Macro Trends Affecting the Nutritional Supplement Industry, an Interview With Industry Veteran Stephen Adele
Industry Veteran and Chief Executive Officer of iSatori, Stephen Adele, Discusses the Five Major Macro Trends Affecting, Positively and Negatively, the Nutritional Supplement Industry and Their Business
(firmenpresse) - GOLDEN, CO -- (Marketwired) -- 01/12/15 -- iSatori, Inc. (OTCQB: IFIT), an emerging leader
in the development and marketing of scientifically engineered nutritional
supplements for healthier lifestyles, today released an interview with
their founder and Chief Executive Officer, Stephen Adelé, where Sue
Mosebar, Executive Editor of Real Solutions, recently sat down with Stephen
to discuss the major trends materially affecting supplement companies
industry wide, including his at iSatori, Inc. ().
: The nutritional supplements industry saw its share of
ups and downs in 2014 yet appears to remain a robust industry. What are
your thoughts on this?
: It [Nutritional Supplements] is a great industry that
continues to grow in double digits, organically. According to Simmons
(Experian Marketing), nearly 39% of all U.S. adults, representing
87.8-million consumers, are currently watching their diets to lose weight
or maintain muscle weight. And many of them are turning to sports nutrition
products to help them in their journeys. This segment was worth $38-billion
in 2013 in US retail sales value and is expected to grow to over
$40-billion by 2016 (Packaged Facts). That''s why we remain committed to
this industry to help meet this strong, growing demand for quality
supplements to help these individuals along their physical and health
transformation journeys.
: It looks like you had really impressive growth during
the first half of the year, and then it appears to have been a rough third
and fourth quarter; what happened?
: Yes, you are correct. We were growing, steadily, at
47% year over year, when we were negatively affected by two major
unexpected events. The first we call the "post Oz era." If you recall, in
June of 2014, the Senate put Dr. Mehmet Oz in front of a Congressional
hearing to essentially chastise him before the general public on
television, and doing so, I believe, shook the confidence of many consumers
across America. This is evidenced by leading retailers, like GNC, The
VitaminShoppe, and others, who experienced a massive retraction in consumer
purchases of weight-loss supplements.
These hearings could have been handled much differently: I honestly believe
Dr. Oz''s intentions were good from his television show. He was presenting
his viewers with natural options to improve their health and body weight.
It was the hucksters and unethical marketing companies out there that took
advantage of unsuspecting consumers and caused pretty much the entire
weight-loss segment of this industry to slow down. This negatively
materially affected our business in the third and fourth quarters, causing
us to lose about 19% of our anticipated business.
The "post Oz era" has thankfully seen the bottom and is now stabilized, but
we don''t anticipate it will recover to the levels it was prior to the Oz
Senate hearings. As a result, we have adjusted our business expectations,
going forward in 2015, to accommodate for this new reality within the
weight-loss sector.
This macro trend has affected the entire industry, and we expect, at least
for the time being until consumer confidence is restored, it will remain a
constant constraint for most supplement retail stores and web retailers in
2015.
: Most industries are noticing that land-based retailers
are becoming more cognizant of internet retailers and their growing level
of competition; what do you see going on here?
: That is another macro trend affecting our supplement
industry, and likely every other industry in commerce. That is, the
internet continues to create more price competition for land-based stores
and increases in value when the products don''t necessarily need to be felt
and touched before making a purchasing decision. Personally, I don''t think
land-based stores will ever go away, and they shouldn''t, but I do think
that constant downward price pressure from the internet is making it more
difficult for land-based retailers to compete.
The key for these businesses will be to find other ways of creating
constant and growing value for their customers. In our business, the
direct-to-consumer (internet) channel and internet-only retailer channels
have experienced tremendous growth this past year, at 128% and 70%,
respectively. And I don''t see this slowing down any time soon. It''s a major
strategic focus for us going into 2015, and it''s one of the surest ways to
keep a constant flow of higher margin revenue coming into the company. This
is a macro trend I see continuing to grow, within our industry as well as
across all different types of consumer packaged goods.
: How do you deal with the demands of retailers; I''ve
heard they can be stiff and somewhat unreasonable?
: In our experience, most retailers are very good to
deal with. We have a long history working in our industry, and as a result,
we have built very strong relationships with all of our channel partners.
In fact, we place a huge emphasis on the relationships we build with our
retail partners. The demands from retail have certainly increased over the
last few years, and I see this as a macro trend that will continue to shape
our industry. Examples of these demands might be slotting fees, promotional
fees, rebates, and guaranteed sales, as well as their own internal
pressures to improve their margins through higher margin expectations from
third-party brands and the creation of their own private label brands.
Retailers are expecting success within a few months, or returns are
inevitable, so it places more emphasis on delivering strong product
innovation with the correct marketing support.
The key is to find and work with retailers who view the relationship as
more of a partnership. But to that end, to be a partnership, there must be
equal participation from both sides. This is where we got side-swiped this
past year. We experienced excessive returns from one retailer in
particular, which pretty much took away our profits this past year. Whereas
our business normally experiences less than three-percent in returns from
retail sales, this year we experienced an unprecedented 12-percent in
returns, due to a one-time major product failure. While not systemic, we
have taken serious measures to ensure this level of returns won''t happen
again as the trend of increasing pressures from retail partners will likely
not soften.
