Because the DS industry comprises a large number of diverse products, industry data must be compiled from a variety of sources. In this section, we present industry data as compiled from secondary data sources and discuss projections and predictions for the industry.
Industry data are useful in characterizing baseline supply and demand conditions in particular DS product markets. Compiling this information is the necessary first step in conducting an economic impact analysis of a particular regulation. Because the industry comprises such a large number of diverse products, providing detailed statistics on each product market is beyond the scope of this report. Instead, we provide aggregate industry data and describe our procedures for constructing these data.
6.1.1 Domestic Industry Data
The most complete and frequently reported industry data from the U.S. Bureau of the Census is reported at the 4-digit SIC level. After examining the descriptions of each SIC code to determine which contain DS products, RTI compiled the list of SIC codes in Table 6-1. In addition, the corresponding North American Industry Classification Scheme (NAICS) codes are provided as well.
Of the products listed in Table 6-1, some are solely DS products and others are used or manufactured by other industries as well. For example, the tea products in SIC 2099 include all teas in addition to those that are considered DS products. SIC codes 2833 and 2834 contain products that could be considered, depending on use and labeling, either DS products or pharmaceuticals (over the counter or prescription). SIC code 2075 contains all soybean products in addition to protein supplements. SIC codes 2819, 2869, and 2899 contain chemicals that are used in a wide variety of industries in addition to the DS industry.
Some value of shipments data are available for 5- and 7-digit SIC codes that are predominately DS products. These data are provided for SIC codes 2833 and 2834 for 1996 in Table 6-2. However, many DS products are most likely contained in the codes for products "not stated by kind."
Table 6-1. SIC Codes for Dietary Supplements, Included Dietary Supplement Products, and NAICS Codes for Dietary Supplements
SIC | SIC Description | Included Dietary Supplement Products | NAICS | NAICS Description |
2075 | Soybean Oil Mills |
|
311222 | Soybean Processing |
2099 | Food Preparations, Not Elsewhere Classified |
|
311920 | Coffee and Tea Manufacturing |
2819 | Industrial Inorganic Chemicals, Not Elsewhere Classified |
|
325188 | All other Basic Inorganic Chemical Manufacturing |
2833 | Medicinal Chemicals and Botanical Products |
|
325411
325412 |
Medicinal and Botanical Manufacturing
Pharmaceutical Preparation Manufacturing |
2834 | Pharmaceutical Preparations |
|
325412 | Pharmaceutical Preparation Manufacturing |
2869 | Industrial Organic Chemicals, Not Elsewhere Classified |
|
325199 | All other Basic Organic Chemical Manufacturing |
2899 | Chemicals and Chemical Preparations, Not Elsewhere Classified |
|
325188 325199 |
All other Inorganic Chemical Manufacturing
All other Basic Organic Chemical Manufacturing |
Sources: U.S. Department of Labor, Occupational Safety and Health Administration. "Standard Industrial Classification Search." <http://spider.osha.gov/oshstats/sicser.html>. As obtained on March 24, 1998.
U.S. Department of Commerce, Bureau of the Census. "1997 NAICS and 1987 SIC Correspondence Tables." <http://www.census.gov/epcd/www/naicstab.htm>. As obtained on March 24, 1998. |
Table 6-2. Detailed SIC Breakdown for SIC Codes 2833 and 2834, 1996
SIC Codes: 5 and 7 Digit |
Description |
1996 Value of Shipments ($ million)a |
2833 Medicinals and Botanicals | ||
28333 | Other medicinal chemicals and botanical products, in bulk, not elsewhere contained | 1,586.4 |
2833315 | Alkaloids, including opium and nicotine | NA |
2833318 | Other botanical drugs, including glycosides and ginseng extract | NA |
2833323 | Vitamin C | NA |
2833325 | Vitamin E | NA |
2833326 | Other naturally occurring vitamins | NA |
2833344 | Drugs of animal origin, including hormones, dried glands, organs, and tissues and extractions thereof | NA |
2833300 | Other medicinal chemicals and botanical products, in bulk, not elsewhere contained, not stated by kind | NA |
28330 | Medicinals and botanicals, not stated by kind | 226.6 |
2834 Pharmaceutical Preparations | ||
28347 | Vitamin, nutrient, and hematinic preparations, for human use | 4,811.6 |
2834711 | Multivitamins, plain and with minerals (except B complex vitamins and fish livers oils) | 1,154.4 |
2834713 | Pediatric vitamin preparations (drops, suspensions, and chewable tablets) | 91.8 |
2834714 | Prenatal vitamin preparations | 30.0 |
2834715 | B complex preparations | 104.4 |
2834717 | Fluoride preparations | 1.7 |
2834719 | All other vitamin preparations | 616.7 |
2834721 | Fish liver oils | 11.8 |
2834731 | Nutrients, excluding therapeutic dietary foods and infant formulas | 261.2 |
2834741 | Tonics and alternatives | 19.9 |
2834751 | Hematinics, with B12, oral | 15.4 |
2834755 | Other hematinics, oral | 24.6 |
2834761 | Hospital solutions | 1,470.3 |
2834798 | Other vitamin, nutrient, and hematinic preparations, for human use | 477.6 |
28340 | Pharmaceutical preparations, not stated by kind | 652.9 |
a Value of shipments data for all of SIC 2833 and for SIC 28340 at the 7-digit level are available only in census years. Thus, the most recently available data were collected for 1992 and are not reported here.
