SUPPLEMENTAL HEALTH COVERAGE

MARYELLEN LO BOSCO

With consumer trends toward healthier lifestyles, proper diet and fresh foods increasing, it's only a logical and natural move for grocery retailers to take full advantage of the growth nutritional and dietary supplements offer.

For consumers demanding healthy foods and natural products, herbals and nutritional supplements are a natural extension of the business, noted Grant MacLean, director of general merchandise and health and beauty care at Rosauers Supermarkets, Spokane, Wash.

Most nonfood executives would agree it makes sense to capitalize on the synergy supplements can bring to grocery merchandising. Yet, the reality is that for many chains the health supplement category, which includes vitamins, minerals, herbals, homeopathic remedies and nutritional drinks, is in a state of flux.

Retailers are currently reassessing their stocks, as well as their purchasing decisions and marketing strategies, according to an SN survey of executives.

A source at Fleming Cos., Oklahoma City, a distributor that sells to some 3,500 stores nationwide, explained that the entire category of vitamins and nutritional supplements is currently under review. "If you look at the General Nutrition Centers and national health stores, that's where the growth is," the source said. "It starts there and carries over into the drug and food chains. By making them available in the food chain, we can offer them a lot cheaper," he said, referring to herbals and homeopathic remedies as well as vitamins.

Vitamins are still the staple of the health supplement category, according to the source at Fleming, with national vitamin brands and multivitamins accounting for the lion's share of sales.

"Multivitamins are still a large percent of the category," agreed Steve Lauder, category manager at Supervalu, Minneapolis, the second-largest food wholesaler in the United States.

Vitamin C, vitamin E and vitamin A are also popular and have become more so, in recent years, since they are now touted as antioxidants. Vitamins, and some herbals, usually fill from 8 to 12 feet of shelving in a typical store, Lauder explained.

According to statistics from Chicago-based Information Resources Inc., vitamins generated $486 million in sales in food stores for the 52-week period ended June 16, 1996. Sales of vitamins in food stores were up 9.1% for that period. Food stores have 24% of the vitamin market.

Many supermarkets, such as Food Giant Supermarkets, Sikeston, Mo., still carry only vitamins and minerals, and not homeopathic remedies, herbals or nutritional supplements. HBC Director Tom Schmutz said he has 4- and 8-foot sections in his stores. At Jons Markets, Los Angeles, for example, low-income customers will buy only basic vitamins, said Wanda Lovelace, general merchandise buyer.

While vitamins and minerals continue to be the staple and profitable items for HBC managers, herbals and nutritional supplements (drinks that take the place of meals) are much faster-growing categories. "Herbal supplements are up 33% in dollars and 30% in units, according to data from IRI," Lauder said.

Supervalu distributes the most popular herbs, which are ginseng, echinacea, garlic, ginko biloba, saw palmetto and goldenseal. "Some of our stores will carry these products; some will carry none," explained Lauder. "It really depends on the store."

Echinacea and goldenseal, which strengthen the body's natural immunity, are very popular during the cough-and-cold season. Saw palmetto is taken to enhance prostate health, while ginseng is often considered to be an energy-booster.

"We're encouraging our stores to be aggressive [with herbals]," Lauder commented. "In the majority of proposed planograms, we use top herbals as part of the shelf sets." According to Lauder, the stores that follow Supervalu's advice are seeing these products move.

Maui, Hawaii-based Sunsource International, already successful in bringing herbs and homeopathic remedies to the general public, will ship a nationally advertised, mass-market echinacea product, called Echinex, in October. "Food is underdeveloped because many food chains have given up with effectively competing," said Preston Zoller, marketing director for Sunsource. Stores that continue to market herbs, homeopathic remedies and nutritional supplements are getting good margins, Zoller said.

Sunsource does a lot of national advertising of its branded products. "A brand is helpful to the food store, because if you have limited shelf space you want to carry products that have the highest recognition," Zoller said. The company has done well with its Melatonex brand (a melatonin supplement), for example, and is hoping for similar results with Echinex.

Jerry Golub, a health and beauty director for Schenectady, N.Y.-based Price Chopper, which has stores in upstate New York, Massachusetts, Vermont and Pennsylvania, said the chain has been "experimenting" with herbals. "We're finding that a few items are the best movers, while others are fairly weak, but we need to carry them to convey to customers that we're in the business."

According to MacLean, Rosauers stocks only a limited selection of herbals at the moment.

"The customers know more about them than I do," admitted MacLean. "I'm learning more about the category and looking at putting in an additional section called 'supplements' and carrying more natural remedies. Most pharmacists think it's next to quackery, but they have been awakened by consumer demand. Those who study it come away believers."

Retailers say there is an information gap at them moment.

Price Chopper's Golub said retailers and consumers need to learn more about homeopathics and herbals. "We provide some basic information at the point of purchase, but it's a difficult category because it's not regulated by the Food and Drug Administration. Bill West, director of nonfood at Seaway Food Town, Maumee, Ohio, thought consumers are being educated about the more esoteric items through television and other media. "I think [manufacturers] are doing a good job telling people what they need to know. That's what's driving us to put in more products."

West promotes vitamins and herbals with prepack displays, towers and price-offs during certain times of the year, such as back-to-school, spring and the flu season. Seaway contains a 16-foot vitamin set that includes Sunsource products and other herbals.

Retailers SN surveyed say adult nutritional meal supplements are a booming category in supermarkets.

Brian Johnson, product manager at Sandoz Nutrition, Fremont, Mich., said its nutritional beverage, Resource, has its strongest showing in the supermarket.

"We've targeted the 55-and-over consumer, and that's the fastest-growing consumer market right now," he said. Products like Resource are aimed at the healthy, active adult who finds it difficult to eat three or four meals each day, or at people who have been sick and need a nutritional supplement in addition to regular meals.

Golub at Price Chopper agreed that nutritional supplements are a fast-growing category with lots of potential for the future as the population grows older.

''The adult drink category has grown by leaps and bounds, outselling Slim Fast and the diet powders, so we decided it needed its own section," explained Rosauers' MacLean.

Nevertheless, "there's more money in vitamins," added MacLean. "Nutritionals are not a real profitable category. They [various manufacturers] are very competitive price-wise, and there's lots of volume, but not bottom line."