This week saw Nutra-Ingredients host the annual Sports and Active Nutrition summit in Amsterdam. The event brought together the great and the good of the Sports and Active Nutrition world with representatives from brands, co-manufacturers, and suppliers, coming together for three days of presentations, networking, and discussion.
Well done to the team at Nutra-Ingredients and in particular, Nick Morgan of Nutrition Integrated who did a great job chairing the event. Here are our takeaways
Evolution and Outlook
The category has changed immeasurably over the past twenty-five years. Once the preserve of body-builders, it is now a category that covers a far broader range of consumers, needs, and occasions, with branding that has moved away from the ‘big men in small pants’ imagery of the 1990s to address a more mainstream consumer leading an active lifestyle.
And with the increasing relevance and mainstreaming of the category has come growth. As Euromonitor put it: “The sports nutrition industry is amidst a long-term growth trend unparalleled in recent consumer health history…From 2004 to 2018, the global market grew 190% at a CAGR of 7.9%. Such high growth for that long is unprecedented in fastmoving consumer goods”
That might be why the big guys are taking note. Both Nestle Health Sciences and Unilever have built sizeable Active Nutrition portfolios which, along with broader interest amongst financial investors (see CVC’s recent acquisition of The Quality Group), has pushed transaction multiples up from low to high teens over the past decade, according to data from Houlihan Lokey.
But the current picture is not all rosy. According to Bulk, massive input cost inflation, supply chain disruption and economic pressures are hitting the category, with many businesses in the space posting a slowdown in growth over the past year. This has led valuations to drop noticeably over the past year as concerns over future growth come to the fore.
Notwithstanding, we are bullish on the long-term outlook for the category. We see opportunity coming from increasing penetration of core consumers (according to Glanbia Performance Nutrition barely half of Active Lifestyle and Performance-oriented consumers consumed a protein product in the preceding three months), but we also see long-term potential amongst the more lifestyle-oriented consumer who increasingly looks to supplements to support their diets and daily lives.
Within this, one trend we expect to see play out medium-term is the continued blurring of Functional Nutrition and mainstream food and beverage categories, with supplementation increasingly occurring through day-to-day foods as we’ve seen happen in categories like Confectionery (Grenade, Fulfil) and Energy Drinks (Monster, Nocco)
Ingredients suppliers to the category were also out in force over the three days, and there were lots of interesting discussions around alternatives to animal-derived proteins. Representatives from the University of Exeter’s Nutritional Physiology Research Group, spoke about the efficacy of plant- and fungus-derived proteins in terms of protein quality (with PDCAAS comparable to animal-derived proteins), amino acid composition, and muscle absorption.
While non-animal derived proteins will continue to be a smaller part of the market for the foreseeable future (“whey isn’t going anywhere any time soon” as one delegate put it), if they can overcome some of the challenges around solubility, taste and scale, we expect them to become increasingly relevant as Western consumers continue to move to plant-based / flexitarian diets.
Food Strategy Associates is a leading European strategy consultancy focused exclusively on the food and beverage industry. Founded in 2013 by two former food industry executives, we combine the first-hand knowledge of highly experienced industry executives with top tier strategy consultants, to deliver a unique and unrivalled proposition to our clients.
We work across categories and across the value chain to help our clients drive top-line growth, improve margins, or pursue inorganic growth (M&A). Contact us to learn more.