NBTY, Inc: Building On A Legacy of Wellness

With brands like Nature’s Bounty, Sundown Naturals, Solgar, Ester-C, Balance Bar and Met-Rx, Ronkonkoma, NY-based NBTY, Inc., holds a significant presence in virtually every major vitamin, mineral, herb and supplement product category. With an enduring commitment to quality, the company has plans to grow its core businesses while expanding its reach into other wellness markets. 
The company’s history can be traced as far back as 1870 with the founding of its Holland & Barrett retail stores in England. More than 145 years later, the vertically integrated manufacturer, marketer, distributor and retailer now offers many leading health brands, routinely introducing innovative products and solutions to the marketplace.

Formerly known as Nature’s Bounty, Inc., NBTY has grown organically and through strategic acquisitions, evolving into a global wellness business that retains a principal commitment to producing high-quality products on a consistent basis. The company’s brands include Holland & Barrett, Nature’s Bounty, Sundown Naturals, Osteo Bi-Flex, Solgar, MET-Rx, Pure Protein, Body Fortress, Balance Bar and its e-commerce platform Puritan’s Pride, among others.

A portfolio company of The Carlyle Group since 2010, NBTY recently sold its U.S. retail business, Vitamin World, to Centre Lane Partners, representing a focus on investing and building its core brands. Vitamin World began in 1976 with a kiosk in Williamsville, NY. Today, there are 380 stores in the U.S., Guam, the Virgin Islands and Puerto Rico.

With net sales exceeding $3.2 billion in fiscal year 2015, NBTY’s products are currently marketed and sold in approximately 100 countries. About 40% ($1.3 billion) of sales were to customers in the U.S., according to the company’s financial reports.

In addition to its strategy to drive profitability in the Holland & Barrett International segment, NBTY plans to grow international sales of consumer product brands in emerging markets that are characterized by a rising middle class and strong demand for high quality health and wellness products from U.S.-based manufacturers. In addition, NBTY plans to further strengthen the position of its leading international consumer brand Solgar in the premium segment in Western Europe.

Growth & Evolution
According to Brian Wynne, president, Consumer Products Group Americas and CEO of NBTY’s U.S. Nutrition business, the U.S. dietary supplement market is “vibrant and experiencing dynamic growth.”

“We believe this growth will be fueled primarily by proactive health and wellness categories, such as vitamins, nutrition, weight management and fortified foods and beverages,” he said. “Thanks to growing consumer demand, sales have grown exponentially in the wellness category, from vitamins and nutritional supplements to beauty products and nutrition for athletes.”

The industry is at an important point in its evolution, he added. “There is a clear gap between the authentic, responsible players who have a genuine interest in helping consumers lead healthier lives and those companies who try to take shortcuts or jump on ‘fads’ for a quick hit. Consumers are starting to be more discerning and are holding companies accountable for their actions, behaviors and commitment to the cause.”

When New York Attorney General Eric Schneiderman announced his investigation into herbal dietary supplements last year, the spotlight on quality became significantly brighter.

“The investigation certainly raised concerns across the industry,” said Mr. Wynne, who joined NBTY in January 2015. “Some of those concerns were valid and some were not, but it did allow for more open dialogue around quality. As a company who has been dedicated to setting the highest quality standards since the inception of our company, we applaud any effort that seeks to further authenticate and validate the responsible companies out there.”

Ultimately, the investigation opened doors to conversations and collaborations about how responsible companies can continue to set the quality bar higher, he added. “The common elements we look for in any partnership are exceptionally high quality, integrity, innovative thinking, authenticity and transparency.”

Building Better Brands
NBTY’s nutraceuticals brands are in a strong market position, according to Mr. Wynne, thanks to a consumer base that is intent on taking a more holistic approach to healthcare. “Our 10 largest brands account for over 80% of sales and a larger percentage of EBITDA.”

Nature’s Bounty, the company’s anchor U.S. brand, has been trusted by health-conscious consumers for more than 40 years, and has been growing solidly, Mr. Wynne noted. The brand’s line of beauty vitamins, Nature’s Bounty Optimal Solutions, including its Hair, Skin and Nails variety, is a best seller in the segment.

The Osteo Bi-Flex brand also leads in the joint health category. In terms of innovation, last spring the company launched Osteo Bi-Flex Ease, which features a smaller-size pill.

