Vitamins & Supplements Market Update – December 2024

Positive 2025 Outlook for Vitamins and Supplements Market Supported by M&A, High-Growth Categories

Evolving consumer preferences have determined new over- and underperforming categories in the Vitamins and Supplements market, inspiring many business owners to explore mergers and acquisitions (M&A) to expand into high-growth products or strengthen positioning as competition intensifies. Sector outlook has remained buoyant, with an administration change in the U.S. indicating natural health solutions will be favored in over pharmaceutical practices over the next four years. M&A activity is expected to continue gaining momentum moving into 2025 as portfolio restructuring and private equity exits have supplied the market with a healthy inventory of suitable targets. On the innovation front, Ready-to-Drink (RTD) supplements have emerged as a clear winner in the current environment, with legacy players experiencing robust sales growth from these products. Brands offering supplement RTDs, often marketed as sport nutrition products, have piqued non-traditional acquirer interest. In particular, businesses in the Beverages sector have looked to provide more consumption occasions to their consumers, driving acquisition bids higher for quality vitamins and supplements companies with RTD products. Capstone expects these shifting consumer preferences to drive growth and fuel M&A activity looking ahead to 2025, with innovative brands serving multiple consumption occasions garnering strong buyer interest and competitive valuations.

As consumers continue to look to self-care, the Vitamins & Supplements market is well poised for continued growth and expansion. M&A activity is expected to open more broadly for consumer health and wellness companies in 2025 as private equity buyers look to put money to work and corporate strategics move back into growth mode. We have witnessed a couple signifying transactions showing that Supplements are becoming a mainstay and high demand category, including the recent acquisition of GHOST by Keurig Dr Pepper. The RTD and Energy Drink categories are in demand and consolidation is occurring. We expect it will continue to be a growth sub-category of the overall industry.

Lisa TolliverManaging Director, Capstone Partners

Sector Sales Fluctuate Across Cohorts, Ready-to-Drink Products Drive Growth

The Vitamins & Supplements sector has seen mixed results through year to date (YTD) 2024 as the U.S. consumer health has wavered amid inflation, high interest rates, a strong labor market, and wage growth. Sector participants’ performance has varied, often dictated by company-specific challenges, such as capacity issues, labor shortages, and portfolio inefficiencies. Notably, public companies in Bloomberg Second Measure’s Nutritional Supplements index have experienced a 9.9% quarter-over-quarter (QoQ) decline in tracked channel sales in Q3 2024. This follows a 0.3% QoQ increase in sales during Q2 2024. However, fundamental demand drivers have remained intact, allowing select players to observe healthy growth in YTD 2024.

Capstone’s Vitamins & Supplements index participants have provided levity to YTD sector performance. Jamieson Wellness (TSX:JWEL) recorded a 16.3% YOY increase in consolidated revenue in Q3 2024, attributable to efficient marketing strategies in China and Canada which helped fuel strong consumer demand, pricing, and innovation, according to its Q3 2024 earnings call.¹ Glanbia (ISE:GL9) delivered adjusted earnings per share (EPS) growth of 12.4% through the first half of 2024, citing exceptional performance in its Optimum Nutrition brand which saw 11.8% volume growth during the period, according to its Q2 2024 earnings call.² Optimum Nutrition operates in the Sports Nutrition category, offering products such as protein powders and shakes. This product category, and RTD protein shakes in particular, is expected to serve as a bright spot for the Vitamins & Supplements sector moving forward with above-market growth rates and multiple use cases, such as sport applications and supplementation with glucagon-like peptide 1 (GLP-1) weight loss drugs (i.e. Novo Nordisk’s Ozempic and Wegovy). Supported by consumers’ evergreen preference for convenience, the global RTD Protein Beverages market is projected to expand at a 7.7% compound annual growth rate (CAGR) from 2024 to 2029, according to Mordor Intelligence.³ Of note, BellRing Brands (NYSE:BRBR) has showcased the ample whitespace for RTD products in the Vitamins & Supplements sector. The company’s RTD Protein Shakes’ net sales grew 22% YOY to $1.6 billion in its fiscal year 2024, according to its annual filing.⁴ The robust growth has shown consistency, with net sales from this product type rising 22.4% YOY in fiscal 2023.

