Background
Global industry has undergone significant changes in both 2020 and 2021 and nutraceuticals is of course no exception. In fact, demand has continued to increase throughout this period and many of the underlying trends behind this have been accelerated by the short-term challenges of the pandemic – significantly, these trends are also now translating into longer-term behavioural changes. For example, over the preceding 5-years we have seen a gradual move towards nutraceuticals that use plant-based ingredients, natural gummies and probiotics. All three have increased in popularity as consumers have sought natural ways to boost health and wellbeing.
Before we dive deeper into future trends, we should first look at the current data
In fact, never before has global consumer behaviour been altered so significantly and synchronously, with the challenges Covid-19 has brought delivering similar experiences for consumers in United States, Europe and Asia. So, beyond the immediate needs this drove in terms of nutraceuticals for immunity, the longer-term implications for our industry are perhaps more profound. The demand it has created for wellness products and an overall awareness of how supplements can contribute to improved health and wellbeing is likely to be a long-lasting consumer behaviour shift. Consumers are likely to spend less time travelling to work over the next five years than the preceding five, but they are spending more time digesting information via digital screens. Additionally, both in response to the last year and due to the growing trend of preventative healthcare, consumers are increasingly focused on any ways they can improve their overall wellness and prevent or reduce the impact of disease and the aging process. With these trends in mind, we will look ahead to 2022 and beyond to envisage what types of products and ingredients will be popular and profitable in the near and medium term and, crucially, what type of development and manufacturing outsourcing will be needed to support these trends.
Before we dive deeper into future trends, we should first look at the current data and the overall market – which is anticipated to grow at CAGR of over 8.5% until 2025 according to new research from Technavio. Looking deeper, what we also see from FMCG Gurus research is that a remarkable 79% of global consumers are trying to improve their diet. This trend is mirrored by a desire to live healthier, with the data suggesting that globally 26% of consumers identify as flexitarian - with environmental concerns shared by the majority of consumers. Emphasising the shifting perspectives of global consumers, research from a 2021 McKinsey report shows that ‘in every market researched there was a substantial increase in the prioritisation of wellness over the past two to three years’. Significantly these demographic behavioural changes are emerging at the same time as we are seeing increases in consumer spending post pandemic.
Furthermore, the consumer perception of what being ‘healthy’ entails is also evolving. Most consumers now associate this not just with physical health, but also mental and even social aspects that contribute to their overall wellness. There is an increasing consumer perspective that to stay ‘healthy’ and ‘well’ means taking a more holistic approach to lifestyle, nutrition and supplement choices.
Running in parallel to this, there has been well-documented trends towards plant-based diets alongside sustainable food supplies and organic certification. What is interesting is that as these trends have significant crossover themes and are now converging around the idea of ‘proactive living’ and using natural ways to boost wellness and health.
For nutraceutical brands this means that we are seeing shifts in both the way products are marketed, but also the ingredients they contain. If brands can combine natural ingredients with proven benefits and enjoyable dosage forms, they are likely to have a winning product, which is why in particular we continue to anticipate an accelerated rise of nutraceutical gummies as they are able to perfectly intersect these three factors together.
The other interesting aspect is that in an age of new trends and behaviours you naturally see a lot of innovation from companies and new product launches as consumers re-examine their priorities. The Mckinsey report broke this down into 6 segments with – ‘better’: health, fitness, nutrition, appearance, sleep and mindfulness – with the goal of personal improvement the driving theme of consumer changes. Significantly, for both nutraceutical and pharma companies, ‘better health’ constantly appears as the most important category and the one with the highest levels of consumer spending across every major market surveyed.
The convergence of big pharma and nutraceuticals
The growth in preventative medicine and health as a consumer trend has not gone unnoticed by pharma companies, which are looking to use their often highly trusted and valuable brands to open-up new potential parallel markets. This means looking at non pharmaceutical or alternative pharmaceutical methods that can be sold as part of the overall package to improve health – everything from applications, and dietary advice to supplements.
How will pharma, a historically conservative industry, look to enter?
Coinciding with this consumer nutraceutical trend, pharma has been pursuing ‘patient centric’ treatments, reimagining its approach to communications with patients and perhaps, most significantly, looking at how it can improve ‘patient experiences’. One common problem that has been often reduced patient adherence to pharmaceutical interventions is dissatisfaction with API delivery options and dosages. In particular, the conventional solid dose delivery form most commonly used often delivers an unpleasant taste and, in the case of the very old and young, can be difficult to swallow. Dosage flexibility and experiential aspects of active delivery is of course an area where nutraceuticals have shone in recent years, providing a diversity of options and consumer innovations that remain unmatched in pharmaceutical products.
How will pharma, a historically conservative industry, look to enter?
We believe initially through the innovate delivery forms of existing supplements that have evidence based and clinically supportable health claims (e.g. EFSA). For example, omega 3 in combination with vitamin B, D C and/or zinc. What is likely to appeal to pharma is also the possibility to introduce products that offer not only a more enjoyable experience but could also help chime with the increasing ethical considerations of the consumer (particularly those in wire income bands). For example, enjoyable dosage forms like gummies and softgels that consumers look forward to taking, made with natural and/or sustainable ingredients. A probiotic gummy with omega 3 and vitamins B6/12 could make for an ideal commentary product in IBS or dietary issues.
