On 7/8/2020, I was included as an expert panelist on a NutraIngredients-USA webinar titled Sports Nutrition and COVID-19: Adapting, Navigating, & Bracing for the Aftermath. I was joined by Aaron Singerman, Shawn Arent, Michelle Arent, and hosted by Danielle Masterson. This webinar was live, but an on-demand option is available through the NutraIngredients-USA website for free. Because of it being live, the webinar was unscripted and unedited, but we were given a handful of questions and general topics that could be asked during the 60-minute discussion.
Knowing that the sports nutrition industry is flush of uncertainty stemming from COVID-19, I thought it would be valuable to my community if I provided answers to all the potential webinar questions, even if they weren’t directly inside of my wheelhouse…
What segments in sports nutrition are struggling and who is doing well?
There is many ways to consider this question, but I feel its easiest to break it into three segments;
Product Categories — the best performers were sports nutrition brands that had offerings in areas, such as general health and wellness, immune support, and protein (or protein-added foods/beverages). Alternatively, the worst performers were sports nutrition brands that had offerings in areas that were tied to use occasions around the traditional gym routine, such as pre-workout, intra-workout, and post-workout. Also, any products that would be considered a “want” over a “need” in a consumer’s supplement regimen, as wallets tightened over recessionary risk indicators.
Retail Distribution Points — the best performers were sports nutrition brands that sell in sales channels, such as mass retailers, grocery stores, club stores, drugstores, dollar stores and digital (both in direct-to-consumer and marketplaces). Alternatively, the worst performers were sports nutrition brands that sell in sales channels, such as convenience stores and specialty retailers (both small and big…regardless of them being deemed “essential” during restricted living situations)
Relationship with Customers — the best performing brands were the ones that currently hold special places in consumers’ lives. Alternatively, the worst performing brands were the ones that consumers consider only transactionally or offering commodity products. (Note: the exception to this would be product categories in the highest demand)
What has been the most challenging part of adapting to running a company in the midst of a pandemic?
Since I don’t own my own sports nutrition brand, I can only answer this question through the collection of clients that I’ve worked with at J. Schall Consulting throughout the coronavirus pandemic. That being said, I have seen the following problems mostly commonly with my sports nutrition brand clients;
- Incomplete data from changing market variables causing decision delay
- Leading a hybrid or remote workforce through new tools
- Preservation and reallocation of capital resources
- Adjusting go-to-market plans of in-process product launches
Is there any key trends or innovations happening now?
My theory is that nothing has happened during COVID-19 that is actually new (that would be materially noticeable today)…it simply amplified already in-motion key trends. As an example…
- the massive increase in shopping behavior towards digital purchasing (either from pure-play retailers or initiated from omnichannel retailers) was already happening
- the further dissemination of sports nutrition merchandising and buying power shifting away from just specialty retailers was already happening
- the increase in esports/gaming and legitimacy of that ecosystem being a way to monetize yourself, thus creating a desire to gain an edge in training, diet, and sports nutrition product usage was already happening
…and I could go on and on…
With no in-person FDA inspections, is the industry self-policing?
Due to low barriers of entry, the sports nutrition industry is very large in its scope. Additionally, the FDA is not funded to the level of current market size. Reality is, that creates an environment where bad actors can operate and it doesn’t have anything to do with the operating changes at the FDA during the coronavirus pandemic. The majority of the industry is honest and that part will continue to function by the unwritten code of business ethics.
Are brands still incorporating new innovation to stand out in crowded field?
I believe there’s always a premium placed on true market-validated innovation, but sports nutrition brands need to ask themselves if the current risk:reward profile is conducive for radical innovations. There are many levels of innovation from iterative to radical and those can be done in all areas of your business, not just product. Right now, brands must understand what level and how much innovation is proper for their personal situation given the market uncertainty.
Which sports nutrition buyers have been ignored throughout COVID-19?
I think there is a ton of value in isolating specific fragments in the sports nutrition market that are filled with passionate consumers that feel under-served by the current market offerings. In my opinion, there was one pocket of opportunity that became more apparent during COVID-19, and that’s with individuals working out at-home with Peleton or Mirror, stretch bands, and streaming high-intensity group fitness workouts. Though that activity in itself might not be extremely sticky after COVID-19, it will further strengthen the interest in gym concepts like F45 Training, Soul Cycle, and Orange Theory Fitness. If you think about the sports nutrition brands today, who is serving those customers in an authentic way?
