The consumer health industry is expected to finish 2023 in an improved position compared to the inflation-influenced doldrums of 2022, though industry gains in 2023 look to be muted and inconsistent across geographies and categories.
Though inflation has tapered measurably in 2023 compared to the global peak in mid-2022, it continues to influence consumer purchasing patterns and company planning
Source: Euromonitor International
Faced with macroeconomic pressures and dwindling concerns about the global pandemic, consumers have scaled back on categories that surged at the height of the pandemic like many products in vitamins and dietary supplements. Conversely, OTC categories like cough and cold remedies and paediatric consumer health continue to perform well in 2023, bookended by an extreme 2022-2023 cold and flu season and expectations of another severe season to end the calendar year.
Underneath the dynamics of 2023, consumer trends are pointing the way for industry growth, absent the overhang of the pandemic. These trends offer the promise of a resurgence of broad growth for the industry, as innovations and consumer demands are not present just in the categories seeing strength in 2023, with green shoots visible across consumer health.
Multifunctionality a response to consumer feedback about pill fatigue, efficacy and pricing
Consumers, looking to pare back spending and increasingly perceiving health in a more holistic manner, are searching for products that are efficacious and can efficiently meet their needs without numerous pills
Source: Euromonitor International
As a result, formulators have introduced new blends that combine multiple need-states, while enterprising marketers have repositioned existing products to include messaging around popular benefits.
This approach can be seen across dietary supplements but is occurring most around lifestyle needs that have considerable overlap to begin with. Mental health, cognitive health, sleep, digestive health, beauty, immunity, inflammation, energy support, and weight management positionings, among others, are increasingly combined as a tool to attract consumers looking for their version of a “magic pill” that can help them address multiple considerations.
Weight loss drugs present a risk and an opportunity for consumer health
The rise of prescription weight loss drugs dominated conversations in healthcare generally in 2023; users have seen immediate and dramatic benefits in the form of double-digit percentage weight loss results after just weeks or months using the drugs.
Despite severe shortages due to exploding demand and extreme costs, low-end expectations estimate millions of consumers in dozens of countries using weight loss drugs in 2024
Source: Euromonitor International
These drugs put the growth of hundreds of fmcg products at risk, not least the class of weight management and wellbeing products that have a long-standing history of helping consumers with these same considerations. However, initial results support a more nuanced story that likely diminishes the growth of weight management and wellbeing over the near term, but also opens the door for companies to adapt to meet the needs of these consumers at strategic times when they cycle out of using these products, for instance as they consider softer interventions to maintain their weight goals while not engaging for a time with the more serious interventions.
Acquisitions in 2023 presage another year of slow M&A activity
Under the threat of worsening macroeconomic conditions, acquisitions in consumer health slowed considerably in 2022 after a post-COVID-19 surge in 2021. If anything, that pace has continued to decelerate in the first nine months of 2023 as the industry is riding out this period of economic uncertainty and waiting for the next wave of trends to become apparent, hopefully as soon as 2024.
The large consumer health multinationals are still largely absent on this front, with Johnson & Johnson/Kenvue, Haleon, Bayer and Sanofi all selling off long-tail brands in 2023. Of these companies, only Sanofi added brands to its portfolio through acquisition with its July purchase of the prominent American dietary supplement brand, Qunol. As each of these companies are currently undergoing serious restructuring, it is likely that their acquisition strategies will remain muted in 2024.
Sports nutrition to sustain growth by integrating health benefits
Sports nutrition is, by far, the fastest-growing consumer health category globally over any historic interval by sustaining the interest of core consumers while also adroitly marketing to lifestyle consumers and formulating products that fit their active-nutrition considerations (presenting on-the-go and snacking options, lowering protein content, softening the marketing and design to attract a wider base of consumers).
Rather than losing these consumers or sacrificing the loyalty of core adherents, sports nutrition is looking at a future where the industry can build upon these gains, by integrating health benefits that consumers are looking for in addition to the core considerations of muscle-building, strength, endurance and recovery. Enterprising formulations increasingly include positioning around bone and joint health, healthy ageing more generally, digestive health, immunity, sleep and relaxation, and others.
Beauty-from-within supplements, dominant in Asia, expanding steadily globally
Led by both beauty companies looking to extend into ingestibles and supplements companies searching for an aesthetic approach to attract younger consumers, beauty-from-within has emerged post-pandemic as one of the fastest-growing positionings within vitamins and dietary supplements. The market is still overwhelmingly led by Asia Pacific, where consumers have gravitated towards products marketed around skin whitening and radiance, moisturising and anti-ageing properties in markets like China, Japan and South Korea.
As these products expand globally, they are included in comprehensive, holistic supplement formulations, conversations about healthy ageing, and strategies for inclusivity and personalisation. Formulations are also increasingly prevalent around narrower beauty considerations like hair, skin and nail health, gut health and the gut-skin axis, and customised options by age, environmental stressors and other factors.
For further insight, you can find Euromonitor’s World Market for Consumer Health report here.