“Sundown Naturals has been providing high quality vitamins and supplements for over 35 years and is the leading overall brand in the natural space,” Mr. Wynne continued. “Solgar is our premium brand and is distributed throughout the world in over 60 different countries. Solgar just recorded its tenth year of double-digit growth. Pure Protein is another tremendous brand in terms of performance; it is one of the leaders of our Sports and Active Nutrition portfolio, and provides the fuel our consumers expect to lead active, competitive and wholesome lifestyles. So there is a great performance story we can tell for our brands.”

The company is investing resources into a few key, foundational areas of its business: customer service, science, innovation and brand building.

Providing outstanding customer service is not a “nice to have,” Mr. Wynne noted, it is a “have to have.”

“Our customers are our partners and the true conduit to our consumers. Understanding their needs, and the needs of their consumers, is key to our continued success. We are committed to working closely with them to find ways to build more engagement with our brands and to better understand consumer shopping behaviors; this is resulting in some really collaborative and creative thinking at the store level.”

Science has always been at the heart of the company, he continued, but it’s taking that further by bolstering the resources dedicated to R&D, product development, nutrition research and other key areas. The company hired Chief Scientific Officer Matthew Roberts to head its efforts, and in early 2015 announced the creation of its Scientific Advisory Council, which Mr. Wynne said has provided value and insight into specific nutrient areas.

“These efforts fully support our innovation strategy and help to ensure that our pipeline is robust and filled with products that we truly believe will provide health benefits to our consumers,” he noted.

Additionally, the company brought in Chief Marketing Officer Andre Branch, whose dedication to consumer insights and differentiating brands will support growth and brand awareness. “Andre and his team are working on breakthrough creative and packaging that is compelling to consumers and is delivered in a convenient, contemporary and authentic manner,” said Mr. Wynne.

Product Innovations
Focused on continued innovation, NBTY is launching several new products this spring. For example, Nature’s Bounty will be launching Energy Gummies, which is a unique formula designed to provide energy metabolism support. Nature’s Bounty Optimal Solutions will be launching a new “Healthy Aging” platform with three key SKUs: Healthy Hair, Ageless Eye and Radiant Skin. These products are new formulations that incorporate innovative ingredients such as Verisol collagen and Cynatine HNS keratin complex that support beauty from within, Mr. Wynne noted.

Pure Protein is also coming to market this spring with Pure Protein Crunch—bite-sized crisps that will be available in double chocolate or peanut butter varieties. With 10 grams of protein, Pure Protein Crunch is gluten-free and made with non-GMO ingredients.

“We’re also always proud to promote that Sundown Naturals is the number one Natural broadline brand in the food, drug and mass channels,” Mr. Wynne said. “All of our products manufactured after May 1, 2015 are 100% free of gluten and wheat, dairy and lactose and artificial flavors. This March we are launching a great new probiotic gummy—and also Melatonin on the Go, which is a one-week supply of melatonin in a resealable pack for easy traveling.”

Beauty & Personal Care
Extending its efforts in the wellness arena, in December NBTY finalized its acquisition of Doctor Organic, a brand of personal care products that are free from parabens, sodium lauryl sulfate, perfumes, artificial fragrances, petrochemicals, genetically modified organisms, and doesn’t conduct animal testing. Products include Moroccan Argan Oil Shampoo, Manuka Honey Body Butter, Coconut Oil Moisture Melt and Organic Snail Gel.

“The beauty and personal care industry represents a natural extension for NBTY given its position as a leader in the wellness industry and as evidenced by the success of our Nature’s Bounty Optimal Solutions product line,” said Mr. Wynne. “We are confident that this is a natural fit for our business that will produce positive results.”

In 2015 the company also introduced its Nature’s Bounty Earthly Elements essential oils line exclusively at Walmart. “This is another area where we see great opportunity and a natural fit with the extension of wellness into areas beyond ingestible supplements. The line of 10 oils has done extremely well in Walmart, and as a result, will be rolling out to additional locations this year. In addition to making them more widely available to consumers, we will be introducing additional scents and products later in the year.”

Attracted to what it considers to be significant opportunities in beauty and overall wellness, the company has been watching these categories closely. “While not yet in the top 10 brands by our definition, we expect Dr. Organics to complement our existing portfolio of brands nicely and help us expand distribution. We see great things coming from this acquisition in the near future.”

Consumers care as much about what they are putting in their bodies as what they put on their bodies, he added, and brands that can offer quality, cleanliness and purity will continue to excel.

“The market is strong and we have been gaining share in our core brands,” said Mr. Wynne. “We continue to evaluate how we allocate resources and are focused on growing our larger business. We have a number of promising launches in 2016. As a market leader with a laser focus on quality, NBTY is well positioned for a great year in the health and wellness market.”