Additionally, there has continually been a hugely ignored sports nutrition buyer group (even before COVID-19) and that’s with female consumers. There has been this history of “shrink it and pink it” in the sports nutrition industry because of the male-dominate brand decision makers. Frankly, that has held back the existing sports nutrition brands from not serving the unique needs of the mainstream holistic wellness female buyer that’s rushing into the market. What you’ve seen lately is more gender diversity with leadership and start-ups that are looking to disrupt the space from legacy sports nutrition brands. That will continue in the near-term, but there is massive opportunity for more new brand entrants.
R&D — is that on pause right now? Are labs closed?
Speaking from the brand perspective of sports nutrition product development, it has been business as usual with getting new projects through the commercialization steps. I think brands must consider new products by asking themselves “do I want this” or “do I need this” in my product assortment. Wants can wait. Needs should be pushed through despite the outside risks and threats.
What have been the biggest disruptions in your sports nutrition industry stake?
I pride myself on being a “see around the corner” strategic thinker, so I’m not sure there have been any huge disruptions with the way that I work with sports nutrition brand clients. That being said, I’ve seen a lot more clients looking at situations in a much more balanced way. Compared to January/February 2020, when everything was Goldilocks and you could throw a dart against the way and hit a winning plan of action, it was “press your luck” without considering any downside risks. The “COVID-19 Effect” punched a lot of sports nutrition brands in the face and made them value risk analysis and contingency planning, that was not being given the right weight in day to day business in the industry.
How are you advising your clients/athletes to do with staying in shape/being healthy?
Since I’m not in the business of advising clients or athletes on athletic performance or health/fitness goals, I will just answer this with what I experienced personally during the start of Texas’s restricted living in mid-March.
Initially, I was excited to try something new with working out at-home and performing cardio outside. I quickly realized that I didn’t like this style of training. It left my mind wondering and focusing on stresses from work. I decided to replace my gym time with working even more hours than my normally insane work schedule. That caused me to support my wellbeing mentally with treats and eating poorly. As the gyms opened back up in Texas, I was able to get back into a routine again and have slowly adjusted my life back.
I’ve tried to focus on progress, not perfection in this part of my life…
Are sports resuming in the fall? What will that look like?
I really hope they resume because I’ve caught myself watching an increasing amount of everything from highlights of old sporting events to trick shots from Instagrammers way more than I would like to admit. Also, sports are a community building distraction that I believe would be very helpful to Americans right now.
Is Nutrigenomics, using DNA to maximize athletic potential, coming?
While I’m not an expert on personalized nutrition, but I am extremely bullish on it radically disrupting the CPG industry (including sports nutrition market). Right now, we are extremely far away from having epigenetics, nutrigenomics, and the answers to larger questions of data privacy, technology systems, and mass customization manufacturing to achieve true personalized nutrition. If you are interested in more of my thoughts on personalized nutrition, check out this YouTube video that I did in October 2019.
What shifts in consumer behavior have you seen?
Before I answer this question, I think there’s a normal reaction when any human is going through extreme change that we tend to believe something will be a lot more pronounced or sticky than it actually turns out. The coronavirus pandemic has certainly provided a novel event (no pun intended) that sped up a lot of shifts in consumer behavior, but it’s important to be conscious of that potential bias. Additionally, that stickiness can become greater with the longer COVID-19 lingers on and creates havoc on the psyche of consumers.
When things go back to normal…whatever that means, will sports nutrition industry ever be the same? What will stick? What is just a phase?
I’ve always found myself gravitating towards the sports nutrition industry over the last decade plus because it never stays the same. I thrive in periods of change and chaos, so I’m excited about all the new challenges and opportunities that will come from COVID-19.
Things in the sports nutrition industry to consider after COVID-19;
- Further bifurcation of the industry (commodity vs. premium brand experience)
- E-commerce (primarily controlling your destiny on direct-to-consumer)
- Erosion of product categorical siloes