In part one of a two-part feature, Andy Coyne takes a close look at the drivers behind the rapid growth of the UK sports nutrition market.
UK consumers are now routinely presented with words such as ‘protein’ and ‘whey’ splashed across a plethora of products in their local supermarket.
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The sports-nutrition category has taken root in the country’s largest grocers and demand is rising.
It is tempting to think we have all become fitness fanatics but the reality is different.
Sports nutrition is a difficult category to, well, categorise, which makes meaningful research into the sector difficult to come by. In broad terms it may include powders, capsules, drinks, bars, snacks and enhanced dairy products.
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But is a chocolate bar with added protein a sports nutrition product or still confectionery?
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By GlobalDataAs Mike Simons, category controller at specialist sports nutrition company Grenade UK, puts it: “Sports nutrition is a difficult category to pin down. It’s very subjective.”
To its credit, market research company Mintel has attempted to scrutinise the category in its Attitudes to Sports Nutrition, UK report published last June.
However, Mintel’s report comes with a caveat and reveals another problem. It warns its sales figure for the category is through leading grocers and chemists. It excludes specialist retailers, such as health food stores, sports nutrition companies and gyms. It also excludes online sales.
That said, Mintel quotes data captured by IRI which claims the category grew by 4% in 2016 to GBP61m (US$86.4m). And its research shows 27% of adults used sports nutrition products in the three months to April 2017, up from 24% in the three months to the end of May in 2016.
But, if we are not all down the gym five times a week or taking part in triathlons, what is driving this growth?
Exercise and the pursuit of a healthy lifestyle more generally is a large part of the answer.
As Mintel says: “It is far from being limited to serious athletes and bodybuilders, as 23% of those who exercise less than once a week have used them.”
Moreover, Mintel also points out that “strong is touted as the new skinny”, adding: “A new ideal appears to be rising that sidelines waiflike figures in favour of toned physiques, offering good news for sport nutrition and high protein food/drink.”
While some high-protein products may appeal to the dedicated athlete/gym goer, most sports nutrition products have a wider appeal.
Mintel says: “The appeal of sports nutrition products has traditionally been curbed by their positioning as catering for serious athletes. Products tailored for low-intensity activities warrant attention. Women aged 16-34 are particularly interested in these, including both current users (62%) and non-users (36%) of sports nutrition products.”
This is at the heart of the growth of sports nutrition. The category has moved from a specialist one supplying serious athletes to one that promotes an active and healthy lifestyle. It has moved from niche to mainstream.
As Mintel says: “That the category has succeeded in attracting ‘lifestyle’ users, who associate these with a healthy, active lifestyle, is in part thanks to wider trends.
“Healthy eating intentions are widespread, with protein held in high esteem in this context, particularly among young people. This being a core proposition of much of sports nutrition has seen the market benefit from the protein trend.”
None of which has been lost on mainstream food producers, which have eyed the surge in sports nutrition category with interest and, in some instances, taken steps to join the party, either through launching products of their own or by adding a specialist arm to their business via acquisition.
In April last year, it was revealed Associated British Foods (ABF) had acquired UK sports nutrition businesses H5 Ltd and Reflex Nutrition. H5’s High5 is a hydration and energy brand popular with endurance athletes while Reflex provides a range of protein-based recovery products.
“This is a new high-growth market segment and we plan to develop these brands and broaden their distribution,” ABF, which owns UK food brands from Kingsmill bread to Jordans muesli, said at the time.
GlaxoSmithKline (GSK)’s interest in the category goes back to 2010 when it bought Maxinutrition, a manufacturer of protein-enhanced functional nutrition products, from private-equity firm Darwin Private Equity.
As part of the agreement, GSK acquired brands including Maximuscle. But, perhaps indicating how difficult it is to integrate such specialist products into a broader portfolio, last year GSK confirmed its intention to offload the sports nutrition business. A deal has yet to be announced.
Many others, though, are heading in the opposite direction and trying to get a piece of the action – even using brands one would not necessarily associate with health or exercise. Mars announced in April last year it was expanding its range of protein-enhanced products in the UK with the launch of a protein powder under its namesake chocolate brand in response to “the increasing appeal” of such products to “everyday lifestyle users”.
Another mainstream entrant to the category is Samworth Brothers. In October 2015, the Ginsters pasty brand owner bought sports nutrition firm SCI-MX, saying the category represented a “new and high-growth sector” for the business.
The company sells powder, capsules and convenience sports nutrition products. Its SCI-MX Pro2Go flapjack is perhaps its best known product.
Max Dawson, senior brand manager at SCI-MX Nutrition, suggests the market has changed dramatically even in the six months since Samworth Brothers entered it.
“The category has gone crazy,” he said. “When you look back at when SCI-MX started ten years ago, the market was very much a niche for die-hard gym buffs. Now it is much more mainstream.
“Everyone else has caught on to this as well and it has spilled out to all sorts of categories.”
But the speed of change, the sheer number of new products being developed and the entrance of some larger, more mainstream companies have combined to put pressure on retailers who are struggling to cope with such a fissiparous category.
“A few years ago you could only get healthy snacks in the healthcare aisle but now people don’t want to buy power bars with their condoms,” Dawson said.
“We’re doing a lot of work with the retailers about consumer research. Retailers are looking to test and try things in new places, in areas where there is higher footfall. There is still work to be done on that.”
It is a theme taken up by Alan Barratt, CEO and co-founder of sports nutrition specialist Grenade UK.
The firm, based near Birmingham in the English Midlands, was launched back in 2010 and has had success with products including the Carb Killa range of high protein bars and drinks.
Last March, private-equity firm Lion Capital acquired a majority stake in the company in a transaction that valued the business at GBP72m. Now it is said to be worth GBP250m and has a GBP60m turnover.
Barratt is fascinated by the rapid growth of a category in which Grenade has long specialised – and by the problems supermarket chains face in dealing with that growth.
“Retailers didn’t see it coming this quickly. We helped Tesco to remove chocolate from its till points with our positioning at the front of store,” he says.
“But the retailers thought people would rather spend GBP0.60p on a Mars Bar than GBP2.50 on one of our bars. They thought it would take two years to change. It took six weeks.”
Barratt says one major supermarket put Grenade’s non-liquid products down the drinks aisle. “We brought the category to the supermarkets and they don’t always know what to do with it,” he says.
“Innovation doesn’t always fit in with their infrastructure. But our data shows that 80% of our consumers are new to Tesco so we are driving people into their stores.”
Grenade is at the heart of the category’s appeal with its colourfully-designed packets and military hardware branding, which reflects the fact it started out supplying nutrition products to special forces soldiers and elite athletes.
But it shows how much things have changed that for all this macho imagery (it has used tanks to support its marketing initiatives in the past) it now reaches a much broader market.
“Like Ferrari, there are only so many people you can sell a racing car to,” Barratt says. “Fifty per cent of our consumers are now women and a lot don’t even train.
“We have a lot of fun with the brand. We don’t take ourselves too seriously. Too many brands do. A lot of the others are in white packaging or linked to bodybuilding.”
Looking at the category more broadly, Barratt is sceptical about the ability of ‘Big Food’ to succeed in sports nutrition through acquisition.
“You can’t just pick up sports nutrition and go mass market,” he said. “It’s like a car. You can’t just sell a Range Rover to everyone – it’s too expensive.”