: How do brands differentiate themselves in such a
crowded industry?
: Good question. Prior to founding iSatori, I had been
blessed to work with the industry''s leading companies. The theme for
success has always been innovation. Our industry thrives on it, and when
you are able to create something that''s truly innovative, and highly
beneficial to consumers, and no else has it, you have a distinct advantage
in the market.
At EAS, for example, we launched the first commercially available creatine
monohydrate (under the brand name Phosphagen®), and it is now a
$550-million category. More recently, at iSatori, we invented and filed for
patents on a new supplement innovation for muscular performance called
"bio-active peptides" (commercially available under the brand name
Bio-Gro™). In doing so, we have been able to create an entirely new
category in sports supplements, something that hasn''t been done for over
ten years
-- since the introduction of nitric oxide supplements. The market rewards
these types of creations with distinction and sets the brands apart from
the many other copycat types of products. We don''t see this trend ever
going away, and as the industry becomes more crowded, these types of truly
innovative supplement creations will continue to drive the industry''s
excitement and growth, as they now account for an estimated $4.7-billion in
sales each year.
: Functional benefit claims on products seem to be
getting more inflated; what is your view to this, and is this good or bad?
: Competition in the nutritional supplements space is
fierce, and sometimes, unfortunately, it can bring out the worst in some
companies. I''ve always said the best way to kill a bad product is with good
marketing. That''s because if a product does not live up to its marketing
claims, or worse, does not perform to consumers'' expectations or at all,
then word travels fast -- around the internet and in the gyms -- and
consumers learn that it''s probably not a product worth spending their
hard-earned money on. The best way to combat this is threefold: (i) temper
the claims and set a reasonable expectation that can be validated by
legitimate science; (ii) from the first point, invest in clinical studies
on your products. Not just any study, but the gold standard -- randomized,
double-blind, placebo-controlled to ensure they are effective and safe for
consumers to use; and (iii) spend time educating retailers and consumers
alike about the true benefits of your product.
This is how we invest our time and marketing at iSatori: we work hard to
educate consumers about the science we have conducted on our products and
how they can potentially benefit from them. I see this as a continuously
evolving trend that will grow more important over time, especially as the
FDA becomes more involved in our industry, as they have lately. To set
brands apart from others who do not spend time investing in this trend and
to keep consumers satisfied and coming back to continually remain a
customer of nutritional supplements.
: Stephen, we appreciate your time today and for sharing
a more in-depth look at the major market trends affecting the nutritional
supplements industry.
: You are very welcome. It was my pleasure. After
devoting nearly twenty years of my life to this great industry, the least I
can do is try and contribute, in some small way, to us becoming a better,
more reputable, and thriving industry.
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Stephen Adele has been helping individuals from all walks of life create
measurable results in their physiques and performance for almost 20 years
and has rapidly become a respected authority. He has published numerous
articles for magazines around the world, been quoted in several trade
publications, appeared on radio shows, conducted seminars around the globe,
is the CEO of the prestigious supplement manufacturer, iSatori, and won
Outstanding Young Coloradan, Best Boss in America by Fortune magazine, and
was named as a finalist for Entrepreneur of the Year by Ernst & Young.
iSatori is a consumer products firm that develops and sells scientifically
engineered nutritional products through online marketing, Fortune 500
retailers, and thousands of retail stores around the world. The Company is
headquartered in Golden, Colorado, and its common stock trades on the OTCQB
under the symbol "IFIT." More information about the Company is available at
.
Statements made in this news release relating to the Company''s future
sales, expenses, revenue, product developments, and all other statements
except statements of historical fact, are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. We have used the words "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "plan,"
"predict," "project," "should," "will," "potential," and similar terms and
phrases to identify forward-looking statements in this press release. These
statements are based on assumptions and estimates that management believes
are reasonable based on currently available information; however,
management''s assumptions and the Company''s future performance are both
subject to a wide range of business risks and uncertainties, and there is
no assurance that these goals and projections can or will be met. Any
number of factors could cause actual results to differ materially from
those in the forward-looking statements, including, but not limited to, the
timing and extent of changes in demand for the Company''s products, the
availability and price of ingredients necessary to manufacture such
products, and the outcome of any current or future litigation regarding
such products or similar products of competitors. Please see our Risk
Factor disclosures included in our Registration Statement on Form S-1, as
amended, initially filed with the Securities and Exchange Commission on
April 30, 2013, and in subsequent filings with the Securities and Exchange
Commission. All future written or oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified
in their entirety by the previous statements. The forward-looking
statements herein speak as of the date of this press release. We undertake
no obligation to update any information contained herein or to publicly
release the results of any revisions to any forward-looking statements that
may be made to reflect events or circumstances that occur, or that we
become aware of, after the date of this press release.
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Datum: 12.01.2015 - 17:34 Uhr
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