Issue No. 108: In Supplements We Trust

Courtney Powell

Nutritional supplements are a massive industry. But the efficacy and safety of said supplements are questionable.

Still, despite a lack of certitude around risks or rewards, consumer spending on dietary supplements is surging. And brands are bulking up their efforts to capitalize on this trend.

Cashing In

According to a 2019 Harris Poll, 86% of US adults take vitamins or supplements.

In a consumer survey performed by the Council for Responsible Nutrition, the five most popular dietary supplements among US adults include multivitamins, vitamin D, vitamin C, protein, and calcium.

As former FDA commissioner Dr. Scott Gottlieb put it, it’s becoming impossible to keep up with the rapidly expanding supplement industry:

“What was once a $4 billion industry comprised of about 4,000 unique products, is now an industry worth more than $40 billion, with more than 50,000 — and possibly as many as 80,000 or even more — different products available to consumers.”

And those numbers might be an understatement:

  • In 2020, the US supplement market will surpass $50B.
  • Globally, the industry is projected to reach $188B by 2025.

Do they work?

There’s no doubt, supplements sell. The real question is, do they actually work?

After conducting countless randomized controlled trials on popular vitamins and supplements, Edgar Miller III, MD, PhD, a professor of medicine at Johns Hopkins University, concluded: “People would be better off spending their money on fruits and vegetables.”

A step further, Dr. Mark Moyad, the Jenkins/Pomkempner Director of Preventive/Complementary and Alternative Medicine at the University of Michigan, said vitamins can fill some gaps related to nutritional deficiencies but treating them as a cure-all is potentially harmful:

“The idea that you can take 10 pills a day and fix everything or live forever is faulty. There’s a huge disconnect between people’s perception of supplements and the reality, and that can be really destructive. 

Across multiple studies, researchers found no conclusive evidence to support the use of dietary supplements, with experts at Tufts University stating:

“Adequate intake of certain nutrients is associated with a reduction in all-cause mortality when the nutrient source is foods, but not supplements.” 

Worse, on a number of occasions, supplements have been found to be tainted or contaminated, containing ingredients that don’t appear on the label.

Something to Believe in

Despite evidence to the contrary, 87% of consumers say they trust the safety, quality, and effectiveness of dietary supplements. And that’s largely because we want to believe.

Motivations vary, but the most cited reasons for taking nutritional supplements include a desire to feel better, improve energy levels, and boost the immune system.

Happy to oblige, brands have developed a playbook for selling us the outcomes we desire most. Add the co-sign of a celebrity, influencer, or athlete and the possibilities are endless.

Recent developments signal emerging trends and opportunities for growth:

Immune support. Hoping to combat the coronavirus, consumers stocked up on zinc, elderberry, vitamin C, and echinacea. Quick to capitalize, brands from GNC to Moon Juice and TB12 tailored their messaging to “immune support.” Meanwhile, experts say that particular terminology is “scientifically misleading.”

Multivitamins. In August, Bayer paid $225M to acquire a majority stake in direct-to-consumer vitamin startup Care/of. And last month, Unilever purchased Smartypants Vitamins. Why? Sales of multivitamins spiked 17% in 2020, reaching $7.5B.

Sleep aids. The market for sleep supplements is expected to grow 30% this year. Melatonin alone is experiencing a 17% boost. Related, mood-boosting and stress-relieving supplements are trending. Of note, Proper, a sleep coaching and supplement startup, raised $9.5M of funding in July.

Keto-friendly. This low-carb, high-fat fad isn’t new. But brands are taking full advantage of the keto gold rush. In September, Bulletproof added $13M in funding, bringing its total to nearly $84M. Last month, HVMN landed $5.5M in new funding. As the category grows, expect to see more companies introduce MCT powder, exogenous ketones, and electrolytes.

Hydration. Speaking of electrolytes, supplements that support hydration are in high demand. A category investors want to back, Unilever’s acquisition of Liquid I.V. validated the market. Following suit, Cure Hydration recently raised a $2.6M seed round. That’s on the heels of Hydrant’s $5.7M Series A in May. Gaining ground, keep an eye out for LMNT, a clean electrolyte mix co-founded by paleo expert Robb Wolf.

Celebrity-backed. As ingredients become increasingly commoditized, brands are reliant on athletes, influencers, or celebrities to stand out from the crowd. More and more, celebs are going it alone, starting their own supplement companies.

Earlier this year, Tom Brady’s TB12 acquired VitalFit Nutrition. Since then, supplement sales have become a growing segment of the business. October saw Laird Superfood, a plant-based nutrition company from surfer Laird Hamilton, IPO — the company is now valued north of $400M.

Ladder, a supplement company started by Arnold Schwarzenegger, LeBron James, and Lindsey Vonn, was acquired by Beachbody-owned Openfit. And just last week, tennis star Venus Williams launched Happy Viking, a vegan protein brand.

Looking Ahead

Like the broader wellness category, supplements blur the line between fact and fantasy. Hoping to validate their respective products, and the industry in general, some brands are doubling down on clean labels and research-backed claims.

For example, Seed Health recently received FDA authorization for its probiotic supplement. Hilma, a natural remedy brand, is prioritizing natural, clean-label formulations backed by clinical studies. And telehealth startup Ro recently introduced Plenity, an FDA-approved weight loss treatment.

With nutrition science pursuing personalized protocols and glucose monitoring as a path to better health, nutritional supplements could find themselves hard-pressed to prove their worth.

🎙 On the Podcast

This week, on the Fitt Insider podcast, we’re joined by Brynn Putnam.

Putnam is the founder and CEO of Mirror — a connected fitness company that combines an interactive screen with on-demand workout content. In July, lululemon acquired Mirror for $500M.

