Executive Summary

RICH-VICKS LATEST MAJOR OTC MARKETER TO ENTER VITAMINS & MINERALS business, according to a recently published research report from SRI's Health Industries Department entitled "The Beckoning Nutritional Supplements Business -- Analysis and Prognosis." Although quite a few major U.S. and foreign OTC drug and H&BA "firms have considered and are considering entry into the U.S. vitamins and minerals business, so far only a few have actually made the attempt," the report states. "Vicks is the latest major OTC consumer products company to try." Commenting on the firm's LifeStage line introduction, the report says that "on the surface, it would appear that Vicks has approached the mass market correctly. It designed a six-item, natural ('no' claims) product line . . . for the most logical population segments, reportedly using inputs from consumer psychographics research . . . it introduced the line with very generous stocking incentives; and it supported the introduction with a considerable media spending program." However, the report maintains, the LifeStage brand line "has not done particularly well during its first nine months on the market, and penetration of the mass market retail stores is said to be incomplete." According to the report, "the reasons for this mediocre performance may have included poor packaging concepts, indifferent formulations, lack of trade rapport or a good image among consumers in the nutritional supplements field, the company's mistakes with its Plus Products subsidiary . . . or lack of commitment to the entry effort." The report also notes the difficulties Rich-Vicks has experienced in attempting to build a base in the market through acquisition. Plus Products, with sales at the time of about $20 mil., was acquired by Rich-Vicks in 1980. Since then, the report states, "Plus now including Mill Creek Products (natural hair and skin items), has had a series of difficult years -- and sales may have declined by one-third -- in sharp contrast to Richardson-Vicks' success with many of its other acquisitions, particularly those in the health and personal care products areas." SRI believes that Rich-Vicks may be ready to divest Plus. The SRI report represents an extensive evaluation of the rapidly growing nutritional supplements industry, including analysis of the various types of products, manufacturers and distribution networks that are involved. The report predicts that the business will grow at a 13% rate for the remainder of the decade, reaching $5 bil. in 1990 from an estimated $2.1 bil. in 1983