The $55.8 billion U.S. VMS market saw record growth in 2020, with a surge in sales that is expected to be long-lasting as changing consumer dietary patterns and the continued emergence of preventative healthcare continue to drive long-term growth. VMS products have grown in popularity, especially those purchased through online channels, which are seeing disproportionate share growth as digitalization accelerates. Online sales increased 87.3% in 2020, accounting for 16.7% of all supplement sales and are projected to reach nearly one-quarter of industry sales by 2024.
Secular growth, healthy buyer appetite and a strong capital markets environment are supporting robust M&A activity. Industry participants are seeking acquisitions of VMS companies with strong brands and digital footprints to enter adjacent product categories more rapidly. Contract manufacturers with scalable platforms that offer robust capabilities, diversified customer lists, and geographic differentiation are in high demand. Strategic acquirers who recently announced deals include Nestle Health Science (The Bountiful Company and Nuun), Unilever (Onnit Labs and SmartyPants Vitamins), and Bayer (Care/of). Financial buyers are equally active, with a high-level of new platform and add-on acquisition activity. New Heritage Capital (Icelandirect), Cornell Capital (INW), New Mountain Capital (Natrol), Gryphon Investors (Metagenics), WM Partners (Vega), and Wind Point Partners (FoodScience) are among sponsors to make headlines in the VMS space.
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