NA = not available Sources: U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census. February 1998. "1996 Annual Survey of Manufactures: Statistics for Industry Groups and Industries." M96(AS)-1. U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census. May 1995. "1992 Census of Manufactures: Industry Series, Drugs." MC92-I-28C. U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census. January 1998. "Current Industrial Reports: Pharmaceutical Preparations, Except Biologicals." MA28G(96)-1. |
Using 6-digit international codes, RTI compiled information on trade volumes for codes that contain DS products. The list of international codes used is provided in Table 6-3 along with the DS type to which we assigned each, their descriptions, and their corresponding SIC codes. Herbal and botanical extracts are combined with all herbals and botanicals because it is not possible to determine the form of the product based on the international codes. Concentrates, constituents, and metabolites are not specifically identified because they are forms of the products included elsewhere.
The products that are classified in the international codes in Table 6-3 include, in addition to dietary supplements, foods, drugs, and products with industrial uses. Thus, estimates of trade volumes and values based on these 6-digit codes may overstate the true volumes and values for DS products alone. In particular, vitamins include not only vitamins sold as DS products but vitamins used to fortify foods. Minerals include products that may be for industrial uses as well. Sulfur, for example, is sold as a dietary supplement, but most of its sales is likely for industrial uses. Products classified in herbals and botanicals include some products that may be sold as OTC or prescription drugs (e.g., ephedrine). Amino acids, proteins, and teas may be food products in addition to DS products.
Using the classifications in Table 6-3, we tabulated trade statistics as reported by the International Trade Commission. However, these trade values include all products for each code rather than DS products only. In Table 6-4, import values for 1997 are listed by DS product type. Within each DS product type, the top 10 countries from which the United States imports (by import values) are listed individually. In Table 6-5, export values for 1997 are listed as well. Again, within each DS product type, the top 10 countries to which the United States exports (by export values) are listed individually.
Although some trade publications cite the opinion that the DS industry is beginning to mature, high growth rates are still predicted for the foreseeable future. In the recent past, some have estimated that industry sales have been growing at a rate of 20 to 30 percent a year. The Nutrition Business Journal is predicting an average growth rate of 10 to 14 percent per year to the year 2000 across all DS product types (Nutrition Business International, September 1998). Within individual product categories, it is predicting 16 to 18 percent growth rates for herbals and
Table 6-3. International Codes by Dietary Supplement Type
Dietary Supplement Type |
International Code | Description | SICa Code |
Amino acids | 292241 | Lysine and its esters; salts thereof | 2833 |
Amino acids | 292249 | Amino acids and their esters, not containing more than one oxygen function, and salts, nesoi | 2869 |
Amino acids | 350790 | Enzymes and prepared enzymes, nesoi | 2869 |
Animal extracts | 051000 | Ambergris castoreum civet and musk; cantharides; bile; glands and other animal products for use in pharmaceutical products; fresh, frozen, etc. | 2011 |
Animal extracts | 150410 | Fish-liver oils and their fractions, whether or not refined but not chemically modified | NA |
Animal extracts | 150420 | Fish fats and oils and their fractions | 2077 |
Animal extracts | 150430 | Fats and oils and their fraction of marine mammals, whether or not refined but not chemically modified | 2077 |
