Vitamins.com Secures Funding, Promotion Deal

Vitamins.com, the online supplier of vitamins and other nutritional supplements, announced today that it has raised $22.5 million (US$) in funding and will now be strategically allied with retail drugstore chain Phar-Mor. The round of financing was led by Acacia Venture Partners in San Francisco, with several other venture capital firms participating. Investors include CIBC Capital Partners, Demuth, Folger & Wetherill and Grove Street Advisors.

Phar-Mor, which also participated in the round of funding, has entered into an exclusive marketing agreement with Vitamins.com. Under the terms of the deal, 100 million Vitamins.com logos will be placed on Phar-Mor’s customer merchandising materials, including prescription and general merchandise bags. Vitamins.com will install Web kiosks in selected Phar-Mor stores.

Phar-Mor is the country’s sixth largest drug store chain, with $1.4 billion in revenues and 25 million prescriptions filled per year. The company also operates its own online store.

Earlier this month, Phar-Mor announced that its Web presence will be promoted on health resource site drkoop.com (Nasdaq: KOOP).

Funding Will Be Used For Marketing

Vitamins.com plans to use some of its new funding on targeted marketing programs. The company will continue its strategy of opening demonstration retail stores in selected markets.

“As Vitamins.com seeks to fulfill its strategic vision to be the definitive market leader in the $9 billion nutraceuticals retailing market, achieving greater brand awareness and rapid national expansion are essential,” said Robert Haft, chairman of Vitamins.com.

Vitamins.com also plans to use part of the $22.5 million raised to enhance its Web site and make acquisitions.

About Vitamins.com

Vitamins.com, which was founded in 1997, projects revenues of $28 million for 1999. In addition to selling vitamins online, the company has 10 “click-and-mortar” demonstration stores and a retail catalog operation. The company sells vitamins, herbs, supplements and cosmetics at prices that it says are 20 to 50 percent less than those at traditional stores. Vitamins.com also sells health-related books.

In addition to selling products, Vitamins.com’s Web site features an encyclopedia of health concerns, as well as editorial content such as health news and advice from a nutritionist and personal trainer.