Management teams across the sector have identified the robust growth prospects in this segment of the Vitamins and Supplements market and the cross-sector synergies with the Beverage industry. “In functional beverages, which is a growing segment within the Beverage industry and includes products enhanced with vitamins, minerals, and other solutions, providing multiple health benefits in a convenient format. According to a recent survey, 49% of consumers cite food and beverage and physical exercise as the top contributors to well-being, highlighting the importance of functional products as consumers take ownership of their health and wellness,” said Hugh McGuire, CEO of Glanbia, on its Q2 2024 earnings call. The demand for RTD protein products, and other nutritional RTDs, has supported sector M&A. The M&A market has seen legacy sector participants bolster offerings with strategic acquisitions, but cross-sector lines have blurred as Beverage sector participants see a natural expansion into nutritional beverages and have executed M&A to expand product suites.

U.S. Administration Change Adds Ambiguity, Though Sector Outlook Appears Positive

Despite the lack of visibility into potential policy changes, the outcome of the U.S. Presidential election has largely supported growth prospects in the Vitamins and Supplements market. The Dietary Supplements industry has mostly viewed president-elect Donald Trump’s appointment of natural-health advocate Robert F. Kennedy Jr. (RFK) as Secretary of the U.S. Department of Health and Human Services (HHS) as a positive for the industry. Although a lack of visibility into direct actions and policy changes remains, RFK has spoken against the Pharmaceutical industry and seeks to reorganize the Federal Drug Administration (FDA) in favor of natural health supplement solutions. Some industry participants and journalists have expressed concern over the potential deregulation of the Supplement segment, but many are hopeful to engage with RFK and push the Vitamins & Supplements sector forward.

RFK’s pro-vitamins and supplements stance has somewhat offset proposed tariffs from Trump, primarily afflicting major dietary supplement ingredient supplier, China. Canadian-based Jamieson Wellness has addressed input cost concerns related to tariffs and affirmed it does not anticipate any material impacts to its U.S. business given its onshore manufacturing, the ability to adjust raw materials sourcing, and the essential categorization of health products. Sector participants with less agile supply chains and supplier concentration may face higher input costs. Pushing these costs onto consumers could dampen sales volumes and motivate consumers to switch to brands with more stable pricing—at least in the early innings of any realized tariffs. As a result, supply chain diversity and agility may become a key point in strategic M&A over the coming years. Healthy public company performance, high-growth categories within the sector, and optimism around the new U.S. administration has helped increase Capstone’s Vitamins & Supplements index value higher in the past six months. The index has appreciated 18.5%, outpacing S&P 500 returns during the same period.

M&A Volume in Vitamins and Supplements Market Rebounds From 2023 Trough

Vitamins & Supplements M&A volume has grown 19.6% YOY to 55 announced or closed transactions YTD. Deal activity to date has eclipsed full-year 2023 volume (53 transactions), providing evidence that the Vitamins & Supplements sector troughed in 2023 when the space saw the lowest deal count over the 2018 to 2024 period. Strategic activity has remained flat YOY as private strategic buyers have offset subdued acquisition appetite from public companies. Private strategic activity has risen 40% YOY to 21 transactions YTD compared to 15 in the prior year period. Private business owners have leveraged M&A to enter new product categories, gain capacity to meet strong consumer demand, and acquire distribution. Public companies have exercised discipline in the M&A market with respect to valuation. Competitive uses of capital, including share buybacks, supply chain investments, and other value-creating internal opportunities, have trumped appetite for inorganic growth strategies. As a result, public strategic deal activity has fallen 30% YOY to 14 transactions YTD. The sector has seen notable divestitures YTD, underscoring public strategics’ preference for internal initiatives and portfolio restructuring that strengthen margin profiles and balance sheet health in the current environment. Notable divestments include Lyon Magnus’ acquisition of Hormel Health Labs from Hormel Foods (NYSE:HRL) (October 2024, undisclosed) and Piping Rock Health Products’ acquisition of Better Health Vitamins, Minerals & Supplements (VMS) from Clorox (NYSE:CLX) (September 2024, Undisclosed).  Private equity buyers have supported the sector’s M&A market recovery and compensated for stagnant changes from the strategic buyer universe.

