point here is product differentiation. Not taking one product from an existing market and plopping it down into a new market. Will some users convert to the new sizes out of convenience and nutritional breakdown? Probably. But, the bulk of the business should still hold steady with the existing sizes and flavors.

Source:

Nutraingredients-usa.com. “Expanding to Convenience Stores, Glanbia Performance Nutrition Ramps up Grab-and-Go Sports Nutrition Portfolio.” Nutraingredients-Usa.com, 19 Oct. 2017.

HUMANOGEN!

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