Animal extracts | 300110 | Glands and other organs, dried, whether or not powdered | NA |
Animal extracts | 300120 | Extracts of glands or other organs or of their secretions | 2833 |
Animal extracts | 300190 | Heparin and its salts; other human or animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included | 2833 |
Herbals and botanicals | 070320 | Garlic, fresh or chilled | 161 |
Herbals and botanicals | 091010 | Ginger | 2099 |
Herbals and botanicals | 091020 | Saffron | 2099 |
Herbals and botanicals | 091030 | Tumeric (curcuma) | 2099 |
Herbals and botanicals | 121120 | Ginseng roots, fresh or dried, whether or not cut, crushed, or powdered | 831 |
Herbals and botanicals | 121190 | Plants and parts of plants (including seeds and fruits) used primarily in perfumery, pharmacy, or for insecticides, etc., fresh or dried, etc., nesoi | NA |
Herbals and botanicals | 121220 | Seaweeds and other algae, fresh or dried, whether or not ground | 919 |
Herbals and botanicals | 130231 | Agar-agar | 2833 |
Herbals and botanicals | 293940 | Ephedrines and their salts | 2833 |
Herbals and botanicals | 293942 | Pseudoephedrine and their salts | 2833 |
Herbals and botanicals | 293949 | Ephedrines and their salts, nesoi | 2833 |
Herbals and botanicals | 330124 | Essential oils of peppermint (mentha piperita) | 2899 |
Minerals | 280120 | Iodine | 2819 |
Minerals | 280130 | Fluorine; bromine | 2819 |
Minerals | 280200 | Sulfur, sublimed or precipitated; collodial sulfur | 2819 |
Minerals | 280450 | Boron; tellurium | 2819 |
Minerals | 280470 | Phosphorus | 2819 |
Minerals | 280490 | Selenium | 3339 |
Minerals | 280521 | Calcium | 2819 |
Minerals | 281000 | Oxides of boron; boric acids | 2819 |
Minerals | 281122 | Silicon dioxide | 2819 |
Minerals | 281610 | Magnesium hydroxide and magnesium peroxide | 2819 |
Minerals | 282530 | Vanadium oxides and hydroxides | 2819 |
Minerals | 282560 | Germanium oxides and zirconium dioxide | 2819 |
Minerals | 282611 | Fluorides of ammonium or of sodium | 2819 |
Minerals | 282720 | Calcium chloride | 2819 |
Minerals | 282760 | Iodides and iodide oxides | 2819 |
Minerals | 283325 | Copper sulfate | 2819 |
Minerals | 283326 | Zinc sulfate | 2819 |
Minerals | 283522 | Mono- or disodium phosphates | 2819 |
Minerals | 283524 | Potassium phosphate | 2819 |
Minerals | 283640 | potassium carbonates | 2819 |
Minerals | 283650 | Calcium carbonate | 2819 |
Minerals | 284170 | Molybdates (Molybdenum content) | 2819 |
Other | 293710 | Pituitary (anterior) or similar hormones | 2833 |
Other | 293721 | Adrenal cortical hormones and their derivatives | NA |
Other | 293729 | Other adrenal cortical hormones and their derivatives, nesoi | 2833 |
Other | 293890 | Glycosides, natural or reproduced by synthesis and their salts, ethers, esters and other derivatives, nesoi | 2833 |
Other | 300339 | Medicaments containing hormones or other steroids used primarily as hormones, but not containing antibiotics | 2834 |
Dietary Supplement Type |
International Code | Description | SICa Code |
Proteins | 040410 | Whey and modified whey, whether or not concentrated or containing added sweeteners | 2023 |
Proteins | 210610 | Protein concentrates and textured protein substances | 2075 |
Proteins | 350210 | Egg albumin | 2015 |
Proteins | 350211 | Egg albumin, dried | NA |
Proteins | 350219 | Egg albumin, other | NA |
Proteins | 350220 | Milk albumin, including concentrates of two or more whey proteins | NA |
Proteins | 350290 | Albumins, albuminates, and other albumin derivatives, nesoi | 2869 |
Proteins | 350400 | Peptones and derivatives; other proteins and derivatives, nesoi; hide powder, chromed or not | 2075 |
Teas | 090210 | Green tea (not fermented), nesoi, in immediate packings of a content not exceeding 3kg | 2099 |
Teas | 090220 | Green tea (not fermented),nesoi | 2099 |