Private equity acquisitions have spearheaded the Vitamins & Supplements M&A market gains through YTD, with transactions from these buyers increasing 81.8% YOY. Private equity platform acquisitions have held steady YOY, with seven platforms in YTD 2024 compared to six in YTD 2023. Fund managers have increasingly focused on exiting current portfolio holdings and returning liquidity to limited partners (LPs) to date. Private equity add-on transactions have more than doubled to date, posting 13 deals compared to five in the prior year period. Although exit activity in the middle market has remained depressed across industries, the Vitamins & Supplements sector has seen private equity groups purchase other sponsor-backed companies to bolster current portfolio holdings and prepare for their own exits in the coming year. Notably, 4x4 Capital-backed Worldwide Sport Nutritional Supplements acquired Pervine Foods, the parent company of Fitcrunch high protein bars, powders, and snacks, from Union Capital Associates (November 2024, undisclosed). In addition, American European Associates (AEA) Investors-backed Impetus Wellness Group acquired Reliance Vitamin Company from Brand Brook Holdings (September 2024, undisclosed). Capstone expects PE exit activity to pick up in 2025, supported by a healthy backlog of platform investments reaching maturity in the near future. This will likely supply the Vitamins & Supplements sector with an abundance of targets for strategic and private equity buyers alike.

Vitamins and Supplements Market Draws Attention from Diverse Group of Strategic Buyers

Traditional players in the Food and Beverage sectors have increasingly targeted Vitamins & Supplements sector participants. Transaction rationale has focused on diversification of revenue streams and investment in the long-term growth potential of RTD supplement offerings and associated emerging consumer interests. Several notable transactions are detailed below.

• Molson Coors Beverage Acquires ZOA Energy (October 2024, $481.2 Million) – In October 2024, Molson Coors Beverage (NYSE:TAP) acquired an additional 11% stake in better-for-you energy drink brand ZOA for $53 million or an enterprise value of $481.8 million. The deal brings Molson Coors’ ownership to 51%. The majority stake acquisition reflects Molson Coors’ premiumization plans and diversification beyond beer. Co-founded by Dwayne “The Rock” Johnson, ZOA boasts repeat purchase rates of 50%, and 30% of ZOA buyers are new to the Sport Nutrition Energy Drink space, according to a press release.⁵ Molson Coors will lead ZOA’s marketing, retail and direct-to-consumer (DTC) sales and development efforts with taking majority stake in the company. “We’re building a winning portfolio that offers consumers choices across a wide range of occasions, and non-alc[oholic beverages] is a key part of that strategy. ZOA opens the door for us to participate in more parts of the day and incremental opportunities beyond our core business,” said Molson Coors CCO, Michelle St. Jacques, in the press release.
• The American Bottling Company to Acquire GHOST (October 2024, $1.7 Billion) – Keurig Dr Pepper (Nasdaq:KDP) subsidiary, The American Bottling Company, announced its acquisition of lifestyle sports nutrition business, GHOST, for an enterprise value of $1.7 billion (October 2024). Upon the close of the agreement, in which The American Bottling Company will acquire a 60% stake in GHOST for $990 million (equivalent to 3.0x EV/Net Revenue), the companies will enter a subsequent agreement requiring GHOST equity holders to sell the remaining 40% stake in 2028, according to the deal terms.⁶ GHOST’s primary offering is its energy drink, though the company also sells supplements and other liquid refreshment beverages. The company has experienced robust growth since 2021, quadrupling its net sales over the period, according to a press release.⁶ GHOST compliments KDP’s existing presence in the Energy Drink category, joining sport energy brands C4 and Black Rifle Coffee Company. KDP pursued the acquisition to strengthen their position in this category and accelerate its portfolio evolution toward growth-accretive spaces.
• Prenetics Global Acquires Europa Sports Partners (August 2024, Undisclosed) – Hong Kong-based health sciences company, Prenetics Global (Nasdaq:PRE), acquired U.S.-based nutritional and sports supplements company Europa Sports Partners for an undisclosed sum in August 2024. Europa operates as a major full-service sports nutrition distribution company, supplying more than 120 nutritional and sports supplements, sports drinks, and accessories brands to gyms, studios, and fitness centers, according to a press release.⁷ The transaction includes the acquisition of Europa Sports’ subsidiary Hubmatrix, a third-party logistics DTC fulfillment provider. The deal marks Prenetics first transaction after entering the U.S. Consumer Health and Wellness industry with its launch of IM8, a health and wellness brand focusing on science-backed consumer health products. IM8 officially launched in November with David Beckham as a strategic investor in Prenetics and Co-Founding Partner of the IM8 brand. Prenetics expects the acquisition to solidify its distribution network in the newly entered U.S. market and integrate a direct digital distribution platform to its brick-and-mortar distribution business model.

