We pose this question about supplement brand relevance in the middle of a pandemic—at a time when sales of supplements are at all-time highs, and the issues for many companies center on maintaining inventory and protecting the supply chain rather than worrying about sales. In truth, supplements as a whole have never enjoyed such relevance as they do today. But that relevance has to be shared with more than 6,000 companies producing about 75,000 supplement products, boasting revenues of more than $50 billion in the United States.
Maintaining a brand’s relevance in the supplement industry is always a key to long-term success, and it is an ongoing process. In fact, brands that have enjoyed success over a long period of time are probably more susceptible to losing relevance than ever before. A brand’s long history can be both a blessing and a curse. These legacy brands can emotionally leverage their authenticity, or they can feel out of touch with the times.
When it comes to relevance, the legacy brands need to ask themselves tough questions. During the past three or four decades, these established brands have benefited from increased consumer interest in health and wellness, as well as the supplement category’s enviable sales growth. They have prospered in a market that has become increasingly crowded. Consider the fact that in the 1970s, there were only a handful of supplement and herbal supplement brands; today, there more than 6,000.
Because of this dramatic proliferation of supplements, many legacy brands are struggling to maintain their market share even during the COVID-19 pandemic. This challenge can be attributed to unexpected competition or a dramatic change in market forces. New and exciting herbal and dietary supplement brands are gaining attention, and many are launching as digitally native, direct-to-consumer brands. In addition, CBD has altered the supplement landscape, and Amazon continues to flex its muscle. Older brands are not as nimble as younger brands for reasons like internal bureaucracy. Whatever the cause may be, the result is often a decrease in sales or a replacement on the shelf by new, disruptive supplement brands.
The Legacy Supplement Brand Space
There are many ways to categorize legacy supplement brands. For the purpose of this article, we place them into three categories: the Coasters, the Superstars and the Middle.
The Coasters: Some legacy brands are coasting. They have established their formula for success. They feature a few stellar products but have not focused much on innovation for decades. And more power to them! They are not looking for anything other than profitability.
The Superstars: These high achievers embrace it all: new products, new channels and full engagement. If they are not the first to market with a new supplement, give them time—pretty soon they will be leading through innovation. They are not afraid to spend money to make money. They are the “named competitor” that always comes up in the conversation. They take branding seriously. They conduct market research, protect their intellectual property, and dominate. It’s not that they don’t have challenges. They live in a high-pressure environment. Some are publicly held and have the added pressure of serving their shareholders. When they make mistakes (and they do), no one sheds any tears. They are not the bad guys; they are just the big guys who are aggressive in their expansion and protective of existing market share. When they can’t innovate internally, they actively look to acquire emerging brands.
The Middle: The majority of legacy supplement brands live somewhere in the middle. They have their superstar products that guarantee some shelf space. They have invested in producing quality supplements. They take the future seriously, knowing that new competition is always around the corner and that their success does not rely only on manufacturing quality products backed by good science. They face the same regulatory hurdles that everyone in the supplement space does. And each one has challenges specific to its brand. How they address those challenges is often the difference between being an also-ran to being a relevant brand—one that competes head-on with both the high achievers and the new brand or product du jour.
In addition to relevance, there are several challenges common to legacy supplement brands: flat revenue growth, loss of direction, lack of differentiation, confirmation bias and founder syndrome.
Diminishing relevance happens slowly and quietly. Then, one day a brand wakes up to realize that it has lost its relevance in the market. This can manifest itself in several ways:
• The consumer is aging out. If the company conducts market research, it realizes that its customer base is becoming older and may be aging out. Yes, they are loyal, and sales may not be suffering yet, but the younger supplement user is going elsewhere. This is puzzling to the brand because its products are still relevant to the needs of the consumer.
• Shelf space is decreasing. Another manifestation of this dynamic appears when retailers begin challenging the brand’s shelf space. A legacy brand with a perceived lack of relevance finds itself not only competing against other brands, but retailers may also begin questioning whether this legacy brand adds value to their shelf or simply competes against their more profitable private-label brands.
Flat Revenue Growth
Numbers don’t lie. But when flat revenue growth confronts a legacy brand, the justifications abound: The category is flat. The media is hammering the supplement category with negative press. Sales are down because larger legacy brands acquired by multinational CPGs provide free fills and outspend all others on consumer marketing to drive awareness and purchase. Sell-through and support from the conventional FDMC channel that was entered the year before has been less than stellar, resulting in a bad year-over-year comparison.
Some legacy brands are fine with flat sales growth as long as their profit margins remain healthy. Others offset unit sales declines with price increases. However, we have observed that flat revenue growth is the canary in the coal mine. It often has less to do with actual sales and more to do with future perception of the brand (see the Relevance section). Frequently, it indicates a corporate culture that lacks passion and urgency.
Loss of Direction
Most of the legacy brands we know began with a purpose. A company’s founder has a compelling story that leads to the company’s creation, such as a personal or family health crisis that they have overcome. Often, they rally against a villain—such as the conventional medical system—and they want to offer a better alternative.
Then the company grows. People come and go. Expansion for its own sake becomes the driving force.
Whatever the case may be, one day the brand looks at itself and does not know why it exists, other than making and selling supplements. What was once a place where everyone felt a deep sense of purpose is now merely a job.
Lack of Differentiation
Being first has great advantages, but how long can this advantage last? Success breeds imitators. It is a common story in our space: A leading legacy brand will develop innovative messaging, product nomenclature, or a unique set of reasons to believe. For several years, they drive home this messaging with great success. Then they notice that their competitors have started copying them.
