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A high level of new product introduction. Hundreds of new products are introduced into the nutraceuticals market each year. Costs for test launch are relatively low, retailers expect product innovation from brand providers and consumers in the category are constantly on the lookout for the next hot new product. Many of these product introductions fail, but there are breakthrough successes each year, making the continued effort worthwhile for both retailers and brand providers.
Boom/bust cycles. The supplement component of the nutraceuticals business has historically been subject to wide swings in consumer popularity and demand. While calmer waters are forecast for the future, the boom/bust nature of the industry has discouraged many of the larger food and pharmaceutical companies from participating seriously in the category. Thus, innovation in the nutraceuticals business tends to come from smaller, entrepreneurial operations with a higher tolerance for risk. Once successful, these small operations are often purchased by the larger food companies (e.g. PowerBar, Balance Bar, etc.). |
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