The most successful pharma entrants are likely to be those with well-developed marketing strategies and products that closely align with adjacent offerings. This is particularly important as the McKinsey Wellness Research showed that ‘consumers don’t want a single solution from brands and that targeted extensions will deliver greater engagement and potential sales breakthroughs’.
In terms of the contract partners pharma companies work with, they are clearly going to favour those CDMOs that operate higher GMP standards and are certified to manufacture pharmaceuticals as well as nutraceuticals [e.g. as SIRIO is in Europe).
Probiotic formulations, which help stabilise the microbiome, are potentially another big trend
For contract manufacturers there are also many opportunities as increasingly we are seeing clients looking for entirely new combinations, and there remains a strong desire to be first to market with products that can potentially appeal across a number of converging segments. For example, we see ingredient combinations that have ‘dual health’ benefits rise in popularity, particularly those than can transcend both body and mind.
These “body and mind” formulations are ones that combine a number of potential benefits together like mood enhancement, focus and/or sleep, but also additional “mind” benefits such as enhanced immunity, heart function or metabolism. This, we believe, will be a long-term trend for consumers over the next five years.
For example, probiotic formulations, which help stabilise the microbiome – an essential regulator of equilibrium in immunity, diet, and more recently research continues to emerge on its vital role in the nervous system – are potentially another big trend and products with multi supportable health claims are likely to see strong growth.
At SIRIO, we have seen this first-hand in the last year, with the continued demand for our patented probiotic/omega 3 softgels. In fact, we anticipate nutraceutical customers in both the United States and especially in Europe coming to us to explore novel combinations over the next 12-24 months as consumers become more aware of this innovation.
Another ‘trendy’ ingredients class we have seen substantial increase in popularity is adaptogens – led in the United States by formulations containing popularity of ashwagandha and in Europe by ingredients like ginseng and saffron. These ingredients are increasingly in demand in response to increased incidence of stress and sleeping problems – both in response to anxiety and increased digital screen time.
For example, saffron due to the antioxidant and anti-inflammatory effects of its two extracts, crocin and safranal, is used not only to improve mood and combat depression, but its efficacy is also now being explored for preventing age-related ocular diseases. We anticipate an increasing number of contract manufacturers will be using saffron in their mood formulations in the next 12 months as demand grows.
Significantly, the trend for mood formulations is proving universal and, the differences we see are in regional preferences for dosage forms, ingredient types, and most importantly flavour profiles. For example, in China we have introduced a center-filled, plant-based and sugar-free gummy product containing the active ingredients GABA (γ-aminobutyric acid) and theanine. This product is used to promote relaxation and calm before sleep and is combined with a regional flavour profile and scientific design. Consumers here are looking for multidimensional experiences and so the product combines peach and oolong tea in the filling and jasmine and lavender in the outer layer. This personalisation of ingredients and flavours will continue to drive forward innovation, new dosages and ultimately products with greatest growth potential and margins for nutraceutical brands.
This is very much where the market is heading, with the development research and new products design now emerging from contract partners. It is why earlier this year we launched a global nutra-innovation team that empowers customers not only with constant innovation in ingredient combinations, but also trends and learning from different preferences across the globe.
In fact, more widely, development services and R&D teams are becoming a vital part of how we work with nutraceutical brands, and, in the future, we imagine CDMOs will become much more influential in the selection and development of formulations for clients – using formulary experience to help guide them to a better understanding of what is likely to work well together.
Another area we believe we will now see lasting changes from the pandemic are in the nutraceutical manufacturing plants themselves. The last year has drawn specific focus on the importance of supply chain resilience, management and remote resources. So, over the next few years, we will see a tremendous amount of digitisation in manufacturing, both allowing remote reporting and predictive supply and manufacturing – so important as brands compete for the best manufacturing resources at contract partners.
The most advanced contract partners are adopting smart factories and real-time process controls for customers to have reassurance. The biggest lesson from the pandemic is that you need to look closely at supply robustness and capability of any of your partners. How much capacity they have, do they deliver in time and how much flexibility they can build into planning. We have seen in the last 6-months many logistics challenges across all markets – and particularly in Europe – with a shortage of containers, drivers and suitable transport conditions.
Consequentially, nutraceutical companies will want to ensure they work with contract players with large and robust facilities. There will be a preference for those that can offer multiple contingencies while maintaining high production quality and service. And that may well be a longer lasting change as bigger brands look for more strategic partners and global resources in case of any facility down time.
Conclusion
Overall, by 2025 we anticipate a far larger number of nutraceuticals will be taken in more novel delivery forms, notably softgels and gummies. Nutraceuticals will also be a key part of new lifestyle-based consumer approaches and form an integral part of their preventative health and wellness-based choices. Increasingly, we will see parallel trends merging into a far greater brand narrative - with plant-based, wellness and ethical considerations a perfect example where brands have the potential to deliver to broad based consumer appeal with multiple sales angles. In terms of contract manufacturing, we therefore expect the biggest growth among CDMOs that have the expertise to help customers develop new formulations, but also the ability to deliver in multiple markets.