Features and benefits are essential for product differentiation, but in the supplement space, a successful product and brand will quickly find imitators. From echinacea to omega-3s to collagen to curcumin, and now to CBD, the consumer looks to the brand name rather than features when they believe everything else is equal. You can’t rely on brand differentiation in the supplement space through science alone.
The truth is that most supplement brands share more traits with one another than create their own distinct ones. We often ask brands a series of questions:
• Does your brand lead with science?
• Does your brand’s technology/science differentiate it from the competition?
• Is your solution the best when compared with similar solutions offered by the competition?
• Do you have a commitment to producing the highest-quality supplements?
• Are you a mission-driven company?
The more a brand answers “yes,” the less differentiated it is. And the more it answers “no,” the less impressive the brand is. The vast majority of legacy supplement brands would say yes to almost all of these questions. Differentiation in this space is not easy—especially if you are competing as a premium brand that maintains the highest standards.
We have found that legacy brands are more susceptible to confirmation bias than their newer competitors. Confirmation bias occurs when people look for data, instances or anecdotal experiences that confirm their preexisting beliefs. Legacy brands often have executives who fall into well-grooved patterns that guide their decision-making.
Additionally, in an effort to gain fresh perspective, legacy brands bring in new people from other industries. These new players often start to equate their experience, and that of their friends, with how “all” people view supplements. Or, they apply the norms and best practices of their previous industry to the supplement space.
Confirmation bias is the enemy of legacy brands. It prevents them from seeing new trends. Depending on the corporate structure (top down or bottom up), it stifles new ideas. Additionally, it encourages closed corporate cultures by rewarding those who buy into groupthink.
Most founders of successful legacy supplement brands have a powerful vision. These founders invest their lives in their companies, and their brands are an extension of who they are. They often find it hard to disassociate their experiences with what consumers are looking for in a brand, and this “founder’s syndrome” can be a challenge for the brand’s growth.
Over the past decade, many founders of legacy brands have reached their 60s and 70s or older. They are retiring, selling their brands, focusing on specific areas of their companies that drive their passion, or making a clean break and exiting completely. Companies that relied on their founder’s personality as part of their branding now have to adjust to life beyond the founder. And this is not a simple process. It requires careful and conscious attention to how the brand needs to evolve with a renewed sense of purpose and core beliefs.
Certainty vs. Uncertainty
A legacy brand that is facing one or more of these challenges needs to do something to change its trajectory. This often means looking at itself truthfully, which can be painful. In fact, when we think of the term “legacy,” by definition it exists because of things that happened at an earlier time. Thus, a legacy brand is beholden to the past.
That past includes not only breakthroughs and heroic tales but also sales history, expensive corporate infrastructure, needs of investors and/or shareholders, and livelihoods of employees.
In other words, the needs and wants of legacy brand stakeholders are quite different from the needs of emerging brand stakeholders. This impacts how a legacy brand approaches change and figures out how to reinvigorate their brand.
Often, we find that legacy supplement brands are caught in a balancing act between taking or mitigating risks. The first priority of most legacy brands is to protect their assets rather than disrupt the market. This does not mean that a brand reinvigoration for a legacy company can’t be bold. In fact, it often calls for more courage than that of a startup: What brand equity does a startup have to lose? With a legacy brand, going in the wrong direction can have disastrous results.
Many legacy supplement companies come to us knowing they need a rebrand—and it has to happen now. They have identified the challenges, and they know they need an authentic differentiation. They are anxious to take bold action.
Next, they ask, “How quickly can you do repackaging? How quickly can you redo the website? When can we launch new products?” There is urgency. Key stakeholders are applying pressure, and the market is changing quickly.
The question we ask is, “How certain are you that rebranding is the right way to go?” Remember, a legacy brand has many stakeholders who are more concerned about protecting their interests than are willing to take a chance on swinging wildly for the fences.
Many processes can lead a brand down a path of greater certainty, but two critical elements cannot be skipped. The first is performing due diligence during the discovery process: conducting in-depth interviews with key stakeholders, reviewing any and all market data, and assessing the key opportunities. The second is consumer market research and testing.
One supplement brand we know held strong beliefs about what was right and wrong. Internally they “walked the talk,” but they worried that they were too adamant or activist for consumers. Even though they knew who they were, they were timid about presenting themselves that way to the public. Wisely, they fielded market research and tested positioning platforms. Much to their surprise and delight, they discovered that their key consumers wanted them to be more of an activist brand. Without this information, they would not have had the strength of conviction to go forward boldly and with a high degree of certainty. Not only did they hold onto their leadership position, but they also distanced themselves from the competition.
Had they acted too quickly before obtaining the research, they would have launched a watered-down version of themselves. In fact, they would have lost the opportunity to be relevant.
In the end, supplement brand relevance is associated with many qualities, including efficacy, alignment with values, authenticity and market perception. In a normal business climate, flat sales and loss of shelf space would alert brands to a lack of relevance. But today, all supplement brands should be enjoying hearty sales, so the signs are not as clear. That will change post-COVID-19, and there inevitably will be a fallout. Some dinosaurs will fade away, and only those brands deemed relevant will succeed. NIE
Yadim Medore, founder & CEO of Pure Branding, has led business-transforming research and strategy for dozens of leading dietary supplement brands including Gaia Herbs, which led to 3x growth in four years; MegaFood, which helped double sales in two years and led to acquisition by Pharmavite; and the digitally-native personalized nutrition brand Persona which was acquired by Nestlé Health Science in August 2019. Pure Branding’s Supplement Brand Accelerator is a quick, cost-effective and predictive custom research tool designed to fuel growth for both legacy and emerging dietary supplement brands. More information at: www.purebranding.com/accelerator.