Predicting the future of the dietary supplement market is no easy feat, as it’s influenced by a wide range of factors that are constantly shifting. Much like forecasting the weather, market dynamics are influenced by unpredictable variables that can dramatically alter supply and demand. The dietary supplement industry has certainly seen its fair share of ups and downs in recent years, particularly with the global pandemic, inflation, and looming recession creating a turbulent environment.
At Nutrition Business Journal (NBJ), we strive to provide accurate forecasts by analyzing both hard and soft data from across the industry. Despite our best efforts, market predictions remain a challenge due to the many fluctuating economic factors at play. However, these predictions give us a glimpse into the overall direction of the industry, even if the path forward remains unpredictable.
The Wild Ride of the Last Few Years
Looking back at the numbers from our 2023 Supplement Business Report, it’s clear that the dietary supplement market has faced significant volatility. The industry saw its most substantial growth during the pandemic in 2020, recording an impressive 14.5% increase. But by 2022, growth had slowed dramatically, dropping to just 1.9%. Categories within the industry were similarly inconsistent. For example, herbs and botanicals saw significant growth in 2020, bringing in $817 million more than expected, only to decline by 1.9% in 2022. On the other hand, sports nutrition saw slower growth during the pandemic but bounced back strongly, outpacing the industry as a whole in 2021 and 2022.
This stark contrast in growth rates highlights how the industry, much like the rest of the global economy, experienced intense fluctuations. While some segments of the market thrived during the pandemic, others are now feeling the effects of that rapid expansion, creating challenges as we move into the second half of 2023.
The Investment Landscape: A Shift Toward Caution
As we continue through 2023, the investment landscape for dietary supplements looks significantly less optimistic. According to experts, mergers and acquisitions (M&A) activity is at a low point, with early-stage funding and valuations both seeing a downturn. Investment banker William Hood described the situation as a “walloping hangover” after a 12-year boom, where stimulus measures fueled growth and inflation is now creating setbacks.
Hood noted that this is the first time in two decades that the dietary supplement industry has faced challenges on both the demand and supply sides. As we head into a period of slower growth, the focus will likely shift toward stabilizing the industry and adapting to more sustainable growth patterns.
A Stronger Industry Despite the Setbacks
Despite the slowdowns, the supplement industry is still larger than it would have been without the pandemic. Our projections for 2022 show that the industry reached $61.06 billion, 4.5% higher than the pre-pandemic forecast in 2019. Sports nutrition, in particular, ended 2022 stronger than expected, growing 4.2% more than previously predicted.
Looking ahead, NBJ expects growth to hover around 4% annually through 2026—modest, but steady. This level of growth may not be groundbreaking, but after the extreme fluctuations of the past few years, it could be just what the industry needs: a period of stability.
Strength Beyond Growth: What Does the Industry Need?
While the industry has grown, it’s essential to recognize that growth alone does not equate to strength. The true strength of the dietary supplement market lies in its resilience, the quality of the products it offers, its transparency, and the ethical practices that underpin the entire value chain. It’s also about how companies and stakeholders manage resources and ensure that their products improve lives without causing harm.
As we move into a more stable period, it’s important to focus not just on growth but also on reinforcing these values. Industry leaders and companies that are working to address these issues should be celebrated, as their efforts contribute to strengthening the market and ensuring its long-term success.
Looking Forward: A Thaw and a Path to Stability
Experts like William Hood predict that the industry may soon experience a “thaw,” where conditions become more stable and predictable. A period of growth without the extreme highs and lows would allow the industry to strengthen and solidify its position in the market.
The future is uncertain, but the steady growth forecasted for the next few years could be the most positive news the industry has seen in a while. A more predictable path forward would not only allow companies to focus on sustainable development but also provide consumers with greater confidence in the products they rely on for their health and well-being.
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