Page 42 - Malaysian Dietary Supplement Industry Status and Outlook Report 2019-2020 Preview

• Dietary supplement distributors are warehousing
and logistics solution providers, connecting
marketers to brick-and-mortar retailers in the
downstream segment of the value chain. Global
distributors control the lion’s share of this market,
with 1 or 2 players dominating the distribution to
major retail chains nationwide. Local distributors
operate on a smaller scale with smaller geographical
coverage, and primarily distribute to independent
retail stores.
• Brick-and-mortar and online retailers operate the
last mile of the value chain, connecting dietary
supplement products to consumers. There are 6 to 7
established brick-and-mortar retail chains that
operate nationwide, and typically run in-house
online platforms to supplement sales. Dedicated
online retailers for dietary supplement products
include all established e-commerce platforms.

Vertical integration is a relatively standard practice in the
Malaysian dietary supplements industry, and is observed in
the midstream to upstream segments of the value chain:

• OEM manufacturers provide value added services
such as product conceptualization, formulation,
regulatory assistance and related services
(integrating upwards), expanding capabilities into
the ODM sphere.
• Manufacturers looking to provide go-to-market
services, connecting overseas sellers to the local
market via in-house distribution channels
(integrating downwards).
• Marketers investing in manufacturing facilities,
either through acquisition or new investments
(integrating downwards).
• Marketers investing in direct distribution (single-tier,
multi-tier) and online channels (integrating
downwards), connecting products directly to
consumers.

Market dynamics of the Malaysian dietary supplements
industry is largely characterized by aggressive competition
among marketers in an (organically) growing but highly
saturated market.

• The dietary supplements industry is trend-driven.
Introduction of trending ingredients in the market
accelerate industry growth. Product trends in the
dietary supplement market are difficult to sustain for
more than 2 to 3 years due to the number of
competing brand offerings that will enter the market.

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