Following years of strong growth in demand throughout the 1990’s and early 2000’s, the Canadian market for natural health products (NHPs) has continued to grow at the respectable rate of seven percent in 2008. This trend is expected to continue over the next two years at a rate of five percent. A recent survey conducted for Health Canada concluded that the majority of Canadians see growth in their use of natural health products in the coming years. The NHP market encompasses vitamins and minerals, herbal remedies, homeopathic medicines, probiotics, traditional medicines such as traditional Chinese medicines, and other products like amino acids and essential fatty acids.
U.S. exports are estimated to make up more than 50 percent of Canada’s imports of vitamins and derivatives, by far the most popular and largest category of NHPs, accounting for about one third of market demand. Local production levels have been relatively stagnant over the past five years resulting from industry consolidation, acquisitions and transfer of production facilities to other countries and perhaps the significant strengthening of the Canadian currency since 2004.
The steady growth of the Canadian economy, increasing health consciousness among members of an aging population, as well as expanding acceptance of NHPs will continue to drive growing demand in Canada over the next three to five years. Canadians remain very receptive to well-designed, well-presented, high-quality NHPs. Canadian consumers’ demand for NHPs constitutes a market that should continue to offer many business opportunities for U.S. suppliers.
The NHP industry is now serving a fast moving and highly competitive market in the developed world, including Canada. The use of vitamins, minerals, supplements, as well as probiotics and herbal remedies in Canada has increased significantly during the past two decades. These products remain very popular in 2008. Four Canadians out of five have used NHPs and a majority of them foresee an increase in consumption of NHPs in the coming years.
The Canadian market for NHPs, as defined in this report, should reach the wholesale value of US$1.3 billion in 2008. However, in evaluating this market it is important to focus on the shifts occurring in consumers’ preferences, the competition between sales channels and also the important regional and geographic differences in the Canadian NHP market.
Concerning sales channels, most recent figures available indicate that health food retailers and food chains incorporating a pharmacy department, like Loblaw Companies Limited, now lead the way by fulfilling 37 percent of retail market demand while other retailers including chain and independent pharmacy stores meet 33 percent of the demand. Direct sales including online and consumers clubs, like Quixstar/Nutrilite, and some practitioners account for 20 percent. Traditional Herbal & Chinese Medicine retailers primarily located in large cities like Toronto, Montreal and Vancouver account for almost 10 percent of retail sales in Canada.
Industry sources have indicated that purchases of natural health products in pharmacies are much more significant in the Eastern regions of Canada while health food stores dominate in the Western parts of the country. This means consumers in British Columbia and Alberta shop for their NHPs at health food stores, while drug stores are clearly the favorite sources of supplies for Canadians living in Ontario, Quebec and the Atlantic provinces.
Canadian sales of NHPs, by category, indicate that multi-ingredient products are the most popular claiming close to 30 percent of the market. The next two most important categories, in terms of sales, are single vitamins & minerals and herbal medicines with close to a 20 percent share each. Accounting for five percent or less of Canadian sales of NHPs are homeopathic products, other extracts and isolates, fatty acid supplements, probiotics, amino acid supplements and synthetic duplicates.
Canadians now place greater emphasis on preventative measures as they become more inclined to take control of their own health. Through better access to information, Canadians are becoming more comfortable with evaluating their own conditions and seeking appropriate remedies for specific ailments.
Middle-aged Canadians make up the bulk of the Canadian population and constitute the most health-conscious group. They tend to be the most avid users of NHPs. As the proportion of elderly Canadians continues to increase with those over the age of 65 already making up 14 percent of the population and as the baby boom generation (those born between 1946 and 1964) gets older, the demand for natural health products should spread to the senior age groups. It is reasonable to believe that a good number of these Canadians will turn to NHPs to maintain a healthy lifestyle in the coming years. Potential for strong growth in demand therefore currently exists for NHPs among all age groups of the Canadian population in the foreseeable future.
Residents of Ontario and the Western provinces seem to be more self-care prone and spend a significantly higher amount on NHPs than those living in Quebec and the Atlantic provinces. One key reason for this is that the residents of Ontario and Western provinces, particularly B.C. and Alberta are more affluent than the residents of Quebec and Atlantic provinces. The issue of cost and affordability in marketing NHPs is of significant importance because Canadians are used to being reimbursed by provincial medical public plans, as well as third party insurers for conventional remedies prescribed by their physician. These plans do not cover the purchase of NHPs, even when prescribed.
Both, consumers and the industry, welcomed Canada’s new regulations in 2004. Industry’s perspective on the regulations is that they should contribute to increased visibility, more credibility and therefore greater demand in the coming years. Currently, however, it remains difficult to measure the results of the 2004 regulations. Nonetheless, NHPs are generally accepted and more discussed today.
Canadians using NHPs are traditionally oriented to self-caring rather than to consult with alternative medicine practitioners. However, this trend is currently moving towards alternative medicine practitioners including massage therapists, acupuncturists, chiropractors, homeopaths, naturopaths, herbalists and others. These practitioners are often prescribing the use of NHPs. They represent an increasingly important component in the promotion and sale of NHPs in Canada. The proportion of the population consulting alternative medicine practitioners could be as high as ten percent and certainly exceeding that percentage in certain parts of the country, like in the province of British Columbia.
Another indicator of widespread and nationwide acceptance of NHPs by Canadians is the first-time introduction of supplements in Canada's official Food Guide published by Canada’s public health agency, Health Canada. The popular and well-publicized guide started making provisions for supplements in 2007. This guide is similar to the United States Department of Agriculture's MyPyramid. The latest version of Canada's Food Guide makes vitamin recommendations for women of childbearing age as well as for older people. It is expected that future editions will include more recommendations encouraging the use of NHPs, particularly vitamins and minerals.
The popular craze for high concentration NHP ingredients in drinks and foods, not discussed in this report, may have a long or medium term detrimental impact on the level of demand for the traditional vitamins, minerals, herbs and supplements. So far, these food products, marketed as natural health foods and beverages, seem to have attracted a brand new category and generation of NHP consumers in Canada. Red Bull was the first energy drink maker to obtain a license number (NPN) and to comply with Canada’s NHP regulations.
By Pierre Richer