Divestures and Private Equity Exits Provide Robust Inventory of Targets

Corporate divestures and private equity exits have bolstered M&A activity in YTD 2024 via an influx of scaled targets. While some companies have exited the space to focus on core offerings outside of the Vitamins & Supplements sector, private equity firms have begun to exit a robust backlog of investments. Of note, private equity groups tallied 46 platform investments from 2020 through YTD, creating the basis for future exits. The Vitamins & Supplements sector is expected to see an influx of M&A activity as these portfolio companies reach maturity, fueling dealmaking moving into 2025 and beyond. Several notable divestures and private equity exits are outlined below.

• Morgan Stanely Private Equity Acquires FoodScience (November 2024, Undisclosed) – Morgan Stanley Capital Partners (MSCP), Morgan Stanley’s (NYSE:MS) middle market private equity platform, acquired FoodScience from Wind Point Advisors for an undisclosed sum (November 2024). FoodScience operates as a vertically integrated supplements, formulating, manufacturing, selling, and distributing pet and human nutritional supplements business under its VertiScience, Pet Naturals, DaVinci Laboratories, and Little DaVinci brands. The company also offers co-manufacturing to Supplement segment participants. FoodScience expects the acquisition to support growth initiatives and build off its 50-year history delivering science-first supplement products. “We look forward to working together as we collectively seek to build on and expand the exceptional product portfolio through continued organic growth and M&A,” said James Stewart, Managing Director and Co-Head of Consumer Investing at MSCP, in a press release.⁸
• Lyons Magnus Acquires Hormel Health Labs (October 2024, Undisclosed) – Paine Shwartz Partners-backed Lyons Magnus acquired Hormel Health Labs from Hormel Foods (NYSE:HRL) to form Lyon Health Labs (October 2024, undisclosed). Lyon Health Labs will focus on dysphagia, unintended weight loss, digestive health, and hydration products and operate as a business unit of Lyon Magnus, who offers a wide range of products for the Foodservice and Food Ingredient markets. The new business will sell products from each company under the new brand, including Hormel Health Lab’s Vital Cuisine and MightShakes brands that offer nutrition shakes, protein supplement beverages, and protein and calorie mixes. “The combination of both companies’ broad portfolio of products, resources, capacity, and people immediately establishes Lyons Health Labs as a health and nutrition leader, poised to meet the needs of today’s foodservice operators and also be a major player in tomorrow’s innovations,” said Jim Davis, CEO of Lyon Magnus, in a press release.⁹
• PipingRock Health Products Acquires Better Health Vitamins, Minerals, and Supplements (September 2024, Undisclosed) – In September 2024, PipingRock Health Products acquired Better Health Vitamins, Minerals and Supplements (VMS) from Clorox for an undisclosed sum. Clorox’s divestment comes as part of its ongoing portfolio restructuring which aims to reduce volatility, accelerate sales growth, and improve margins. PipingRock, a family-owned pure-play vitamins and supplements provider, expands its product portfolio with the acquisition, gaining Natural Vitality, NeoCell, Rainbow Light, and RenewLife brands, as well as manufacturing and distribution facilities in Florida. The company’s DTC e-commerce platform boasts robust product categories including Supplements, Essential Oils, Men’s Vitamins, Joint Support, Heart Health, Skin Care, Immune Support, Brain Supplements, Eye Nutrients, Women’s Vitamins, Herbs, Antioxidants, Sports, Digestive Health, Sleep Support, and Weight Support.

