As highlighted at last year’s 2012 Sports & Performance Nutrition Conference, the UK sports nutrition market is facing a spectre in the shape of VAT. This follows the addition of sales tax to a large number of sports nutrition products on 1 October 2012.
Recently noted by the Grocer magazine, sports nutrition has been hit by the VAT introduction. The Grocer has cited data from ACNielsen, which points to growth in the sports nutrition market slowing dramatically since the introduction of VAT last October.
Speaking at last year’s Sports & Performance Nutrition Conference, which was organised by Bridge2Food, Julian Wright, Marketing Manager at Reflex Nutrition pointed to the generally high unit price of sports supplements. He stated that this could hold back sports nutrition overall in becoming a mainstream category in the years to come – even with previously high rates of growth.
The imposition of VAT on sports nutrition in the UK is seen as a major challenge. This is coupled with the rising price of whey protein, which towards the latter part of 2012 had jumped by 17%. When combined with the recent imposition of UK VAT, at 20%, protein powders have therefore been facing a 30-40% rise in retail prices.
Also speaking at last year’s conference, Kyle Rowe, Director of Buying at NBTY Europe, the company behind Holland & Barrett and GNC in the UK, felt that there was a limited amount of brand loyalty amongst consumers and that price was a key determining factor. He added that higher ingredient prices and other financial pressures, such as increased transportation costs, had brought about retail price inflation of 7-8% over the last two years.
Going forwards, it was argued that the customer could not bear further price rises and that NBTY would not put up prices for its retail customers. An environment of aggressive competition and ‘value engineering’ could therefore be expected in the months and years to come.