No talk of layoffs, cutbacks, bailouts or restructuring here. Quite the contrary. Executives at Utah’s nutraceuticals-based companies are charting plans for continued heady growth in products designed to improve health, looks and your neighbor’s dwindling income—simultaneously. While that may seem counter intuitive in the midst of the worst economic downturn in decades, it actually makes perfect sense to boomers and home-based entrepreneurs who are driving this counter-cyclical trend.

Companies from established direct marketing powerhouses to national retail marketers to nutritional ingredients suppliers and Web-based startups are all experiencing 8 to 20 percent growth over previous years’ positive results.

At the heart of this seeming anti-economic-gravity feat are three fairly simple basic human drivers: ageing, stress and financial security. According to executives at several Utah-based nutraceutical companies, these factors create powerful momentum and loyalty during slowdowns, producing sustained growth in the midst of business contraction and layoffs.

Boomer Power

The Baby Boomer generation, which has been a significant economic driver in a number of major product category trends over the past 50 years, is now seen as key in the growth of the expanding health, beauty and nutraceuticals sectors. “These people see their health slipping away, and they see their wealth slipping away,” says Mark Bartlett, vice president, Research and Development for Nu Skin Enterprises. “They want to take control of their own future.”

This segment of the population—those born before 1955—is estimated to account for seven-tenths of every dollar spent in the U.S. economy today. “The Boomers powered the tremendous growth of large categories of products as they and their families grew up—from Pampers/Huggies, to Toys R Us and Stride Right, to the Mustang and later the mini-van,” says Jeff Wilson, marketing director for Nu You. “Now they are aging, and they don’t like it. They will try products with promise to combat that.” Wilson points to a quote by anthropologist Ashley Montagau that summarizes Boomers’ sentiments and motives, and the nutritional industry’s opportunity: “The goal of life is to die young as late as possible.”

Boomers’ perceived loss of control over their health is due in part to dissatisfaction with the current health care delivery system. “In the high-consuming 50 plus age group, there is increasing dissatisfaction with conventional medical care and costs,” says Bruce Woods, CEO of Schiff Nutritional International. “There is concern and distrust regarding drugs, side effects, etc. and as a result, more interest in alternative forms of medicine.”

In addition to being overall well-healed and educated, the Boomers are discriminating buyers. While they are highly motivated to address their increasing health and beauty issues, they seek products that deliver real and lasting benefits, not just promises. Nutrition industry executives point out that this need has directly intersected with their ability to deliver innovative, cutting-edge products aimed at satisfying that requirement.

This Stuff Really Works

As Boomers and others seek alternative solutions to their health and aging challenges, nutraceuticals and supplements have become more widely scrutinized, proven and accepted as an essential part of a healthy lifestyle. “Even doctors are coming around, and stating publicly that everyone should be supplementing their diets,” says Dave Wentz, CEO of USANA Health Sciences. “It’s not a fad or an on-and-off thing. People stop looking at it as optional when they start feeling better.”

Over the years, the industry has evolved from the perception of fringe science to taking a leading role in new product and technology innovation.

“One of our greatest strengths is innovative products that you can’t get anywhere else,” says Kevin Fuller, vice president Global Product Marketing, Nu Skin Enterprises. “We are on the cutting edge of nutrition technology.” The company pioneered inclusion of nano technology that delivers ingredients more effectively, and is now unveiling its new ageLoc technology that focuses on the sources (vs. the symptoms) of aging. “These products are clinically proven to be measurably and meaningfully different,” says Fuller. Nu You’s Wilson has experienced similar trends in the industry. “We’ve seen tremendous breakthroughs in nutritional benefits that haven’t been understood before. Giving them sound scientific support and credible claims in the media has created a literal frenzy of demand.”

These strong positive results translate directly into strong brand loyalty and increasing demand for nutritional products, even during tight economic times.

“If it really works for them, if it makes them feel better, they will take almost anything else out of their budget to buy it,” says Wilson. “These people are terribly loyal, and will buy over and over.” This phenomenon appears to

be rooted firmly in consumer demand, as opposed to being channel or distributor-driven as verified by Schiff’s Wood, whose company’s products move through mainstream retail channels such as CVS and Walgreens. “There has been a significant acceleration in positive science surrounding our types of products,” said Woods. “People who try them do believe in them and aren’t willing to cut back, even when they are cutting back in other products, because they see them as essential to their health.”

The Stress Factor

Other executives point to the increasing awareness of the positive benefits of fitness and wellness in dealing with stress during an economic pinch. GNC Stores, which with the rest of the industry has seen sales steadily increase, says many customers decide to trim down and firm up as well as tighten up during an economic squeeze. “In times like these, there is more interest in dealing with stress,” says Tom Dowd, executive vice president, Store Operations and Development for GNC. “With increasing general awareness of health and wellness benefits, people who never thought much about exercise and nutrition and trying it as a way to offset increased stress.”

Supplement and Stretch

As people worry about, or actually do lose their employment, they increasingly look for opportunities to supplement their incomes and stretch scarce dollars even further. Nutraceutical companies who sell their products through direct marketing channels have experienced substantial growth in their distributor organizations as the recession has deepened and lengthened—reportedly up to 20 percent growth in new distributors. “As things

get worse, many people who had the employee mind set are more open to having their own business, to being entrepreneurs,” says Wentz. “For a while, new recruits were paralyzed waiting and wondering if the recession was really going to be severe. But now the down-turn has kicked in in most countries worldwide, and many more people are interested in home-based businesses.”

Nu Skin has experienced similar results in its worldwide distribution business. “We are in 50 markets worldwide, and are seeing healthy growth in all our markets,” said Fuller. “Prospects are doing their due diligence, and are finding that our distributors have the products and technology platforms they can trust to build a business around. It is a huge and primary contributor for us.”

Retailers note a slightly different, although related trend, noting consumer’s increased spending on so called “affordable luxuries.” Rather than take the cruise or the big trip to Florida, people will splurge on pampering themselves by taking better care of their health (supplements, exercise, spa, new treadmill, etc.), seeing more movies, and—much to the chagrin of these industry executives—eating more candy. “During times of economic stress, we see our sales increase in tandem with the movie industry and the candy industry,” says Dowd. “People seem to turn to comfort measures—getting fit, losing weight—as well as comfort foods to see them through.”

On the Horizon

The consensus of these industry executives is that the future should reveal continued growth and prosperity in nutraceuticals for the foreseeable future. The factors that have buoyed the industry thus far through the downturn should continue to provide resiliency even through a potentially prolonged recession. And while an upturn could throttle back home-based business growth, the underlying demand for nutritionals appears long and strong. As Wilson puts it, “We are always trying to outdo each other—this industry will always be on the cutting edge of innovation.”