Teas | 090230 | Black tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3 kg (6.61 lb.) | 2099 |
Teas | 090240 | Black tea (fermented) and other partly fermented tea, nesoi | 2099 |
Teas | 090300 | Mate | 2099 |
Teas | 210120 | Tea or mate extracts, essences, and concentrates and preparations with a basis of these products or with a basis of tea or mate | 2099 |
Teas | 210690 | Food preparations, nesoi | 2099 |
Vitamins | 292310 | Choline and its salts | 2869 |
Vitamins | 292320 | Lecithins and other phosphoaminolipids | 2869 |
Vitamins | 293610 | Provitamins, unmixed | 2833 |
Vitamins | 293621 | Vitamins A and their derivatives, unmixed | 2833 |
Vitamins | 293622 | Vitamin B1 (thiamine) and its derivatives | 2833 |
Vitamins | 293623 | Vitamin B2 (riboflavin) and its derivatives | 2833 |
Vitamins | 293624 | D- or DL-pantothenic acid (vitamin B3 or vitamin B5) and its derivatives | 2833 |
Vitamins | 293625 | Vitamin B6 (pyridoxine and related compounds with vitamin B6 activity) and its derivatives, unmixed | 2833 |
Vitamins | 293626 | Vitamin B12 (cyanocobalamin and related compounds with vitamin B12 activity) and its derivatives | 2833 |
Vitamins | 293627 | Vitamin C (ascorbic acid) and its derivatives | 2833 |
Vitamins | 293628 | Vitamin E (tocopherols and related compounds with vitamin E activity) and its derivatives, unmixed | 2833 |
Vitamins | 293629 | Vitamins and their derivatives, unmixed, nesoi | 2833 |
Vitamins | 293690 | Provitamins and vitamins (including natural concentrates) derivatives thereof used primarily as vitamins and intermixtures of the foregoing, nesoi | 2833 |
Vitamins | 300450 | Medicaments in measured doses, etc., containing natural or synthetic vitamins and their derivatives | 2834 |
NA = not available (SIC code was not contained in the Concordance file supplied by FDA).
nesoi = not elsewhere specified or included a The SIC code descriptions are: 2099 Food Preparations, Not Elsewhere Classified Sources: U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census. "Schedule B Keyword Search." <http.//www.census.gov/foreign-trade/schedules/b/index.html>. As obtained on September 21, 1998. U.S. Department of the Treasury, U.S. Customs Service. "Harmonized Tariff Schedule of the U.S." <http:/www.customs.ustreas.gov/imp-exp/harmoniz/index.htm>. As obtained on September 21, 1998. |
Table 6-4. Import Quantities and Dollar Values for Trade Codes that Contain Dietary Supplement Products, 1997
Dietary Supplement Type |
Import Country |
Import Value ($ million)a |
Vitamins |
France |
109.09 |
Japan | 108.74 | |
Germany | 91.18 | |
Switzerland | 81.73 | |
China | 81.15 | |
Canada | 40.89 | |
Denmark | 37.07 | |
United Kingdom | 30.40 | |
Netherlands | 7.57 | |
Australia |
7.51 |
|
Total (top 10 countries) | 595.33 | |
Total (other countries) | 54.04 | |
Total (all countries) |
|
649.37 |
Minerals | Japan | 77.76 |
Chile | 66.53 | |
Germany | 48.02 | |
Canada | 39.88 | |
United Kingdom | 35.87 | |
Mexico | 23.15 | |
China | 19.51 | |
South Africa | 13.24 | |
Israel | 11.61 | |
France |
11.29 |
|
Total (top 10 countries) | 346.86 | |
Total (other countries) | 50.16 | |
Total (all countries) |
|
397.02 |
Herbals and Botanicals | India | 62.63 |
China | 55.32 | |
Germany | 38.07 | |
Mexico | 19.93 | |
Chile | 16.64 | |
Japan | 14.48 | |
Spain | 14.38 | |
Korea | 9.21 | |
Hong Kong | 8.63 | |
Brazil |
6.41 |
|
Total (top 10 countries) | 245.70 | |
Total (other countries) | 72.48 | |
Total (all countries) |
|
318.18 |
Animal Extracts | Canada | 49.50 |
China | 42.47 | |
Germany | 22.34 | |
France | 22.30 | |
Spain | 11.63 | |
Norway | 11.62 | |
Netherlands | 4.62 | |
Sweden | 3.67 | |
Argentina | 3.02 | |
Denmark |
2.69 |
|
Total (top 10 countries) | 173.86 | |
Total (other countries) | 11.40 | |
Total (all countries) |
|
185.25 |
Amino Acids | Japan | 76.12 |
Denmark | 55.03 | |
France | 45.09 | |
Germany | 43.59 | |
Korea | 31.12 | |
