Don’t “Sleep” on the Long-Term Growth of This CPG Category
Sleep matters A LOT. It’s essential to every process in the body, affecting our physical and mental functioning the next day, our ability to fight disease and develop immunity, and our metabolism and chronic disease risk. Because of that…sleep is truly an interdisciplinary aspect of our health. Yet, if I was tasked to describe in one word the current state of sleep in America, I would use lackluster. A recent Gallup poll showed that around 84 million Americans would describe their sleep the previous night as “fair” or “poor.” Although many Americans’ sleep quality remains low, 55% also report that getting good sleep is a “major priority.”
Hustle Culture & Sleep
Admittedly, it wasn’t too long ago that I frequently bragged about my ability to work long hours without needing much sleep. I would even toss in the occasional Nas lyric from the 90s song N.Y. State of Mind where he raps “I never sleep, cause sleep is the cousin of death.” Hustle culture has taught us that there's always more: more money to make, a bigger title or promotion and a higher wall to climb. But hustling comes at a cost.
As so many people found out during the last few years, being a hustler in a chaotic environment involves paying a huge personal price. Your brain and body weren’t built to handle the physical and psychological stressors of continual hustling. Stress and poor sleep are closely connected, as the chances of a bad night’s sleep increases by 96% when stress in at an elevated level.
While it’s silly to think we can eliminate stress from our lives entirely, we can implement healthier practices in our daily routines to improve sleep insufficiency. This particular topic around lifestyle changes really hits home hard for me, and by looking at various market data points, I know I’m definitely not a special snowflake in my pursuit.
But, before I get further into explaining why I believe the sleep health category is a massively growing CPG market opportunity, I wanted to give a quick shoutout to the sponsor of this content, NuLiv Science. Over the last 25 years, NuLiv Science has grown into a leading full range ingredient supplier, early-stage developer of nutraceuticals, and a trusted turnkey service provider to the dietary supplement industry.
These days, people are quick to rely on addicting, synthetic sleep ingredients, but NuLiv Science wants you to get quality sleep the natural way. By promoting the uptake of GABA to specific brain cell receptors, the ingredient Zylaria supports relaxation and tranquility.
If you’re interested in obtaining more information around why brands are formulating with NuLiv Science ingredients to take their products to the next level, head over to NuLivScience.com or reach out to me directly and I’ll connect you with the relevant team member.
Sleep Supplements Market
The sleep supplement category was building momentum even before it got an additional pandemic-era booster shot. According to the Nutrition Business Journal, the amount of sleep supplements purchased by consumers have more than doubled since 2017. In 2021, the condition specific supplement category grew at about 17% YoY, reaching just shy of $1.3 billion in total sales. Furthermore, Clearcut Analytics released data that stated the sleep support supplement category was growing even faster on the Amazon marketplace at over 50% YoY in 2021.
To make this market data a bit more granular, I think it’s important to understand the popularity of certain sleep support ingredients. Melatonin remains, far and away, the category leader. Per SPINS multioutlet channel data, melatonin was responsible for over 90% of all sleep supplement ingredient sales last year.
Beyond Melatonin
While melatonin is going to be the leading ingredient in sleep supplements for a while, I’m thinking about the Wayne Gretzky quote where he said, “skate to where the puck is going to be, not where it has been.” Why that sports analogy is applicable to the sleep supplement category is because it has historically been focused on helping people get to sleep. However, as we continue to learn more about the sleep cycle, it becomes obvious that sleep issues are more nuanced than that, and the solutions need to better address these specific issues.
Many consumers struggle with racing thoughts and feelings from elevated personal or work stress, too much stimulation before bedtime, or even consuming too much caffeine. Some might be looking for quality over quantity in their sleep. Others need as much or more help staying asleep than getting asleep. That’s a central reason why you saw outsized growth last year coming from many non-melatonin ingredients, such as l-theanine, chamomile, and lemon balm. These ingredients, and others like ashwagandha and valerian root are addressing sleep quality indirectly by supporting mood and the body’s ability to relax. There has been this organic melding of consumers connecting the dots between sleep support and relaxation and stress relief, but also supplement brands have increased marketing communications that support this interconnectivity.
Does CBD Have a Place in Sleep?
While I don’t want to get offtrack too much, it’s important to mention how CBD is playing an increased role in the intersections of sleep support and relaxation and stress relief. If you think about a handful of years ago when CBD burst onto the scene, it was primarily marketed for stress relief and relaxation. That just happens to perfectly align with the post-dinner comedown use occasion with consumers preparing to go to sleep. As the regulatory issues clear up around CBD, it’s likely we’re going to see the ingredient included in many more sleep formulas.
More Than Just Supplements
Another important aspect of the sleep support supplement market trend revolves around delivery methods. It doesn’t matter the supplement category, but consumers have pill fatigue…that’s no different with sleep supplements. Yes, capsules still hold the leading market share, but gummies, powders, and food/beverage are closing the gap. It’s that food and beverage product format that I want to spend a bit of extra time on because I feel it’s another “skate where the puck is going” kind of thing.
Yes, sleep support is still a very niche segment of the food and drink CPG space. It’s driven by the legacy category of herbal teas that are associated with evening relaxation. That being said, I’m mostly intrigued with the growing connection between sleep support and indulgent snacking categories (even if it’s better for you versions). The most popular nighttime snack choices are cookies, chips, and ice cream.
If you remember from my late-2020 Pivotal conversation that I had with my good friend and founder of NightFood Sean Folkson, we talked about how a large proportion of ice cream gets consumed before bedtime. That’s why his company focuses on sleep-friendly ice cream for night snacking. While there’s been some more recent dabbling my large CPG food and beverage companies, I still believe there’s this huge relatively untapped market available for food and beverage CPG brands to provide sleep friendly choices for consumers who snack before bed (which is a huge share of Americans).
Ecosystem of Sleep
To continue with some potentially huge sleep market opportunities, I wanted to shift very quickly to the estimated $100 billion global sleep aid market which not only includes supplements, but also prescription and over-the-counter medications, personal care products, sleep wearables, smart beds/pillows, clinics/coaches, and many more associated consumer categories. We know that sleeping pills, be that prescription, over-the-counter, or supplements, are not the silver bullet (aka the magic pill for all things sleep). That’s not to say your sleep supplement brand needs to manufacturer pillows or beds, build a sleep wearable, or hire tons of doctors to provide telehealth sleep services, but a wide mix of consumer-facing companies are addressing these needs. I’m just saying that there’s more to the sleep quality equation than functional CPG products alone, but brands should at least consider if an ecosystem or partnership strategy would be effective.
Final Thoughts
Here’s a collections of thoughts as to why I’m long-term bullish on the sleep support category…
Sleep supplements are one of the few sensory type products in the industry. I believe that will help overall consumer adoption levels.
Sleep insufficiency can have serious health implications, weaken the immune system, and impair cognitive performance. These issues have been brought to the forefront over the last few years and I don’t think consumers are going to overlook it anymore.
Sleep quality may also have a tangible impact on the U.S. economy. As corporate wellness programs grow in popularity, companies will realize their employees’ poor sleep is collectively costing them tens of billions annually.
Main factors causing sleep issues (like stress and anxiety from work, family, and finances) unfortunately aren’t disappearing anytime soon.