HYPE FOR THE PICKING

Chapin Clark

Remember DHEA?

That's short for dehydroepiandrosterone, an adrenal hormone and nutritional supplement said to slow the aging process, increase energy, build muscle mass, bolster the immune system, lower cholesterol levels and generally make one sharp as a tack.

Just last year, it was the talk of the show at the National Association of Chain Drug Stores Marketplace Conference in San Diego. It also began setting supermarket vitamin and supplement aisles on fire, thanks mainly to glowing reports in the print and broadcast media, and stores reported troubles in meeting consumer demand.

That was then, this is now.

Today, the focus has shifted from DHEA and its "wonder drug" predecessor, the antioxidant melatonin, to St. John's Wort, an herbal extract many believe to be a cure for mild depression; glucosamine, a natural treatment for arthritis; and herbal "phen/fen," a natural nondrug weight-loss alternative.

But despite the ephemerality of individual products, the nutritional supplement business continues to boom, as more Americans embrace alternative medicine and experiment with self-treatment.

And though they may rue the flashes in the pan, supermarket health and beauty care directors admit the high-margin segment has irresistible appeal.

"It's the vitamin of the month," said Ralph Blanchard, merchandising coordinator at Macey's, Sandy, Utah, in characterizing the volatility of the category. "And it always amazes me what [shoppers] will pay for this stuff."

"It's a big, growing category," said Denny Voight, nonfood buyer/merchandiser at Rosauers Supermarkets, Spokane, Wash.

"People are getting more and more conscious about their vitamins."

Karen Blakey, HBC buyer for Grand Rapids, Mich.-based Spartan Stores, agreed. "This trend will continue as do-it-yourself health continues to expand in the United States."

According to ACNielsen, Stamford, Conn., multioutlet sales of nutritional supplements -- including herbal products and vitamin-rich "energy drinks," but excluding vitamins themselves -- were $1.1 billion for the year ended March 29, a 29.2% increase from the prior year. Supermarkets accounted for $426.3 million (or 38.3%) of that total, with drug stores generating 35.1% and mass merchants 26.7%.

Growth, however, is a different story: Supplement sales in grocery expanded by 20.2%, in drug by 26.3% and in mass by a tremendous 49.7%.

Total multioutlet vitamin sales, according to Information Resources Inc., Chicago, were $2.3 billion for the 52 weeks ended Aug. 17, a 12.6% rise from the year before. At 12.7%, the growth in supermarket sales, totaling $557.6 million, slightly outpaces that of the category. Sales in mass -- $627.9 million -- grew at a rate of 27.1%.

Only in drug stores, which led with $1.1 billion in sales, but lagged with a 5.6% growth rate, have vitamins started to plateau.

The current heir to the legacy of melatonin and DHEA is St. John's Wort. It has been available for decades and has long been popular in Europe, where it is commonly prescribed by doctors. But only after a flurry of news reports extolling its benefits -- in Newsweek, for example, and on ABC's "20/20" -- did demand escalate here.

Rosauers' Voight has just ordered a St. John's Wort power panel, containing 36 units of 100-count bottles of capsules. A circular advertisement announced the herbal supplement's arrival.

"I've always been one to say, 'Hey, if it's new, let's get it in there.' What have you got to lose?" said Voight.

"It may be a good item for a long time. If it's an in-and-out item, fine. We'll discontinue an item as quickly as we bring it in."

That flexibility, Voight said, comes into play in advertising as well. He noted that a freestanding insert can be altered right up to the time of its press run to make room for a hot new product, or to eliminate an item that has received sudden negative media attention.

"You have to be Johnny-on-the-spot," said Blanchard. "We'll sell a new item on an in-aisle display really quick, get out of it and then put it back on the shelves."

Vendors, he added, are quick to respond when a particular item takes off, providing displays and extra product. Discount Inc., Las Vegas, supplies Blanchard with five stockkeeping units, including St. John's Wort, shark cartilage and glucosamine.

According to Blanchard, "Whatever is hot, they're always on the phone within a day or so."

And because Discount's minimum orders are low, noted Blanchard, he doesn't have to worry about getting stuck with a lot of unsold merchandise.

"We haven't been burned badly on anything because we practice such tight inventory control," said Lynett McCoy, who buys liquid vitamin and mineral supplements for Minyard Food Stores, Coppell, Texas. Of the products McCoy buys, Minyard never carries more than four weeks' worth of supply at one time. "We do take a risk of running out of the product, but vendors have done a good job in getting us rush orders. It's in their interest as well to keep the shelves stocked."

"If it goes on television, you best make sure you have it in the store," said Verdie Henderson, an HBC buyer for Minyard, who admitted nonetheless that her store "didn't buy during the first wave" of media attention given herbal supplements.

Echinacea, saw palmetto and St. John's Wort, the first three additions to Minyard's vitamin set, shipped to stores at the end of September.

Henderson said Minyard's vitamins were reset chainwide in March to cut in a new, 86 SKU line of Hy Top brand private-label vitamins. The chain has a separate herbal/homeopathic section in the works.

"We've had a lot of new items that have been coming in, and it's really getting pretty crowded," said Henderson. "But if an item doesn't sell, we'll replace it with something we think will."

Ever on the minds of supermarket executives, space and its allotment weigh especially heavily on HBC directors considering whether to add items that may turn out to be unpopular, ineffectual or worse.

"Many of our conventional grocery stores are not interested in this segment," said Spartan Stores' Blakey, adding that they have only "a four-foot section devoted to vitamins and supplements, with one shelf dedicated to herbal remedies and miscellaneous supplements."

"Our stores vary so much in size that to jump right in isn't always an easy decision," said Art Awerkamp, HBC supervisor at Niemann Foods, Quincy, Ill. "You might have a 4-foot planogram with some proven items already in, so what goes out?

"You don't know if it's a fad or here to say."

Citing melatonin as one gamble that failed, Awerkamp said he wanted to see natural nutritional supplements develop more of a track record before he committed fully to the segment.

"We did [melatonin] in shippers, and the residue is still hanging around out there. We've got it on temporary price-reduction shelves, just trying to get rid of it."

And what of the efficacy of products like melatonin, DHEA and St. John's Wort? Do they actually do what manufacturers purport?

Herbal and homeopathic remedies are not regulated by the Food and Drug Administration, but by something called the Dietary Supplement Health & Education Act, which supposedly prevents manufacturers from advertising such products as cures for specific health problems.

This summer, the Center for Science in the Public Interest, Washington, recommended that the FDA classify herbals making therapeutic claims as either over-the-counter or prescription drugs, depending on whether they can be used safely without a doctor's supervision.

"It's a major concern that these supplements are not regulated [in the United States] when other countries, such as Germany, do regulate," said Blakey.

"The talk I've heard from people is that the promises [manufacturers] make on the bottles aren't 100% true," said Awerkamp. "That stuff is pretty much unregulated, and I think it's going to hit the fan soon."

Consumers' readiness to believe, however, may render the question of efficacy irrelevant.

"With all of these things, people try them, and if they don't have an immediate effect, they move on to something else," said Macey's Blanchard. "It seems like there are a lot more claims than actual effects."

He noted though, that "very rarely" has a customer returned such a purchase with a complaint. "I wonder if people think, 'I guess it just didn't work for me.' "