26 May International Trends
Trends that could impact on the SA complementary health food industry
1. The 80/20 principle
The USA, Japan, Western Europe, Australia, New Zealand and the old Asian tigers represent 80% of the world market in value sales but only 20% of the world population.
Prediction: As these markets mature and regulate, growth will decline
SA IMPACT: SA should benefit from growth/per capita consumption
2. The developing world
Growth will expand in the developing world especially in Russia, India, China and Latin America.
Prediction: Unless regulations are draconian, similar growth should occur in SA
SA IMPACT: SA only has 30 percent per capita consumption. Potentially very big
3. Ingredients becoming a commodity
As markets mature, many ingredients will become commodities, i.e. fish oils, primrose oils, vitamins, glucosamine etc
Prediction: This trend will drive prices down and more retailers will develop private label products.
SA IMPACT: Private label could become a major development, depending on the growing strength of the multiple chains
4. The growth of Private label
The branded private label will increase.
Prediction: This development will not be seen as the traditional private label because the new brand name of the private label will not appear to be linked to any particular retailer. In fact, the private label of the future will take on the appearance of a national Brand.
SA IMPACT:We are not selling washing powder. It’s a serious business . The consumer must feel that the private label is well researched and responsibly marketed.
5. The impact of RA
Regulatory activity will curtail product development and the markets will become more pharmaceutical.
Prediction:Manufacturing numbers will decrease
SA IMPACT: Contract manufacturing will be in the hands of a few companies. Imports are possible from overseas units
6. Product claims
Product claims will become more restrictive as is already evident in Europe.
Prediction:It will become more difficult to communicate with consumers in the normal retail environment and this will create opportunities for direct selling companies.
SA IMPACT: Advertising will have to be very clever. Social media may become critical in getting to the consumer in a cost-effective way manner
7. The increasing importance of GMP
Smaller companies without GMP access will have difficulties surviving.
Prediction: There will be far few manufacturing companies. most will be marketing companies
SA IMPACT: Many brands will be outsourced to contractors, which could weaken