2016 Health & Wellness Study - Strategy Consulting€¦ · • Nutritional supplements • Skin...

Health & Wellness Consumer AnalysisExecutive Insights

The 2016 Health & Wellness Study was conducted by Alex Evans and Chris Randall, Managing Directors in L.E.K. Consulting’s Retail & Consumer practice. Alex is based in Los Angeles and Chris is based in Boston.

For more information, contact [email protected].

2016 Health & Wellness Study

The 2016 Health & Wellness Study examines consumer spending preferences for nutritional supplements, personal care and healthy grocery products among Millennials, Gen X and Boomers.

The study looks at category engagement, drivers of channel selection and, the potential for subscription services, as well as the success factors for private-label products.


We investigate three major categories of health & wellness consumables:

• Functional food & beverage

• Nutritional supplements

• Skin care

Three categories of consumables

Functional food & beverage

• Healthier-for-you snacks

• Functional beverages

Nutrition supplements

• Vitamins, minerals and specialty supplements (VMS)

• Sports nutrition

Skin care

• Facial cream

• Hand cream/body cream



While some H&W categories are more “mature” in terms of generational penetration (e.g., healthier-for-you snacks and personal care), there appears to be significant opportunity to bring Gen Xers and Boomers into more complex categories such as functional beverages and sports nutrition.

Underpenetrated opportunities

Consumables engagement by category and segment (2016) Percentage of segment who have purchased in the past 12 months (N=1,934)

Note: Q6. Have you purchased any of the following goods/services within the past 12 months? Source: L.E.K. Health & Wellness Consumer Study (February 2016)


Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100

Functionalbeverages

Healthier-foryou snacks

VMS Sports nutrition Personal care

Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)


With the exception of VMS and facial care, at present, reported Boomer spending is roughly half the per capita rate of Millennials and Gen Xers, once again suggesting additional opportunity to drive growth within this segment.

More room for Boomers

Average spend per customer* in the past month (2016)

Note: Q8. In the past month, approximately how much did you spend on the following goods and services? *Among customers who have spent more than $0 in the past month in the broader category (nutritional supplements, functional F&B or skin care). Source: L.E.K. Health & Wellness Consumer Study (February 2016)


Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100

Functional F&BDollars (N=1,751)

Personal careDollars (N=1,364)

Nutritional supplementsDollars (N=1,434)





Healthier-for-you snacks

Functional beverages

VMS

Sports nutrition

Body care

Facial care

Hand care

51 5544

62 53

34

0

20

40

60

80

100

120

140

160

78

Gen X Millennials

113

Boomers

108

74 70

36

68 67

37

0

20

40

60

80

100

120

140

160

137

Millennials

142

Boomers

73

Gen X

49 4937

42 44

20

42 44

20

0

20

40

60

80

100

120

140

160

Gen X

138

Boomers

77

Millennials

133


While online purchases continue to make gains (currently ranked second for VMS and third for personal care) and healthy grocery has become a core channel for functional F&B, the FDMC channels remain critical across all H&W consumable categories (at around 60%-75% of total sales).

*Food, drug, mass merchant and warehouse club

Conventional channels are still king…

Share of consumer spend by channel and category*Percentage of total spend


Notes: Q53. How did your spend on nutritional supplements in the past month break down across each of the following types of retailers? Q63. How did your spend on facial skin care, personal hand care or body care in the past month break down across each of the following types of retailers? Your best estimates are okay. If you have not purchased through a particular type of retailer, leave blank or enter “0”- Percent of total spend? Q76. How did your spend on functional beverages and healthier-for-you snacks in the past month break down across each of the following types of retailers?; 1 Responses are not weighted by total level of food & beverage or nutraceutical spending; **Other includes multilevel distributors, workout facilities, subscription services and other. Source: L.E.K. Health & Wellness Consumer Study (February 2016)

Overall 53% 84% 72% 41% 84%

Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100





41 39 35 40

25 24

98

1413

8

6 7

179

7

16

18

9

6

6 9

66

7

60

80

40

20

0

100

Personal care(N=701)

3

Functionalbeverages(N=409)

3

Healthier-for-yousnacks

(N=651)

3

1

3

Nutritionalsupplements

(N=690)

73% 69% 59% 66% % FDMC

Department store

Specialty store

Other**

Convenience store

Online

Drugstore

Traditional grocery

Mass merchant/warehouse

Healthy grocery


Though they utilize more diverse channels than their Gen X or Boomer counterparts, Millennials still rely heavily on conventional FDMC channels (68%, compared with roughly 75% of older consumers) when shopping for H&W consumables.

