Sports supplement seller bets on non-GMO veggie soft gels
Veggie capsules have been on the market for years now. But Sports Research president Mike Pedersen said this is the first time gel caps have been offered with a Non-GMO Project Verified positioning. For a company that has built its brand loyalty in online selling platforms such as Amazon and iHerb, it marks a new day. While Sports Research has a presence in brick and mortar, Pedersen said the company has yet to penetrate the natural channel.
“We have really hit Amazon hard and we sell well at GNC and Vitamin Shoppe. We are best sellers on iHerb and on Amazon,” Pedersen told NutraIngredients-USA.
“We are the first company in the US to have non-GMO verified soft gels ever. We have really made this for Whole Foods and for Sprouts; we really want to get into that channel,” he said.
Differentiating a product line can take many forms. Sports Research originally took the route of bold, black packaging. That aspect won’t change as the company transitions the full product line over to the new soft gels. The soft gels are branded as StarchGel by their manufacturer, Hunan Er-Kang Pharmaceutical Co. Ltd. based in Changsha in China’s southern Hunan Province.
“By the beginning of 2018 the full line of supplements will be transferred over to using delivery modes with the veggie starch,” Pedersen said. “To start with we took the ones we thought could work with easily. This veggie starch was tricky to work with. Every product transition was a challenge; we’ve been running soft gels for years but this was something entirely new.”
Branded ingredient orientation
Among the first products to transition to the new delivery mode are an astaxanthin supplement and a vitamin K2 offering. Those products also highlight another aspect of the company’s strategy: a reliance on branded ingredients. Sports Research uses astaxanthin from AstaReal and employs Nattopharma’s MenaQ7 branded form of vitamin K2.
“We take trademarked ingredients form vendors, sometimes paying as much as ten times more,” Pedersen said. “The claims those companies can support are great.”
The new product development came at a cost, Pedersen said. It’s a strategic investment in the company’s future, he said.
“We think this really is a game changer for this whole industry. But it is much more expensive; it’s double the price. We think the cost will come down, but at the moment we are passing that cost on to our customers,” Pedersen said.
“And to go the extra mile for Non GMO Project verified certification, that’s time consuming and it’s expensive,” he said.
Brick and mortar opportunity
The question was raised about why a company without a long history in the natural channel would invest in trying to enter that market at this point. Whole Foods and Sprouts have been struggling with increased competition for organic products. Whole Foods in particular, after years of rapid, trouble free growth, has been beset by faltering economic performance for several quarters now. And, in common with vitamin retailers GNC and Vitamin Shoppe, Whole Foods has seen its stock price sink from a high in early 2014 of more than $65 a share to be worth about half as much today at about $31. (Both Vitamin Shoppe and GNC have seen even more preciptious declines in the same time frame.) The question was raised whether brick and mortar outlets face an uncertain future, and the safer bet is to further concentrate on online sales.
Pedersen said Sports Research still sees significant opportunities in brick and mortar outlets. And it’s a growth opportunity for the company individually, even if the sector itself is stagnant or even contracting. And the natural channel has for the most part resisted the commoditization that is creeping into supplement sales in many outlets, and can offer a home for higher priced products.
“This is a difficult question. We saw this trend happening starting about four years ago. We stopped selling to a lot of distributors and stopped selling to a lot of the bigger chains. For online sales, we feel as if we have that sector controlled. But we think in the natural channel this will be a game changer, and while we are not exclusive on this soft gels, we will be the only ones offering them for at least six to eight months,” Pedersen said.