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1st Annual survey of CEO's regarding the future of the nutrition industry. Detailed interviews, company profiles along with strategic analysis of the survey results.
... excerpt...Nutrition industry executives take center stage in this special issue, which presents results of NBJ's first CEO survey and perspectives of leading companies, including CEO interview and company profiles from Horizon, Small Planet, Hauser, Natural Alternatives, Enzymatic Therapy, Natrol, Arkopharma, Finzelberg, Schaper & Bruemmer, Lichtwer Pharma and BASF.
In-depth discussions about the future with:
Barney Feinblum - Horizon organic Dairy
Gene Kahn - Small Planet Foods
Dean Stull - Hauser, Inc.
Mark LeDoux - Natural Alternatives Intl.
Terry Lemerond - Enzymatic Therapy
Elliott Balbert - Natrol
Dr. Max Rombi - Arkopharma
Werner Baer - Finzelberg, North America
Arne Schaper - Schaper & Bruemmer
Volker Keidtel - Lichtwer Pharma
Stefan Reintgen - BASF Corp
CEOs Remain Bullish... Challenges Mount
Although a list of indicators portray the nutrition industry as a business in an early stage of maturation, most CEOs continue to run their companies in a growth mode. Additionally executives generally seem to expect industry growth to bail them out of the less-than-ideal operating performance they currently report. At least these are the basic interpretations of the results of an exclusive email survey conducted by Nutrition Business Journal in May 1999 and completed by 84 CEOs.
First, let's examine the subject of industry maturation and its symptoms. Virtually no one debates that industry growth is substantially lower than in the past. Pricing pressure remains high, but not on the destructive course some have portrayed, contend CEOs. Customer sophistication-from consumers to retailers to manufacturers-continues to increase, putting pressure on price, quality and customer service. Moreover, the pace of industry consolidation-though not yet rampant in a still highly fragmented business-has picked up noticeably the past three years. All signs point to an industry in transition, where business management tends to take on a higher priority than business growth.
The majority of CEOs, however, seem to be managing their companies with a stronger emphasis on growth than profits, according to survey results. Growth was prevalent in 1998, but margins were pinched. While only 6% of respondents reported a sales decline in 1998, 18% reported a decline in profits. In the manufacturers and branded suppliers segment-which represented the largest component of respondents-19% reported a decline in revenues and 33% reported a decline in profits.
The focus on growth, however, may not be inappropriate given that almost half of the 84 responding CEOs were from companies below $10 million in sales. Nor is that emphasis going unrewarded, as more than two-thirds of small companies reported growth in excess of 20% in 1998.
Fueling growth, according to executives, were a combination of factors principally revolving around product push. When asked the single most significant factor contributing to growth, CEOs picked new products (29%), new customers for much the same products (29%) and using new distribution channels (28%) much more than access to growth capital (5%) or mergers & acquisitions (4%). Most executives expect industry growth to remain high, although not too high. Only 5% believe broad industry growth will fall in the 1-5% range, but by far the largest contingent expects growth in the 5-10% range.
While the industry growth meltdown of the last nine months (as exhibited by the flat IRI mass market monthly herbal sales data presented in last month's NBJ) is a reality affecting 59% of survey respondents, fully 35% of respondents say they have experienced no significant downturn. Of those who believe we are in the midst of a significant downturn, however, 58% expect it will last less than one year, though 17% think it will last more than two....
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