… even among Millennials

Share of foodspend and beverage consumer spend by channel and customer typePercentage of total


Notes: Q76. How did your spend on functional beverages and healthier-for-you snack in the past month break down across each of the following types of retailers? **Other includes multilevel distributors, workout facilities, subscription services and other. Source: L.E.K. Health & Wellness Consumer Study (February 2016)

Overall 53% 84% 72% 41% 84%

Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100





Drugstore

Convenience store

Other**

Healthy grocery

Traditional grocery

Online

Mass merchant/ warehouse

4247 47

20

22 20

1513

11

6

87

6 7

5

6

100

40

60

20

80

0

3 4

Generation X(N=98)

4

Boomers(N=101)

4

3

Millennials(N=189)

68% 75% 74% % FDMC


For many health & wellness categories, consumers are unwilling to take a separate shopping trip and prefer to make the most convenient use of channels where they already shop. This means that FDMC channels have the potential to capture the most share as long as they catch up and provide the right assortment.

Price, convenience inform channel choices


Reasons for shopping channels, by categoryPercentage of responses

Note: Q54. What are the top reasons that you choose to purchase vitamins, minerals, herbals and specialty supplements through these retailers? Q64. What are the top reasons that you choose to purchase facial skin care, personal hand care or body care through these types of retailers? Q77. What are the top reasons that you choose to purchase functional beverages and healthier-for-you snacks through these retailers? Source: L.E.K. Health & Wellness Consumer Study (February 2016)

Overall 53% 84% 72% 41% 84%

Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100





Nutritional supplements (N=690)

Personal care (N=701)

Food and beverage (N=689)

0 5 10 15 20 25 30 35 40 45

Best fits my lifestyle

It’s the go-to store for this type of product

Broadest selection

Convenient: close to my home/office

Highest-quality products

Easy to browse

Helpful customer service

I can’t find the brands I like anywhere else

Lowest prices

Convenient: I already shop there for other things

5

7

7

9

9

14

21

24

36

41

5

7

10

13

26

42

5

8

9

11

11

10

14

19

25

37

5

8

14

23


When it comes to channel selection criteria, L.E.K. Consulting’s findings reveal clear generational distinctions, with Boomers/Gen X consumers preferring value (including high quality/a go-to destination at the lowest possible price), compared with Millennials, who seek channels that best match their lifestyle (both philosophically and in terms of proximity to home/work).

Channel drivers by age

Reasons for shopping channels, by categoryPercentage of responses

Note: Q54. What are the top reasons that you choose to purchase vitamins, minerals, herbals and specialty supplements through these retailers? Q64. What are the top reasons that you choose to purchase facial skin care, personal hand care or body care through these types of retailers? Q77. What are the top reasons that you choose to purchase functional beverages and healthier-for-you snack foods through these retailers? Source: L.E.K. Health & Wellness Consumer Study (February 2016)


Overall 53% 84% 72% 41% 84%

Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100




Nutritional supplements Personal care Food and beverage

19

13

41

45

33

46

25

29

12

36

32

51

38

22

14

19

31

47

0 10 20 30 40 50 60

Lowest prices

Convenient: I alreadyshop there for

other things

It’s the go-to storefor this typeof product

Convenient: closeto my home/office

I trust the products sold at this retailer

Highest-qualityproducts

4

20

3

12

1

(4)

4

(3)

2

0

(7)

(13)

0

0

0

(3)

(8)

(4)

(20) 0 20

(3)

1

1

(5)

(5)

10

0

0

1

(8)

(6)

3

(4)

(1)

3

(2)

1

0

(20) 0 20

(3)

(2)

(23)

(11)

2

(2)

2

(2)

0

2

9

8

7

2

1

(2)

4

4

(40) (20) 0 20 40

Average of generations Millennials Generation X Boomers


Supplements notwithstanding, L.E.K. notes increased interest in subscription services across H&W categories. This excludes Boomers, however, who generally continue to focus on traditional retail models.

Increased interest in subscription services

Likelihood to purchase a health & wellness product subscriptionPercentage


Note: Q80. If this subscription box service were available with items and products that you would be interested in and was priced at a cost that you found reasonable, how likely would you be to subscribe to a monthly membership program? Source: L.E.K. Health & Wellness Consumer Study (February 2016)

Overall 53% 84% 72% 41% 84%

Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100




Definitely would not

Probably would

Probably would not

Definitely would

No interest

Might or might not

Personal care products Nutritional supplements

1524 23 28 27 30 25 28

1712

3324

13

3029

15

33 26

14

32 24

12

19

24

7

1414

17 13

20 14

8

1113 11

14

7

1816

6

1314

8 769961

2 1

70

0

80

10

50

20

60

30

40

90

100

GenX

GenX

Boom.

