It’s not easy being a legacy dietary supplement brand. A brand’s long history can be both a blessing and a curse. A legacy brand can emotionally leverage its authenticity, or it can feel out of touch with the times. It can inherit loyalty—or rejection—from being found in the cupboards of a younger generation’s parents and grandparents. Some may reap the benefit of an acquisition by a larger, multinational CPG (there are challenges in that, too). Others who choose to remain independent may find themselves at a competitive disadvantage to those legacies that have the backing of a large CPG.
At the 35th Natural Products Expo East in Baltimore in early September, many of the industry’s legacy supplement brands will be exhibiting. During the past thirty-five years (and more, for several legacy brands), these established brands have benefited from increased consumer interest in health and wellness and the supplement category’s enviable sales growth. They have prospered in a market that has become increasingly crowded. Consider that in the 1970s there were only a handful of supplement and herbal supplement brands. By 1994, there were about 600 supplement companies, producing about 4,000 products, with a revenue of approximately four billion dollars. Today, there are close to 6,000 companies producing about 75,000 supplement products, boasting revenue of about $45 billion.
Because of this dramatic proliferation of supplement brands, many legacy brands are struggling to maintain their market share. This challenge can be due to unexpected competition or a dramatic change in market forces, such as Amazon’s rise. These older brands are also more likely than younger brands to be experiencing internal, cultural challenges. The impact is often a decrease in sales or a replacement on the shelf by new, disruptive supplement brands.
From our experience working with legacy supplement brands, we have identified a number of warning signs that are to be ignored at one’s own peril. Here are just four of them:
1. Flattening Revenue Growth
The numbers don’t lie. But when flat revenue growth confronts a legacy brand, the justifications abound: The category is flat. The media is hammering the supplement category with negative press. Larger legacy brand competitors who’ve been acquired by multinational CPGs provide free fills and outspend all others on consumer marketing to drive awareness and purchase.
There are some legacy brands that are fine with flat sales growth, as long as their profit margins remain healthy. Others offset unit sales declines with price increases. But we’ve observed that flat revenue growth is the canary in the coal mine. It often has less to do with actual sales and more to do with how the brand will be perceived in the future. And it is often an indicator of a corporate culture that lacks passion and urgency.
Diminishing relevance happens slowly. Then one day the brand wakes up to realize it has lost its relevance in the market. This can manifest itself in several ways. The consumer may be aging out. Sales may not be suffering yet, but the younger supplement user is going elsewhere. This is puzzling to the brand because it believes what it has to offer is still relevant to the needs of the consumer.
Another manifestation of this dynamic appears when retailers begin challenging the brand’s shelf space. A legacy brand with a perceived lack of relevance finds itself competing not just against other brands. Retailers may begin to question whether this legacy brand is adding value to their shelf or is just competing against their more profitable private-label brand.
3. Lack of Differentiation
Just because a brand was the first does not entitle it to hold onto to its original differentiation. In fact, success breeds imitators. It’s a common story in our space: A leading legacy brand will develop innovative messaging, product nomenclature, or a unique set of reasons to believe. For several years they drive home this messaging with great success. Then they notice that their competitors have started copying them.
Features and benefits are essential for product differentiation, but in the supplement space, a successful product and brand will find imitators quickly. From echinacea to omega-3s to collagen to curcumin and now CBD, the consumer looks to brand, rather than features, when they believe all other things are equal. And, as I’ve written before, you can’t rely on brand differentiation in the supplement space through science alone.
4. Founder Departure
Most successful legacy supplement brands have founders with a powerful vision. These founders have invested their lives in their companies, and for them their brands are an extension of who they are. They often find it hard to disassociate their experiences with what consumers are looking for in brands, and this so-called “founder’s syndrome” can be a challenge for the brand’s growth.
In the past decade, many founders of legacy brands are reaching their 60s and 70s or older. They are retiring, selling their brands, focusing on specific areas of their companies that drive their passion, or just making a clean break and exiting completely.
Brands that relied on these founder personalities as part of their branding now have to adjust to life beyond the founder. And it is not that simple. It requires careful and conscious attention to how the brand needs to evolve, with a renewed sense of purpose and core beliefs.
If you’re a legacy supplement brand and are experiencing any or all of these warning signs, addressing these challenges head-on through a strategic rebranding process will revitalize your connection with consumers, providing ongoing relevance and loyalty. Only then will you remain a relevant brand that competes with both the high-achieving multinational-owned brands and the emerging supplement brands.