Trouble sleeping? You are not alone. 1 out of 3 American adults do not get the recommended 7-9 hours of sleep per night. Chronic insomnia impacts between 10-30% of U.S. adults. This situation has not improved with the pandemic and Americans are looking for help.

American consumers spent roughly $826 million on melatonin supplements in 2020. In fact, Melatonin became the #2 ranked segment behind probiotics when looking at all vitamins, minerals, & supplements.

In 2020, American consumers spent + 43% more than previously on melatonin supplements.

Functional beverages, like Som Sleep and Dream Water, have also benefitted from a pandemic year. These beverages incorporate a proprietary blend of commoditized sleep-inducing ingredients, like L-theanine and Melatonin. Pepsi launched its version, Driftwell, in the middle of the recent pandemic. Unlike the other two functional beverages, Driftwell does not include Melatonin, but rather relies on a mixture of magnesium, a touch of blackberry, lavender, and L-theanine to promote relaxation. This is in line with consumers’ continued interest in “clean” medicine.

American consumers are taking a proactive, holistic approach to addressing their most common ailments like sleep deprivation. That’s why we have been looking at brands that address the issue in a unique way.

Some ventures that we're watching:

The Drink - Snooze. Snooze, was developed by the same person who introduced Red Bull to the U.S. Snooze was one of the first DTC brands back in 2018 to emphasize the use of herbs in its botanical elixir. It emphasizes that it’s an alternative to Melatonin, teas, and pills.

The Wearable - Cove. This wearable device applies gentle vibrations to slowly relieve anxiety and bring a sense of calm. Launched in the middle of the pandemic by Feelmore Labs, it’s leaning heavily on scientific studies that show that regular 20-minute use can lead to reduced stress and enhanced sleep.

The Supplement - Remrise. This plant-based solution relies heavily on its Eastern medicine heritage and actively promotes that it does not contain melatonin. Instead, it works with your body’s natural sleep patterns.

As we return to our post-Covid schedules seeking to balance more hectic schedules and potential returns to the work environment, the demand for more sleep solutions and calming remedies are only expected to increase. We foresee more entrants targeting females, particularly those who are post-menopausal, since this is a sector particularly prone to sleep issues. According to the Sleep Foundation, 35-60% of postmenopausal women experience sleep disorders. Reasons may be physical, like estrogen drops or restless leg syndrome, or emotional, like sending a child to college. While supplements abound, there may be a more holistic approach to preparing for and/or addressing this issue.

Another potential audience is teens, given that almost 60% of middle schoolers and 73% of high school students get less than the recommended sleep. Part of the reason is the link between puberty and their internal body clock. As puberty hits, their internal body clock adjusts to delay their natural feeling of drowsiness by a couple of hours. This is known as „sleep phase delay“.

In the near term, we see consumers seeking a holistic solution, using sleep beverages in concert with sleep technology, to create their own customized sleep routine. We see consumers leaning heavily on sleep options that are in line with their food values and technology comfort level. We see consumers more openly discussing what works for them and brands speaking more directly to those needs.

Annette Herz

Annette is skilled at identifying growth opportunities and successfully guiding products from concept to launch. At Compass, she advises leading brands and category disruptors in the health & beauty, personal care and home appliance sectors.

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