MARKET
INFORMATION

According to a report prepared by PMR Publications, “Dietary supplements market in Poland 2009”, the value of the dietary supplements market in Poland in 2008 was over PLN 1.7bn (value of pharmacy, non-pharmacy and online sales). In 2007, when Poland’s GDP grew by 6%, the dietary supplements market grew by 30%, and in 2008 by almost 25%. Between 2009 and 2011, due to the financial crisis and the effects of legal changes, the growth dynamics weakened. However, according to the authors of the report, by the end of 2011 the Polish dietary supplements market will still be growing at a rate of 12-15% a year, much faster than the segment of prescription drugs – Rx, or even the non-pharmacy market of OTC drugs and dietary supplements.

According to PMR, the category of dietary supplements that is about to experience the most dynamic growth in the coming years will be products based on omega-3 and omega-6 fatty acids, especially preparations from this group affecting the heart and circulatory system. In recent years, more and more manufacturers have decided to introduce omega acid-based products to their portfolios on the Polish market, but the products of leading European manufacturers of this type of supplements are still not available in Poland. The development of the market for omega acid-based products will be influenced by the epidemiological trends observed in Poland. Despite their gradual decline, cardiovascular diseases are the most common cause of death in Poland. Poles are also reluctant to introduce real restrictions in their diets. They often prefer to satisfy nutritional deficiencies with artificial supplementation. Taking these factors into account, PMR forecasts that the market for omega acid-based dietary supplements will grow by up to several dozen % annually.

Dietary supplements are part of a larger market, which is the non-pharmacy market for medicines and dietary supplements – OTC. The OTC market is made up specifically of:

• medicines, 
• dietary supplements, 
• functional foods, 
• herbal teas, 
• energising foods.

The latest report by PMR, a research company, entitled “OTC market in Poland 2011. “Non-pharmacy market of OTC products in Poland 2011. Development forecasts for 2011-2013”, the non-pharmacy market of OTC medicines and dietary supplements reached a value of approximately PLN 1bn in 2010, growing only slightly compared to 2009.

According to PMR estimates, in 2009 the non-pharmacy market for OTC products grew by around 11% year-on-year and exceeded PLN 1bn for the first time. 2010 was a weaker year for the pharmaceutical market as a whole, which was also reflected in the non-pharmacy market, which grew by around 1%. This was also due to the high base from 2009 and the fact that the list of products allowed for sale in general shops came into force in October 2009. PMR expects 2011 to be a better year for OTC product sales than 2010. It is estimated that the non-pharmacy market for OTC products will grow at a rate of around 5% in 2011, and in 2012-2013, the market should grow at an annual rate of around 4%.

According to PMR Publications’ report entitled “OTC market in Central and Eastern Europe 2008”, the domestic market for dietary supplements is following a similar trend to that of Western Europe and the USA, i.e. systematic growth. The same trends are also visible in other Central and Eastern European countries, such as the Czech Republic, Hungary and Slovakia. In 2007, the OTC market in the CEE countries reached a value of EUR 7.4bn. The largest OTC market in Central and Eastern Europe is Russia, which accounts for almost half of sales, closely followed by Poland. This evolution is driven primarily by the mass desire for lifestyle changes and a tendency to take greater care of health and physical appearance. 

According to experts, the main factors influencing the sales value of dietary supplements are the ageing population and the increased interest in self-medication, healthy lifestyles and a healthy appearance, products of natural and herbal origin, as well as the trend for vitamins and minerals and other similar products to be registered as dietary supplements.

COMPETITION

The market for nutritional and dietary supplements is very fragmented. There are many entities operating on it, with most companies making the sales online. One of the most important parameters determining the market position of companies selling dietary supplements is the number of registered and active users. Due to the lack of information on the number of users of competing online portals, as well as the amount of revenue they generate, it is difficult to determine the Issuer’s market position. 

The Issuer lists the following companies as its main competitors in its business:

• APS
• ACTIVEBODY
• Centrum odżywek
• DSO.pl
• Muscle Power
• Studio Rekreacji Siłowej
• TYTAN
• WebTrading-Group  
• Triceps.pl

Available reports and market publications do not contain detailed information specifying the Issuer’s market share. The Issuer’s Management Board estimates the Company’s competitive position primarily based on available reports and industry analyses describing the entire dietary supplement market, as well as on its own observation of the market. 

In the opinion of the Issuer’s Management Board, there are several entities on the market with a similar scale of operations to the Issuer. Having said that, most competing entities are much smaller than the Issuer. For several years now, there has been a tendency for entities with a significant position on the market to separate, with a simultaneous phenomenon of weaker entities withdrawing.

COMPETITIVE ADVANTAGES

The Issuer’s main competitive advantage is the unique group of users of the Sports Discussion Forum (Sportowe Forum Dyskusyjne in Polish, SFD) (www.sfd.pl), who, through their opinions, provide the Issuer with knowledge of current customer needs and market trends.

SUPPLIERS

The Company collaborates with more than 30 manufacturers and suppliers of goods from home and abroad. Purchases of goods are diversified and there is no dependence on a limited number of suppliers. In case of product shortages, it is always possible to offer replacement products. In the opinion of the Issuer’s Management Board, there is no dependence of the Issuer’s business on suppliers. Among others, the Issuer collaborates with the following manufacturers of dietary and nutritional supplements:

• Aminostar
• Blastex
• BSN
• Discovery
• Fit Best Line
• Fitbull
• Fitmax
• Megabol
• MRM
• Nutrend
• Ofra Sport
• Olimp
• Optimum Nutrition
• Ostrowia
• Power System
• Profesional Fighter
• QNT
• RX Gold
• Trec
• Ultimate Nutrition
• Vitalmax
• VPX
• Weider

RECEIVERS

The Issuer bases its operations on retail sales (46% of sales) and wholesale sales (54% of sales) of nutritional and dietary supplements conducted in the form of mail order sales via the www.sfd.pl/sklep website in Poland. 

The Issuer is targeting the mass customer, to whom it offers product sales using optimised logistics processes. The Issuer’s business is unaffected by a limited number of customers. The company supplies around 100 wholesale customers and makes around 3,500 retail and wholesale shipments each month. 

The target audience consists of men aged 16-45 and women aged 20-45. The products offered by the Issuer are aimed at active people, into bodybuilding and fitness, leading a healthy lifestyle, interested in active leisure activities and proper nutrition.