In this episode, we discuss:

  • Brynn’s motivation for starting Mirror and the genesis of the idea
  • What differentiates the company from look-alike products
  • How Brynn defines community in a digital world
  • What factors led lululemon to purchase the company

Listen to the full episode here.

🏥 Health HQ

The doctor’s office ain’t what it used to be. It’s better.

A much-needed upgrade. Now, the drab, sterile environment is being replaced by hardwood floors, natural sunlight, velvet sofas, and, in some cases, kombucha bars. More and more, building brand appeal and a sense of belonging is a focus for healthcare’s newcomers, including:

  • Kindbody, a wellness and fertility company for women that has raised $60M.
  • Parsley Health, a boutique medical practice with $36M in funding.
  • Forward, a personalized health practice launched with $30M in 2016 (recent funding is undisclosed).

The newest entrant. Meet HealthQuarters, a destination for holistic and clinically backed health and wellness services. As part of a multi-year, multi-location deal with Mount Sinai Health System, HealthQuarters is opening a flagship location in New York City’s NoHo neighborhood.

Behind the scenes: HealthQuarters was incubated through Redesign Health, a venture studio that funds and launches innovative healthcare companies like Vault Health, Calibrate, Proper, and Ever/Body, among others.

💪 Beachbody 2.0

Last week, Openfit acquired Ladder, a supplement company started by LeBron James, Arnold Schwarzenegger, Cindy Crawford, and Lindsey Vonn.

But that’s not the interesting part…

Sweat & supplement. Openfit is a streaming fitness platform owned by Beachbody, the multi-level marketing company known for fitness programs like P90X and INSANITY, as well as the Shakeology supplement line. This move appears to signal Openfit’s push into nutrition in an attempt to become a kind of Beachbody 2.0.

Speaking to Joe Vennare on the Fitt Insider podcast, Beachbody CEO Carl Daikeler hinted at this opportunity, explaining that Openfit was launched to appeal to a different segment of the market.

Unapologetic about the MLM model, Daikeler said the workouts and supplements added value for their coaches and customers. Despite its critics, Beachbody has seen significant growth:

  • $1B revenue in 2020
  • Profitable, with no debt
  • Shifted from VHS & DVD to streaming
  • 2M streaming subscribers and 340K coaches
  • 92% retention MoM for its digital streaming platform

Openfit IPO? For his part, Openfit CEO Jon Congdon said the company is profitable, counts 130K subscribers, and expects 300–400% growth next year. Asked if the company hoped to go public, Congdon told CNBC, “all possibilities are open for us.”

📰 News & Notes

💰 Money Moves

  • Meditation and mental wellness company Calm raised $75M in a Series C round led by Lightspeed Ventures Partners, valuing the brand at $2B.
    More from Fitt Insider: Billion-Dollar State of Mind
  • Everlywell, a digital healthcare platform providing DTC health testing, landed $175M in an oversubscribed Series D round from investors BlackRockTCG, and others.
  • Digital fitness platform Openfit acquired Ladder, a sports nutrition company founded by LeBron James and Arnold Schwarzenegger, for an undisclosed sum.
    More from Fitt Insider: The Athlete VC
  • Wellory, an “anti-diet” nutrition app, raised $4.2M in a funding round led by Story Ventures.
    More from Fitt Insider: The Trillion-Dollar Question
  • London-based digital fitness startup Quell, creators of a fitness gaming platform, landed $3M in a seed round with investment from TencentKhosla Ventures, and others.
    More from Fitt Insider: The Metaverse of Fitness
  • Ro, a digital health startup and pharmacy operating subsidiaries such as Roman and Roryacquired Workpath, an at-home blood testing service, for an undisclosed sum.
  • Upscale wellness space concept Hydra Studiossecured $3.8M in a seed round with participation from Courtside Ventures and Slow Ventures, among others.
    More from Fitt Insider: Our conversation with Courtside Ventures partner Deepen Parikh.
  • Virta Health, a behavioral-focused digital health platform treating type 2 diabetes, received a $65M strategic investment from Sequoia Capital, valuing the company over $1B.
  • Surf media company Surfline added $30M in new funding from TCG.
  • The Skills, an online platform hosting educational courses taught by pro athletes, raised $5M in a seed round led by Will Ventures, with participation from 8VCMaveron, and others.
  • Medicinal cannabis company Curio Wellness launched a fund with plans to deploy $30M to minority, women, and disabled veteran owners seeking to open a Curio franchise.
  • BIOAGE, a biotech company developing therapies to treat aging-related diseases, garnered $90M in an oversubscribed Series C round co-led by a16z and entrepreneur Elad Gil.
    More from Fitt Insider: The Startups Trying to Cure Aging
  • Digitally native sportfishing brand Catch Co. closed a $6M funding round led by Listen Ventures.
  • Killer Creamery, a ketogenic ice cream startup, closed an oversubscribed seed round to scale production and distribution.
  • Dutch cultured meat producer Mosa Meat added $20M in Series B funding, closing the round at $75M.
  • Folx Health, a digital health provider serving the LGBTQIA+ community, raised $4.4M in seed funding from Bessemer Venture PartnersPolaris Partners, and Define Ventures.
  • Spanish startup Jeff, creator of a digital marketplace for laundry, beauty, fitness, and massage services, secured €17.4M ($21.1M) in a Series B round.
  • LemonBox, a DTC vitamin startup targeting Chinese millennials, received $2.5M in pre-A funding from Panda Capital and Y Combinator.
    More from Fitt Insider: DTC Vitamins
  • Detroit-based restaurant concept Breadless, an eatery crafting sandwiches between leafy greens, will launch in 2021 after raising $1.1M.
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