Health Food Retailing - UK - April 2008

Published by: Mintel International Group Ltd.

Published: Apr. 1, 2008 - 149 Pages

Table of Contents

ISSUES IN THE MARKET

Key themes

Definition

Abbreviations

MARKET IN BRIEF

Steady growth for specialists sector

Highly competitive marketplace

Emergence of organic specialists

More awareness of healthy eating

Expanding the market

Consumers will take initiative

New legislation will affect suppliers more than retailers

Future for health food specialists

INDUSTRY INSIGHT

Key points

Independents losing footfall

General consumer caution

Premium products buoyant

Consumer awareness stimulated

Any publicity is good publicity

Celebrities off the boil

So who uses health food shops?

When do they turn to health shops?

Supermarkets strong in food

Competition has intensified

Health stores better as advisers

But not a substitute for the doctor

Vast array of formulae

Too much discounting

New therapies can stimulate interest

Strained relationships with therapists?

Internet making inroads

Major commitment to run websites

The EU food directive

Whole Foods Market - the impact

Is there a future for independents?

INTERNAL MARKET ENVIRONMENT

Key points

Social change and celebrity educators

Suspicion mounts

Nanny knows best?

Are health food retailers losing out?

Organic plays a part

Healthier lifestyles

Figure 1: Agreement with selected lifestyle statements on health, by gender, 2003-07

Better safe than sorry

Internet a source of information

Figure 2: Internet access, Jan 2001-Jan 2008

Think slim

Figure 3: Adults who are trying to lose weight most of the time, by gender, 2000-07

Ethical consumerism

Figure 4: Agreement with lifestyle statement ‘I buy fair trade when available’, 2003-07

Food intolerance and allergies

BROADER MARKET ENVIRONMENT

Key points

Price inflation

Figure 5: UK: Consumer price index: All goods and food, Dec 2005-Dec 2007

Figure 6: Trends and projections in UK population, by age, 2003-13

Growing population

Growing grey market

More singletons

Over-50s take more interest

Responsibility for the children

Growing wealth

Figure 7: PDI and consumer expenditure, at constant 2002 prices, 2003-13

Busy people but less time

Figure 8: Time spent on occupation per day in an average week by full-time workers, 2002 and 2006

MARKET IN CONTEXT

Key points

Overall consumer spending

Figure 9: UK: Consumer spending on selected major goods categories, 2002-06

High interest in personal care

Price competition in medical goods

Figure 10: UK retail sales of vitamins, minerals and supplements and products that compete with them, 2002-06

Complementary medicines help consumers take control

Five-a-day changing habits

Figure 11: Family purchasing on selected food categories, 2003-06

Functional and free-from foods popular, and growing

Figure 12: Estimated UK retail sales* of gluten-free, dairy-free and other free-from foods, by value, 2002-07

Skincare

Prescriptions dent free-from potential

STRENGTHS AND WEAKNESSES IN THE MARKET

Strengths

Weaknesses

SECTOR SIZE AND FORECAST

Key points:

All retail sales growing

Figure 13: All retail sales, at current and constant 2002 prices, 2002-07

Non-specialised food stores

Figure 14: Retail sales through non-specialist food stores, at current and constant 2002 prices, 2002-07

Health stores running out of steam

Figure 15: Estimated sales and forecast through health food stores, at current and constant 2003 prices, 2003-13

Figure 16: Comparison of previous and estimated 5-year real growth of health food sector

Future growth in the sector

Figure 17: Forecast growth of key segments of the health food market, 2007-12

Factors used in the forecast

RETAIL COMPETITOR ANALYSIS

Key points

Health food shops face intense competition

Figure 18: Retail distribution of main health food categories, 2007

VMS share is large

Chemists number one choice for medicines

Slimming not so healthy?

Figure 19: UK: leading specialist health food retailers, 2007

RETAILER PROFILES

Key points

Holland & Barrett

Figure 20: Holland & Barrett background and financial performance, 1997-2007

Figure 21: Holland & Barrett: Outlet data, 2002-07

Julian Graves

GROCERY MULTIPLES

Tesco

Sainsbury’s

Asda

Morrisons

Waitrose

Marks & Spencer

NON-SPECIALISTS

Chemists

Boots The Chemists

Superdrug

Lloyds Pharmacy

INDEPENDENT HEALTH FOOD SHOPS

NAHS

The Health Store

SMALL CHAIN INDEPENDENTS

Rosemary’s Health Foods

Revital

Bean Freaks

Fitzpatrick’s Herbal Health Shop

Wyedean Wholefoods

ORGANIC FOOD SPECIALISTS

Whole Foods Market (incorporating Fresh & Wild)

As Nature Intended

Planet Organic

Other organic supermarkets

ALTERNATIVE MEDICINES

Dr & Herbs

Dr China

Neal’s Yard Remedies

Culpeper

Botanica Medica

DIRECT SELLERS

ONLINE HEALTH FOOD RETAILERS

Healthy Direct/Nature’s Range and Healthspan Direct

RETAILER ADVERTISING AND PROMOTION

Key points

Advertisers cut back on spend

Figure 22: Total health food store advertising spend, 2004-07

Holland & Barrett get behind its promotions

Figure 23: Main monitored media advertising spend, by health food retailer and manufacturer, 2004-07

