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Natural Products Market Set to Recover

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According to the Natural Products 2012, a new Market Report by market intelligence provider, Key Note, the industry has failed to grow since 2007. It is now worth £750.4m, after its value declined by 12% over the 5-year period to 2011. The primary reason behind the fall of the natural products is the rise of own-label goods.

Own-labels now account for 50% of all sales in the natural products industry. These are cheaper than branded variants, but are increasingly of similar quality and complexity. Consumers have proven to be willing to sacrifice brand loyalty in exchange for lower price tags. The economic crisis has further intensified this trend, as consumers seek the best bargains in order to save money: not only are chemists, such as Boots and Holland & Barrett, offering consumers own-labels, but supermarkets are increasingly selling their own natural products too. With consumers leading increasingly busy lifestyles, it is easier for them to simply buy the products while doing their grocery shopping, instead of going to a drugstore in addition to the supermarket.

Key Note divides the natural products market into three principle categories: vitamins, minerals and supplements (VMS); alternative remedies and specialist supplements. The value of all three sectors suffered a decline between 2007 and 2011. Alternative remedies experienced the sharpest fall in value (15.2%). Self-medication in the UK is not as popular in continental Europe. Moreover, consumers prefer to receive drugs from the National Health Service (NHS) rather than buying the products themselves. The VMS sector accounts for nearly half of the natural products industry (48.5%). Sales in the category are being driven by innovation that targets specific ailments and conditions, as well as products targeted at people of specific age and sex, and so on. The specialist supplements category is made up of slimming products and sports supplements. Although staying fit remains an important trend in the UK, consumers are increasingly opting to lose weight and gain muscle naturally through exercise. This is due to growing awareness of the health benefits of exercising. Moreover, critics have accused the products of being expensive quick fixes instead of reliable long-term solutions, which helps to explain why the subsector has fallen in value.

Consumers lead increasingly busy lives that are increasing their stress levels. As a result, there has been a rise in digestive troubles, problems with sleeping and a demand for products that boost energy levels. Key Note expects this trend to continue. Such issues do not necessarily require over-the-counter medication and can be treated with natural products. In addition, an ageing population and Government initiatives to raise the importance of self-medication in the UK in order to cut £20bn from the NHS' budget will increase volume sales in the future. Own-labels, including those supermarket goods, will continue to stunt value growth.

However, after analysing data exclusive to the company and assessing the market, Key Note concludes that the natural products industry will return to growth over the next 5 years. Both the VMS and alternative remedies categories will contribute to this rise in value. The specialist supplements segment will continue to decline. The industry's value is set to augment by 4.6% between 2012 and 2016. The market will be worth £738.8m in 2016.

View the FREE Executive Summary & Table of Contents for Natural Products 2012