Are Investors Starting to See Dietary Supplement Dollar Signs?

Product

  • Is it Proprietary? — for something to yield the returns that major investors seek, they need to have confidence that it can’t be easily copied by competitors quickly. With recent trends in transparent labeling, this creates less ability to create “special formulas” due to the market’s increased negative perception.
  • Shortened Brand and Product Life Cycles — many of the most popular dietary supplement categories have become saturated and noisy, thus causing a more fickle consumer base. This is because the noise creates an environment where consumers see many variations of substitutes that draw them into switching. This hurts the longevity of the brand and/or product, due to emerging trends changing the purchase criteria.
  • High Customer Acquisition Costs (CAC) and Low Lifetime Customer Value (LCV) — this is another problem that occurs with more saturation and noise in a competitive landscape. To attract more buyers, you have to drive up costs associated with the purchase funnel. After getting a purchase, the noise can create a recycle for the buyer to reassess the purchasing decision, which can create less loyalty even if the buyer is pleased with the product.
  • Is Category is Easily “Amazoned”? — if you pay attention to my content you know that it’s well documented that the dietary supplement category is high on Amazon’s list of private label and exclusive brand creation.

Founder and Leadership Team

Corporate Assets or Processes

Market

  1. Incumbents (legacy brands) are struggling because they don’t have direct relationship with their customers. They are not able to meet the fragmenting market demands.
  2. As stated above, the VMS category of CPG is growing in the high single-digits compounded annually. That means the market can be expandable and those solutions can be offered with fragmentation in mind to disrupt legacy brands.
  3. Gross margins have always been strong in this CPG category, but net margin pressure is strong in most cases due to over-saturation in the many parts of the market

…but could that be starting to change?

Why WILL this Continue to Change?

  • Product category lines are blurring with new consumers looking for “better for you” and “healthier for you” options, which demands larger CPG companies to fill their portfolio gaps with market-vetted businesses.
  • Personalized Nutrition (1.0 and soon 2.0) is going to need major investment for it to become a reality. The entrepreneurs and businesses looking to solve this disruptive shift in consumer innovation will see money flowing their way.

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Joshua Schall, MBA

Joshua Schall, MBA

Functional CPG Business Strategist | Entrepreneurial Ideation to Commercialization Expert | Early-Stage Investor | Futurist | Sports Stat Nerd |