ADVERTISING STRATEGY

Promotional activity

Holland & Barrett

Nature’s Range/Healthy Direct/Healthspan Direct

HEALTH FOODS AND SUPPLEMENTS BOUGHT

Key points

Figure 24: Health foods and food supplements bought in the last 12 months, 2003-07

Five-a-day on target

Whole foods boom

‘Good bacteria’ popular

Be nicer to your chickens

Premiumisation

Fresher for the kids

Feminine influence

Target their vanity

Mums with young children

Lunchbox health

Healthy foods for celebrations

Herbal teas and healthy drinks upscale

Premium audience for brown bread

Self-imposed special diets?

WHERE HEALTH FOODS ARE BOUGHT FROM

Key points

Number of health food stores gradually decreasing

Figure 25: Estimated number of specialist health food stores, UK, 2002-07

Health food shops diversify

Non-specialists take a slice of the market

Industry representation

Alliance for Natural Health (ANH)

Training groups

National Association of Health Stores (NAHS)

The Vegetarian Society

Figure 26: Where health foods and food supplements were bought in the last 12 months, November 2005-January 2008

Holland & Barrett dominates specialists

Older consumers favour independent stores

Figure 27: Profile of shoppers at health food stores, and supermarket used, January 2008

Boots gets the cream

Superdrug sweeping up the price-conscious

Upscale shoppers favour fresh specialists

PURCHASING PATTERNS

Key points

Figure 28: Purchasing patterns of health foods and supplements, January 2008

Supermarkets are good enough

More potential for organic theme

Too much discounting whilst maintaining loyalty

APPENDIX: INTERNAL MARKET ENVIRONMENT

Figure 29: Agreement with selected lifestyle statements on health, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, media usage, household size and car ownership, 2007

Figure 30: Use the Internet at home, 2004-07

Figure 31: British Internet penetration at home/work/place of study or elsewhere, by gender, socio-economic group, age, region and working status, Jan 2001-Jan 2008

APPENDIX: SECTOR SIZE AND FORECAST

Figure 32: Forecast sales of organic food, at current and constant 2007 prices, 2007-12

Figure 33: Forecast of UK retail sales of meat-free foods and meat substitutes, at constant prices 2001-11

Figure 34: Forecast sales of VMS, herbal and homeopathic remedies, sports drinks and supplements and slimming products, at current and constant 2007 prices, 2007-12

APPENDIX: RETAILER COMPETITOR ANALYSIS

Figure 35: UK retail sales of vitamins and dietary supplements, by type of outlet, by value, 2002-06

Figure 36: UK retail sales of complementary medicines, by type of outlet, 2002-06

Figure 37: UK retail sales of meal replacements and appetite controllers/suppressants, by outlet type, 2001-05

Figure 38: UK retail sales of organic food, by outlet, by value, 2005-07

Figure 39: Retail distribution of meat-free foods, 2002-06

APPENDIX: HEALTH FOODS AND SUPPLEMENTS BOUGHT - DETAILED DEMOGRAPHICS

Figure 40: Health foods and food supplements bought in the last 12 months, by gender, age, socioeconomic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

Figure 41: Health foods and food supplements bought in the last 12 months, by gender, age, socioeconomic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

Figure 42: Health foods and food supplements bought in the last 12 months, by gender, age, socioeconomic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

APPENDIX: WHERE HEALTH FOODS ARE BOUGHT FROM: DETAILED DEMOGRAPHICS

Figure 43: Where health foods and food supplements were bought in the last 12 months, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

Figure 44: Where health foods and food supplements were bought in the last 12 months, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

Figure 45: Where health foods and food supplements were bought in the last 12 months, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

Figure 46: Where health foods and food supplements were bought in the last 12 months, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

APPENDIX: PURCHASING PATTERNS - DETAILED DEMOGRAPHICS

Figure 47: Purchasing patterns of health foods and supplements, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

Figure 48: Purchasing patterns of health foods and supplements, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

Figure 49: Purchasing patterns of health foods and supplements, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commercial TV viewing, supermarket usage, household size, car usage, detailed lifestage groups and terminal education age, January 2008

APPENDIX: RESEARCH METHODOLOGY

Abstract

• In view of legislation coming into force by 2010 requiring supplements to be licensed, is this a future problem or an opportunity for health food specialists? Will they simply adapt?
• VMS sees plenty of promotional offers, especially in Holland & Barrett and Boots. But is there simply too much discounting and does this undervalue the products?
• Supermarkets are embracing almost every aspect of health food retailing, so what must specialists do to survive?
• There are masses of stories in the media about diet and health and some have certainly proved important in stimulating demand for health foods. But is the health food landscape becoming too confusing for consumers?
• Is the Whole Foods store format the future of UK health food retailing?

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