United Kingdom | 24.12 | |
Indonesia | 19.79 | |
Ireland | 16.16 | |
Netherlands | 14.63 | |
Switzerland |
14.27 |
|
Total (top 10 countries) | 339.91 | |
Total (other countries) | 86.32 | |
Total (all countries) |
|
426.23 |
Proteins | New Zealand | 23.99 |
Canada | 16.64 | |
Germany | 8.03 | |
Australia | 6.36 | |
United Kingdom | 4.17 | |
France | 3.67 | |
Denmark | 3.63 | |
Mexico | 3.39 | |
Japan | 2.24 | |
Switzerland |
1.64 |
|
Total (top 10 countries) | 73.76 | |
Total (other countries) | 5.29 | |
Total (all countries) |
|
79.05 |
Other | Switzerland | 178.29 |
Korea | 44.14 | |
Japan | 26.49 | |
Netherlands | 20.75 | |
France | 19.78 | |
Sweden | 8.35 | |
Germany | 6.84 | |
China | 6.55 | |
United Kingdom | 2.90 | |
Argentina |
2.80 |
|
Total (top 10 countries) | 316.89 | |
Total (other countries) | 3.85 | |
Total (all countries) |
|
320.73 |
Teas | Canada | 113.98 |
Germany | 50.88 | |
China | 39.84 | |
Argentina | 28.42 | |
India | 23.32 | |
France | 22.90 | |
Taiwan | 19.45 | |
Thailand | 17.91 | |
Japan | 14.89 | |
United Kingdom |
14.55 |
|
Total (top 10 countries) | 346.13 | |
Total (other countries) | 120.90 | |
Total (all countries) |
|
467.03 |
a General import C.I.F. (cash insurance freight) values.
Sources: U.S. International Trade Commission Trade Database. <http://205.197.120.17/scripts/user_set.asp>. As obtained June 1998. U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census. "Schedule B Keyword Search." <http.//www.census.gov/foreign-trade/schedules/b/index.html>. As obtained June 1998. U.S. Department of the Treasury, U.S. Customs Service. "Harmonized Tariff Schedule of the U.S." <http:/www.customs.ustreas.gov/imp-exp/harmoniz/index.htm>. As obtained June 1998. |
Table 6-5. Export Quantities and Dollar Values for Trade Codes that Contain Dietary Supplement Products, 1997
Dietary Supplement Type |
Export Country |
Value of Exports ($ million)a |
Vitamins |
Canada |
116.80 |
Japan | 37.30 | |
Germany | 30.47 | |
Netherlands | 29.66 | |
Mexico | 22.22 | |
United Kingdom | 21.04 | |
France | 19.90 | |
Poland | 17.60 | |
Brazil | 16.58 | |
Australia |
14.73 |
|
Total (top 10 countries) | 326.30 | |
Total (other countries) | 160.13 | |
Total (all countries) |
|
486.44 |
Minerals | Canada | 66.41 |
Mexico | 46.68 | |
Japan | 38.47 | |
Netherlands | 22.94 | |
Germany | 19.94 | |
Belgium | 12.14 | |
France | 11.99 | |
United Kingdom | 11.25 | |
Korea | 11.08 | |
Taiwan |
9.35 |
|
Total (top 10 countries) | 250.26 | |
Total (other countries) | 83.10 | |
Total (all countries) |
|
333.36 |
Herbals and Botanicals | Hong Kong | 58.72 |
Canada | 22.54 | |
Mexico | 17.55 | |
United Kingdom | 14.92 | |
Japan | 12.18 | |
Germany | 11.51 | |
Taiwan | 9.76 | |
Malaysia | 7.92 | |
France | 6.12 | |
Australia |
6.10 |
|
Total (top 10 countries) | 167.32 | |
Total (other countries) | 54.32 | |
Total (all countries) |
|
221.64 |
Amino Acids | Netherlands | 117.82 |
Canada | 83.20 | |
Denmark | 75.40 | |
Italy | 58.26 | |
United Kingdom | 58.19 | |
Mexico | 41.29 | |
Hong Kong | 29.58 | |
Spain | 24.80 | |
Japan | 23.37 | |
Brazil |
21.90 |
|
Total (top 10 countries) | 533.80 | |
Total (other countries) | 180.41 | |
Total (all countries) |
|
714.20 |
Animal Extracts | Germany | 107.09 |
United Kingdom | 65.59 | |
Japan | 40.46 | |
Netherlands | 37.14 | |
Canada | 16.36 | |
France | 9.80 | |
Sweden | 9.42 | |
Mexico | 6.49 | |
Brazil | 4.48 | |
Australia |
4.24 |
|
Total (top 10 countries) | 301.08 | |
Total (other countries) | 23.81 | |
Total (all countries) |
|
324.89 |
Proteins | Switzerland | 310.56 |
Japan | 60.55 | |
Mexico | 57.83 | |
Canada | 47.16 | |
Belgium | 42.99 | |
Netherlands | 35.95 | |
Hong Kong | 23.48 | |
Korea | 22.88 | |
Taiwan | 21.72 | |
Australia |
17.71 |
|
Total (top 10 countries) | 640.83 | |
Total (other countries) | 170.00 | |
Total (all countries) |
|
810.84 |
Other | France | 54.57 |
Belgium | 44.07 | |
