Vitamins & Supplements M&A Update – September 2024

Robust Consumer Demand Spurs Innovation, Vitamins & Supplements M&A

Capstone Partners latest Vitamins & Supplements M&A Report shares that consumer spending in the sector has held strong despite macroeconomic pressures. Fundamental growth drivers such as favorable demographic trends and heightened consumer focus on health and wellness have provided optimism for future innovation and Vitamins & Supplements merger and acquisition (M&A) opportunity.

Although deal activity has remained muted compared to historical levels, the Vitamins & Supplements sector has maintained stable growth in the U.S. market, exhibiting resilience as consumers have tightened budgets and re-evaluated spending patterns amid macroeconomic pressures. The sector has showcased inelastic demand across end markets as media outlet coverage around the importance of health and wellness has directed significant consumer attention to the market. Consumers have significantly increased their prioritization of wellness compared to a year ago. Moreover, aging global populations have offered runway for vitamins and supplements demand, with the Boomer generation (born between 1946 and 1964) contributing to a robust addressable market. The age group has often been referred to as “a pig in a python” due to being a notably large group and posing major influence on nearly all aspects of life, from neighborhoods to schools and retirement systems. This generations’ gradual move into the Geriatric end market is expected to supply stable sales for sector participants with B6, B12, iron, calcium, Vitamin D, and protein supplement offerings. Additionally, the Cognitive Health segment has benefitted from personal care and prevention health trends with consumers adopting a wholistic approach to self-care, with brain health as a cornerstone of care regiments. Growth in the category has stemmed from bifurcated preferences as younger generations seek preventative solutions and older cohorts look to improve longevity.

M&A activity in the Vitamins & Supplements sector has risen year-over-year (YOY) through year-to-date (YTD) 2024 with 28 transactions announced or completed. Pure-play vitamin and supplements companies have remained attractive but a rise in protein and sports-related health and wellness demand has been a focal point for sector M&A, comprising 21.4% of transactions to-date compared to 18.2% in the prior year period. Total sector deal value to-date mirrors the prior year period, but average deal value has fallen 10.1%, indicating buyer caution and more strict cash management amid consumer spending headwinds. Input cost inflation and pricing declines have left public players on the defensive, focusing on enhancing operating leverage and becoming more selective in pursuing acquisitions. On the financial sponsor front, fund managers have leveraged small, easily digestible bolt-on acquisitions to source growth in existing platforms rather than establish new direct investments. Bolstered by strong fundamental sales drivers from both ends of global age demographics, Capstone expects dealmaking to exhibit stable activity and valuations to remain healthy as firms leverage M&A to access new products with proven efficacy in high-growth segments.

Also included in this report:

• A discussion of key demand drivers bolstering outlook in the Vitamins & Supplements sector and specific sector segments.
• A breakdown of the types of buyers actively targeting sector participants, contributing to healthy levels of Vitamins & Supplements M&A.
• The rationale behind notable transactions and the key characteristics driving premium valuations in the sector.

Capstone Partners’ Consumer Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the consumer and retail industries. Our team partners with leading mid-to-large sized consumer businesses that serve growing end-markets. For more information on the Vitamins & Supplements M&A trends featured in this report or to speak with one of our Consumer Investment Banking Team members about how to grow, value, and/or sell your company, we are here to help. Contact us today to start a conversation.