Sports nutrition: Biggest-ever market with the toughest-ever challenges
This was the warning from Simon Jurkiw, product director at Bulk, when he spoke at NutraIngredients’ Sports & Active Nutrition Summit (SANS) in Amsterdam earlier this month (Oct 5-7).
His presentation detailed how the consumer base for sports nutrition has evolved over the last 20 years – from a focus on physique, to a more holistic view of health.
“Where I see it step-changing, certainly in the UK and Europe, was with Maximuscle as they invested a lot in the overall category and trying to get it out to a wider audience… Their whole focus was on educating, which back then was a bit of a game changer.
“Some of the images they used in their marketing were unheard of back then - the image of the mountain climber for example was completely different to what had been seen before.”
It was in the 2010s that bigger brands such as MyProtein and Bulk entered the category with non-descript packaging, no imagery, and no claims, making the products more accessible to a wider audience.
All the efforts to ‘normalise’ the industry have certainly paid off.
Jurkiw told delegates that in 2010 Bulk’s range was around 80% focused on muscle and weight loss but that has quickly changed with more focus on wellbeing and foods to the point where, now, the brand is practically a one third split between muscle-focus, wellbeing-focused, and food.
“It’s completely normal to use a shaker on the tube nowadays. If I’d done that 15 years ago I would’ve got some fairly odd looks. Meetings with Boots used to be about how we are going to explain what these products are, now it's easy as they’re convinced on the product, the efficacy, the market.
"Protein bars are everywhere you turn – you can walk into anywhere and see an array of different protein bars.”
He explained all this market diversification means brands are starting to create more targeted products and personalisation has become so important, giving online brands an advantage.
He added that he can see this opportunity for more specificity being an exciting one for many brands, adding: "There are some incredibly successful brands that are just Crossfit brands, for example, and there are various other sports where that fits."
And of course the plant-based trend offers great opportunity for innovation. Jurkiw explained that Bulk's protein mix would've previously been 95% whey to 5% vegan and now that split is about 65% whey to 35% vegan.
He added that the search term that is increasingly being used by customers is 'plant' as opposed to 'vegan' and brands are marketing their products accordingly.
Acquisition cost or lifetime value
But whilst there’s been this big focus on trying to broaden the market, with the assumption that a broader market equates to bigger revenue, Jurkiw warns that it isn't always that simple.
"An areas to be cautious of is the lifetime value (LTV) of the customer, which is really important, and the lifetime value of the muscle customer – as long as your products are good – is pretty high. It might be slightly more expensive customer acquisition cost (CAC) but the overall CACLTV is pretty good.
“With a lifestyle focused customer, potentially on the periphery of the category, the acquisition cost might be less but the lifetime value might not be so good either as they might be dipping in and dipping out.
“Just a word of caution when you’re looking at the overall economics of the business - it’s not quite as simple as just saying ‘let’s go for all of them’ because you might find the financials don’t stack up.
“If you are trying to do a massive pivot from muscle-building to lifestyle, I think that’s a massive risk because you’re risking alienating your existing revenue.”
He went on to discuss some of the incredibly challenging macro-economic issues in the industry today.
“It’s a pretty tough gig at the moment – there’s a lot of things going against us.”
He said he’s struggled to find any positives which have come from Brexit for UK businesses, noting that it has led to issues with border controls, staff costs, recruitment issues, additional paperwork, raw material costs, bank charges, and more.
Speaking about COVID, he did find one positive - that this has led to increased sales of high margin products such as vitamins and minerals.
However the high lifetime value customer - the gym obsessed - was not as active in the market during that period, after all the gyms closed.
And perhaps the biggest challenger across the board, Jurkiw said: "Inflation is also hitting many businesses around Europe meaning businesses are making a lower gross margin than they’ve ever made before whilst customers are being asked to spend more than ever before."
All these issues lead to an increased cost of doing business.
"Despite all these challenges, growth is still possible and we are fortunate enough to be experiencing that in a pretty strong way. But it does require an incredibly clear understanding of your customer and almost forensic planning around stock and cash flow."