4

Mill.GenX

Boom. GenX

GenX

Mill. Boom. Boom.

4

Boom. Mill. Mill. Boom.Mill.GenX

5

Mill.

Functionalbeverages

Healthier-for-yousnacks

Hand andbody wash

Facial cream VMS Sports nutrition

Functional food & beverage


Generally speaking, H&W consumers are amenable to private- label versions of personal care and nutritional supplement products (more than 80% have already purchased or would consider purchasing such alternatives in the future).

Once again, however, Boomers remain skeptical, and instead continue to favor trusted brands over private-label substitutes.

Private-label preferences

Willingness to purchase private-label brands, by product segmentPercentage (N=749)


Note: Q65. Have you ever purchased any store-brand or private-label facial skin care, personal hand care or body care products? (e.g., Everyday 365, Sephora, CVS-branded products)? If not, would you consider purchasing store-branded facial skin care, personal hand care or body care? Q55. Have you ever purchased any store-brand or private-label nutritional supplements (e.g., Everyday 365, Kirkland, The Vitamin Shoppe or branded products)? If not, would you consider purchasing store-branded nutritional supplements? Source: L.E.K. Health & Wellness Consumer Study (February 2016)

Overall 53% 84% 72% 41% 84%

Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100




Have not purchased but would consider purchasing Have purchasedWould not consider purchasing

Skin care products Nutritional supplements

29

19

40

54636564

4247

54

414148

364448

47

5236

2630

4137

35

4141

41

39

3739

34

8111156

171610

181911

2519

14

10

0

100

50

30

20

40

60

70

80

90

Mill.Mill. Boom. Boom.Boom.GenX

GenX

GenX

GenX

GenX

Mill. Boom. Mill. Mill. Boom.

Facial skin care Personal hand care Body care VMS Sports nutrition


While value may be key to sales of private-label nutritional supplements and personal care products, many H&W consumers believe that the quality of these alternatives matches or exceeds their branded equivalents.

To date, the majority of non-branded purchases have been limited to basic/staple offering. However, there appears to be a broader opportunity for value-added, higher-price-point private-label products in health & wellness.

Price, quality fuel non-branded sales


Overall: Perspectives on private label, by categoryPercentage of responses*

Note: Q56. Do you agree or disagree with each of the following statements as they relate to nutritional supplements? Q66. Do you agree or disagree with each of the following statements as they relate to facial skin care, personal hand care or body care? *Percentage of responses based on respondents who answered they would at least consider purchasing private labels in Q55/65. **Percentage of responses that disagreed with the following statement: “Name-brand vitamins, minerals, herbal supplements and sports nutrition products have higher safety and regulatory standards.” Source: L.E.K. Health & Wellness Consumer Study (February 2016)

Overall 53% 84% 72% 41% 84%

87

57

72

90

76

87

48

73

85

65

81

28

70

81

32

0

20

40

60

80

100



Personal care

Boomers (1947-1966)

Nutritional supplements

27

59

69

69

71

20

62

64

61

72

0 20 40 60 80

Higher safetyand regulatorystandards thanname brand**

Good valuefor money

Same orbetter quality

as name brand

Cheaper thanname brand

Buy only forbasic/staple

products

Overall

(9)

9

4

(3)

(1)

(2)

3

5

3

(2)

(10) 10 0

6

0

3

4

(4)

(5)

(4)

(3)

0

(20) (10) 0 10

(12)

0

8

(5)

(7)

3

(6)

(10) (20) 100

(18)

(19)

(11)

(10)

Millennials Generation X Boomers


About L.E.K. Consulting

L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public sector organizations, private equity firms and emerging entrepreneurial businesses. Founded more than 30 years ago, L.E.K. employs more than 1,200 professionals across the Americas, Asia-Pacific and Europe. For more information, go to www.lek.com.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2017 L.E.K. Consulting LLC

About the AuthorsAlex Evans, CFA, is a Managing Director in L.E.K. Consulting’s Los Angeles office. He focuses on consumer-facing sectors encompassing both retail and media. He specializes in a diverse set of verticals, including Health & Wellness, Food & Beverage, Specialty Retail, Sports/Live Entertainment, Television and OTT/Digital Media.

Chris Randall is a Managing Director and Partner in L.E.K. Consulting’s Boston office. He is focused on the Retail & Consumer Products sectors, advising clients on a range of critical strategic issues, including growth strategy, retail format and network strategy, brand and marketing strategy, e-commerce strategy, international expansion, and mergers & acquisitions.

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