NBTY draws upon nature's bounty to cash in on the market for preventive and alternative health care. As the largest vertically integrated source of nutritional supplements in the US, the company manufactures, wholesales, and retails more than 22,000 products including vitamins, minerals, herbs, and sports drinks. Brands include Ester-C, Nature's Bounty, Balance Bar, Solgar, and Sundown. NBTY has manufacturing facilities in Canada, China, the UK, and the US, and is able to produce and package capsules, tablets, powders, and liquids. The Carlyle Group-owned company sells its goods through pharmacies, wholesalers, supermarkets, and health food stores around the world.
In fiscal 2015 (ended September), NBTY restructured its reporting segments into four units: Consumer Products, Holland & Barrett International, Puritan's Pride, and Vitamin World. The largest segment, Consumer Products, sells products worldwide under a number of brands, including third-party private labels. It accounts for more than half of the group's total revenues.
Holland & Barrett International (accounting for about 30% of sales) operates more than 800 Holland & Barrett stores, primarily in the UK and Ireland, as well as more than 200 De Tuinen, Essenza, and GNC/Met-RX stores in Europe. The two smaller segments, which account for less than 10% of earnings each, are Puritan's Pride (which markets its namesake products online and via mail-order catalogues) and Vitamin World (which operates some 385 retail Vitamin World locations in the US).
Unlike many of its competitors that rely upon third-party manufacturers, the company actually manufactures 90% of the nutritional supplements that it sells and also serves as a third-party manufacturer of private-label products for a broad range of retailers.
In the US the company has manufacturing plants in Arizona, California, Florida, New Jersey, New York, and North Carolina. Internationally, it has plants in Winnipeg and Manitoba in Canada, and in China and the UK. NTBY's products are marketed and sold in approximately 100 countries.
The US accounts for around 60% of NBTY's revenues. The UK is its second-largest market, representing 25%.
Sales and Marketing
The company wholesales its products to all major mass merchandisers, club stores, drug store chains, and supermarkets. It also sells its products to independent pharmacies, health food stores, the military, and other retailers.
NTBY markets its products through print, media, and cooperative advertising and also through radio, television and internet advertising. In the UK and Ireland, Holland & Barrett advertises on television. Holland & Barrett, GNC (UK) and Nature's Way advertise in national newspapers and conduct sales promotions. In addition, Holland & Barrett, GNC (UK) and De Tuinen each publish their own magazine with articles and promotional materials.
Solgar and GNC (UK) advertise in magazines and conducts sales promotions. In Canada, SISU advertises in trade journals and magazines. Vita Health advertises in newspapers, trade publications and magazines, and operates websites.
Wal-Mart accounted for 11% of the company's total sales in fiscal 2015. Other major customers include Costco, CVS, Walgreens, Kroger, and Target.
NBTY spent $198 million on advertising in 2015, a dip from the $203 million it spent in 2014.
NBTY has seen slow growth over the last five years. Revenues increased 1% in fiscal 2015 (ended September) to peak at $3.23 billion, versus $3.21 billion in fiscal 2014. That growth was driven by an increase in the Holland & Barrett segment (which saw higher sales and a boost from positive currency exchange rates), but was partially offset by a decline in the Vitamin World segment, as weight-loss product sales dropped. The Puritan's Pride and Consumer Products segment remained flat that year.
After falling into the red in 2014, with a $44 million net loss, NBTY returned to profitability in 2015. It posted $74 million in net income that year, primarily due to the absence of goodwill and intangible asset impairment charges that had impacted the group in 2014. That in turn helped cash flow from operations, which jumped 183% to $290 million.
Spotting trends early and riding them wisely is crucial in the nutritional supplement industry. While the company keeps an eye out for new products, in recent years it hasn't spent much on research and development, preferring instead to simply acquire or copy products with proven sales.
NBTY has grown big and strong as the entire natural products industry has boomed, but a steady diet of acquisitions has supplemented its growth. Since 1986, the company has acquired more than 30 smaller businesses, which has expanded its product portfolio, geographic presence, and distribution network. In 2015, for example, it bought Dr. Organic for $85 million. That purchase spurred its entry into the mass-market beauty and skincare markets.
NBTY's sales are still heavily concentrated in the US and UK. It has plans to deepen its presence in emerging international markets where the growing amount of consumer income can be used to alleviate nutritional deficiencies.
Mergers and Acquisitions
In 2013 the company acquired Belgian firm Essenza, which operates more than a dozen retail stores, for some $4 million.