Vitamins & Dietary Supplements Procurement Intelligence Report, 2024 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Vitamins & Dietary Supplements - Procurement Trends

“The trend for preventive healthcare and personalized nutrition and a rise in demand for immunity-boosting products following the COVID-19 pandemic are fueling the industry growth.”

Procurement of vitamins & dietary supplements has gained prominence on the back of the rising footfall of nutraceuticals, probiotic supplements and personal care products. The global market is anticipated to grow at a CAGR of 8.5% from 2024 to 2030. This growth can be attributed to the rising focus on preventive healthcare and personalized nutrition, an increase in the geriatric population, and a surge in demand for immunity-boosting products post the COVID-19 pandemic. Meanwhile, an increased need for governmental intervention, the threat of counterfeit supplements, and distrust of consumers regarding safety and effectiveness have challenged supply chain leaders.

Vitamins & dietary supplements have end-use applications in pharmaceuticals, nutraceuticals, feed products, foods and beverages, and personal care products. These products contain dietary ingredients that are required to supplement the diet, such as vitamin subtypes (A, B, C, D, E, and K), minerals, amino acids, enzymes, and probiotics. For instance, Vitamin A supplements may be added to animal diets to ensure adequate supply, especially when livestock lack good pasture and green forages. Similarly, Vitamin D may be added to animal foods to prevent nutritional deficiencies that lead to diseases such as rickets.

The global vitamins & dietary supplements market size stood at USD 178.5 billion in 2023. The demand for immunity-boosting products has increased significantly after the pandemic, encouraging procurement leaders to foster their strategies. Product penetration has risen due to a surge in marketing and the presence of a host of distribution channels. Besides, the past few years have witnessed heightened demand for organic, herbal, vegan, and vegetarian products in light of the growing popularity of veganism and awareness of the benefits of natural ingredients.

The key technologies driving the growth include nanoencapsulation, biohacking and targeted supplementation, nutrigenomics, 3D printed capsules, and time-released delivery. Nanoencapsulation offers several benefits such as improving the stability and solubility of bioactive compounds used for manufacturing vitamins and dietary supplements. It also prevents deterioration of products during storage and transportation. This technology also enhances the bioavailability and potency of target compounds in the products. Biohacking and targeted supplementation are used to offer targeted and personalized nutritional support according to individual biological makeup.

North America dominates the global landscape, accounting for 35% of the market share. This growth is attributed to a surge in demand for specific types of products such as probiotic supplements, fish oils, and protein supplements, the prevalence of lifestyle diseases, and awareness of the health benefits of dietary supplements. Europe accounts for the second largest market share, owing to increased attention to health by consumers, awareness of the significance of vitamins and dietary supplements in supporting weight control and physical activity, and consumer readiness to pursue a healthier lifestyle. Asia Pacific is anticipated to witness the fastest growth rate during the forecast timeframe.

The vitamins & dietary supplement manufacturing processes are increasingly being outsourced to third-party entities such as contract development & manufacturing organizations (CDMOs). Some of the key benefits (which are also the driving factors) of contract manufacturing include reduced operational and overhead costs, improvement in operational efficiency, availability of advanced technologies, and better alternatives related to shipping and logistics. Contract manufacturing leads to expertise in formulation development, navigating regulatory compliance, scalability, and flexibility. For instance, some contract manufacturers have dedicated capabilities in preparing dietary supplements with distinct health benefits that can be used for providing personalized nutrition.

Supplier Intelligence

“What best describes the nature of Vitamins & Dietary Supplements? Who are some of the main participants?”

The industry is fragmented, exhibiting intense competition among the industry players. Key companies compete based on pricing strategies, product innovations, packaging, labeling, and advertising and emphasize product quality, innovation, and cost-effectiveness. They focus on implementing strategic initiatives to reinforce their market position due to the competitive environment and changing customer demand. In addition, the players establish strategic partnerships and collaborations to enhance their geographic presence and product portfolio. A few players are also actively expanding their global footprint by setting up local distributors or purchasing subsidiaries in new regions.

Buyers possess high negotiating capability, enabling them with the flexibility to switch to a better alternative and boost their procurement strategies. Customers can be quite selective as they aim to purchase the best available options at the lowest feasible cost. This increases pressure on the suppliers in terms of pricing and product quality. Besides, regulatory laws in several countries require companies to have stringent quality control and safety standards. Customers are likely to look for lucrative offers and discounts on product pricing, and distribution channels intensely compete based on price discounts and offers. For instance, distribution channels may offer discounted bundled pricing when customers purchase a bunch of products as part of a package.

Key suppliers covered in the industry:

• Abbott Laboratories

• Amway Corporation

• Archer Daniels Midland Company (ADM)

• BASF SE

• Bayer AG

• DSM Nutritional Products AG

• Herbalife International, Inc.

• Lonza Group Limited

• Pfizer, Inc.

• GlaxoSmithKline plc (GSK)

• American Health Inc.

• RBK Nutraceuticals Pty Ltd.