Although the new administration’s impact on the Vitamins & Supplements sector has remained unclear, fundamental demand for natural health solutions has continued to prove robust post-pandemic. Capstone expects tailwinds from government support, unwavering consumer demand for health and wellness, product innovation, and a rich inventory of mature companies to create a vibrant Vitamins & Supplements sector in 2025.

To discuss high growth pockets of the Vitamins and Supplements market, provide an update on your business, or learn about Capstone's wide range of advisory services and Vitamins & Supplements sector knowledge, please contact us.

Andrew Woolston, Associate, was the lead Market Intelligence contributor to this article.

Endnotes

1. Jamieson Wellness, “Jamieson Wellness Third Quarter 2024 Financial Results and Conference Call,” https://viavid.webcasts.com/starthere.jsp?ei=1692246&tp_key=a049489fcb, accessed November 26, 2024.

2. Glanbia, “Glanbia 2024 Half Year Results Presentation,” https://edge.media-server.com/mmc/p/ase77anh/, accessed November 26, 2024.

3. Mordor Intelligence, “Ready to Drink Protein Market Size & Share Analysis – Growth Trends & Forecasts (2024 – 2029),” https://www.mordorintelligence.com/industry-reports/ready-to-drink-protein-beverages-market, accessed November 26, 2024.

4. BellRing Brands, “10-K Annual Report,” https://bellringbrands.gcs-web.com/static-files/d89f8fb8-eca0-4054-9403-003cbf3a081f, accessed November 26, 2024.

5. Molson Coors Beverage, “Molson Coors Beverage Company Takes Majority Stake in ZOA Energy,” https://ir.molsoncoors.com/news/news-details/2024/Molson-Coors-Beverage-Company-Takes-Majority-Stake-in-ZOA-Energy/, accessed November 26, 2024.

6. Keurig Dr Pepper, “Keurig Dr Pepper to Acquire Disruptive Energy Drink Business GHOST,” https://news.keurigdrpepper.com/2024-10-24-Keurig-Dr-Pepper-to-Acquire-Disruptive-Energy-Drink-Business-GHOST, accessed November 26, 2024.

7. Prenetics, “Prenetics Announces Acquisition of Europa Sports Partners in Strategic Expansion to Consumer Health and Wellness Industry,” https://ir.prenetics.com/news-releases/news-release-details/prenetics-announces-acquisition-europa-sports-partners-strategic, accessed November 26, 2024.

8. Private Banker International, “Morgan Stanley Capital Partners Snaps Up FoodScience,” https://www.privatebankerinternational.com/news/morgan-stanley-capital-partners-snaps-up-foodscience/, accessed November 26, 2024.

9. Lyons Health Labs, “Lyons Magnus Established Lyons Health Labs with Addition of Hormel Health Labs,” https://www.hormelhealthlabs.com/resources/lyons-magnus-establishes-lyons-health-labs-with-addition-of-hormel-health-labs/, accessed November 26, 2024.