The nutraceuticals market is growing stronger each year and is expected to reach nearly CAD $876 billion by 2024, sustaining a compound annual growth rate of 7.5% between now and then. It’s a rosy picture, and welcome news for an industry that tends to be fragmented and dominated by small companies, most of which operate in niche local markets. Besides indicators of strong growth, what other trends define the nutraceutical industry? Here we highlight five we think are of interest and point out the potential challenges each trend may present.
- All things cannabis
It won’t come as any surprise that cannabis remains headline news throughout North America. With the passing of the Cannabis Act last October, the Canadian legal cannabis market is on fire. CBD, which can be derived from hemp or marijuana, has been popping up over the past few years in nutraceuticals from mineral water to skin cream to dog biscuits. In the U.S. alone, CBD sales are expected to grow 107% annually through 2023.
Challenges surrounding cannabis and nutraceuticals stem largely from the fact that Canadian manufacturers are operating in new and uncharted territory. Confusion remains about the legality of the distribution of CBD products in Canada, yet given the demand for the compound, manufacturers must scramble to take advantage of this red hot market.
- Quality and safety take center stage
Food and supplement safety concerns are not new, but as the nutraceutical industry continues to grow and even blur the line between food and pharma, it’s inevitable that consumers will expect more. More information about the ingredients—including where and how they’re sourced—and more assurances that the products are safe and effective.
The challenges nutraceutical companies face surrounding quality and safety are many, and include their ability to track raw ingredients and finished goods from source to sale, and the ability to respond rapidly and accurately in the event of a recall.
- Regulatory compliance gets more complex
There’s no universal definition of a nutraceutical, and there’s a growing overlap between food (and beverages) and food supplements. What is certain, though, is that government agencies worldwide are creating new and stiffening existing regulations surrounding “natural health products.”
The challenges surrounding compliance are real. Regulations concerning nutraceuticals can be a moving target, and Canada is recognized as having some of the most stringent regulations covering not only the manufacturing process, but labeling and packaging requirements as well.
- Global expansion is in the cards
Global expansion is on the minds of companies in virtually every industry, and the nutraceutical industry is no exception. While North America remains the hub of this industry, other markets are predicted to grow at an even faster pace. The Central and South American nutraceutical market, for example, is expected to grow by 9% through 2025, and Asia Pacific is forecast to grow by 9.9% during the same time period.
There are multiple challenges surrounding global expansion. Regulatory framework varies widely across the globe. Companies must adapt their marketing strategies to the various country regulations and may even need to vary the nutritional claims and even ingredients based on the rules and consumer preferences.
- Investors are taking notice
Given the high growth rates and attractive margins in the nutraceutical industry and given the products’ standing as part food and part pharmaceutical, it’s not surprising that both “Big Pharma” and “Big Food” companies are eager to enter the market through acquisition and investment. Recent years have seen acquisitions, joint ventures and partnerships between and among industry players accelerate, particularly in the nutrition segment.
Interest from investors may sound ideal for small and growing nutraceutical firms, but in order to appeal to investors, nutraceutical firms must demonstrate a certain level of maturity, both surrounding production and in terms of their accounting—which can be challenging for startups.
As the nutraceuticals industry continues gain both credibility and market share, the future looks bright—but not without challenges. In upcoming posts, we’ll look deeper into the challenges we’ve touched on here. We’ll likely introduce a few additional challenges as well—and consider ways nutraceutical firms can tackle those challenges and continue on the path to healthy growth and success.