Pricing and Cost Intelligence

“What is the cost structure for Vitamins & Dietary Supplements? What variables affect the prices?”

The cost structure of the global vitamins & dietary supplements industry is constituted by raw materials, labor, technology & equipment, energy & utilities, packaging, labeling, and logistics, and other costs as the key components. Other costs are further divided into R&D, regulatory & compliance, rent, general & administrative, sales & marketing, and finance & taxes. Raw materials and ingredients account for the major chunk of the cost structure.

Several variables, including raw material sourcing, energy price fluctuations, challenges in storage and logistics, packaging and labeling requirements, costs of compliance and quality control, competition among manufacturers, challenges in distribution, and inflation, influence the prices of products. For instance, key players may be required to source raw materials and active ingredients from several countries. In this case, supply chain disturbances may lead to an upsurge in raw material prices and result in procurement challenges. Energy price fluctuations include changes in prices of commodities such as coal, crude oil, and natural gas, which directly affect the cost of electricity. Such fluctuations lead to an upsurge in the pricing of finished products.

Key raw materials used for product manufacturing include several types of active ingredients used in vitamin supplements such as retinol, retinyl esters, carotenoids ( alpha-carotene, beta-carotene), thiamin, riboflavin, niacin, pantothenic acid, pyridoxine, biotin, folic acid, methycobalamin / cyanocobalamin, ascorbic acid, cholecalciferol, and alpha-tocopherol acetate. Other raw materials include active ingredients used in mineral supplements such as calcium carbonate, magnesium aspartate, cupric oxide, sodium fluoride, and zinc sulfate. The raw materials also include inactive ingredients (excipients) such as binding agents (cellulose, magnesium stearate), coating agents, coloring agents, diluting agents, fillers, emulsifiers, flavoring agents, and disintegrants.

The prices of active ingredients and excipients witnessed significant fluctuations in 2022 and 2023 due to supply-demand imbalances, geopolitical conflicts, and high inflation. For instance, the prices of ascorbic acid (used in vitamin C supplements) in the U.S. declined during the third quarter of 2023 against the backdrop of a substantial drop in demand and significant availability of supply during this period. The Cost and Freight (CFR) values of ascorbic acid declined from USD 3700 - USD 3800 per metric ton (mt) in July to USD 3400 - USD 3500 per mt in September.

The cost structure is broken down in the accompanying chart. Other costs can depend on multiple cost components, as illustrated below:

Sourcing Intelligence

“How do Vitamins & Dietary Supplements manufacturers engage? What is the type of engagement model?”

In terms of global vitamins & dietary supplements procurement sourcing intelligence, businesses commonly follow a full-services outsourcing model to engage with their suppliers wherein end-to-end manufacturing is outsourced to third-party contract manufacturers such as CDMOs. Assessing the range of products offered by a supplier, requesting testimonials and references of the supplier’s clients, evaluating a supplier’s location capabilities, comparing the prices offered by different suppliers, and negotiating over best pricing terms are some of the key sourcing practices considered in this model.

In some instances, processes such as packaging, labeling, storage, and transportation may be outsourced as the manufacturer may not possess the required capability in-house. Such processes may also be outsourced to attain cost savings and streamline operations. Meanwhile, in some cases, businesses may seek hybrid model for flexibility and scalability to minimize their requirement for an additional/specialist workforce for outsourcing. This helps them minimize their operational costs and increase their focus on core activities.

“In the full services outsourcing model, the client outsources the complete operation/manufacturing to a single or multiple companies.”

Consumers consider certain factors when purchasing vitamins & dietary supplements. The key factors include pricing, safety, end-use / application, and product innovations. The product ingredients (organic or chemical-based) and brand reputation are also considered. Moreover, buyers also check for regulatory certifications that assure product compliance with quality and safety standards. From the supply side, manufacturers prefer to sign long-term contracts with raw material suppliers for increased stability, security, dedicated support, and strengthening of partnerships. However, in some instances, manufacturers may opt for medium-term or short-term contracts with suppliers for ad-hoc requirements.

India is the preferred low-cost/best-cost country for sourcing vitamins & dietary supplements. A growing number of international companies have entered the Indian market, leading to increased industry competition, competitive pricing, and a rise in innovation. Moreover, leading domestic companies are also competing with the international players. Rising R&D investments by the private sector and improvement in quality control standards by the Food Safety and Standards Authority of India (FSSAI) have boded well for the procurement of vitamins and dietary supplements in India. The same trend is expected to continue over the next few years.

The Vitamins & Dietary Supplements Procurement Intelligence Report also provides details regarding day one, quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis. In the report, we have tried to provide a holistic industry perspective, an overview of the supplier landscape – the presence of different types of players and the competitive pressure within the industry as a whole (PORTER’s). Similarly, the supply chain practices under sourcing are also covered. One such instance is the operating or engagement model which encompasses all the business processes conducted within an organization. It is an integral aspect of the company's operations and plays a crucial role in its success.

Vitamins & Dietary Supplements Procurement Intelligence Report Scope