Canada | 18.55 | |
Hong Kong | 8.39 | |
Sweden | 7.31 | |
United Kingdom | 6.73 | |
Germany | 6.40 | |
Japan | 5.92 | |
Colombia | 5.68 | |
Brazil |
4.65 |
|
Total (top 10 countries) | 162.26 | |
Total (other countries)d | 40.96 | |
Total (all countries) |
|
203.23 |
Teas | Canada | 300.39 |
Japan | 192.76 | |
Hong Kong | 131.61 | |
Mexico | 65.74 | |
Malaysia | 49.93 | |
Korea | 48.45 | |
Taiwan | 42.92 | |
Australia | 38.06 | |
Saudi Arabia | 34.10 | |
Bahamas |
28.48 |
|
Total (top 10 countries) | 932.45 | |
Total (other countries) | 567.15 | |
Total (all countries) |
|
1,499.60 |
aF.A.S. (free alongside) values.
Sources: U.S. International Trade Commission Trade Database. <http://205.197.120.17/scripts/user_set.asp>. As obtained June 1998. U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census. "Schedule B Keyword Search." <http.//www.census.gov/foreign-trade/schedules/b/index.html>. As obtained June 1998. U.S. Department of the Treasury, U.S. Customs Service. "Harmonized Tariff Schedule of the U.S." <http:/www.customs.ustreas.gov/imp-exp/harmoniz/index.htm>. As obtained June 1998. |
botanicals, 6 to 7 percent growth rates for vitamins, 7 to 8 percent growth rates for minerals, 14 to 16 percent for specialty supplements, and 6 to 8 percent for sports supplements (Nutrition Business International, September 1998).
As new products are introduced, the range of DS products will continue to grow. In some cases, sales of individual products will grow as new research indicates the potential use or value of the product. In other cases, whole new types of products will be introduced in the market. In particular, the industry expects increased sales of herbal products used in Ayurvedic healing, which is a traditional medicine system originating in India (Nutrition Business International, September 1997a).
Over time, the industry is expected to continue consolidating into a smaller number of manufacturing firms (Nutrition Business International, July 1997a). The number of small businesses, in particular, is expected to decline due to economies of scale in production and the cost efficiencies that larger manufacturers obtain from volume purchase of inputs. In addition, small manufacturers may be unable to serve the larger retailers that are increasingly selling DS products.
Sales of DS products by mass merchandisers such as Costco and Kmart are increasing and are expected to continue to grow in the future (Nutrition Business International, October/November 1997a). In the past, mass merchandisers carried primarily the traditional vitamin and mineral products. However, they are starting to carry a broader range of DS products, including herbal products and products such as shark cartilage and melatonin. In addition, strong sales growth is expected through multilevel marketing firms (Nutrition Business International, November 1996).
Combined with the consolidation of manufacturing firms and the growth of sales by mass merchandisers is the importance of identifiable brand names (Nutrition Business International, December 1996a). Consumers seeking consistent quality of products migrate toward particular brand names. The larger manufacturing firms are more likely to have the resources needed to maintain consistent quality, the advertising budgets to establish brand name recognition, and the resources to serve a large enough portion of the market to maintain brand name recognition.
Because the industry has grown rapidly and is beginning to be considered a legitimate industry, it has attracted the attention of investors on Wall Street (Nutrition Business International, July 1997b). The Nutrition Business Journal and Natural Business both maintain stock market information on publicly traded DS product companies. The influx of outside investment dollars will allow the industry to continue to grow, both by adding new products and by serving additional markets.