Retail: The big health shop chains are looking at expanding in Ireland. Fiona Tyrrell reports

With the arrival of two health stores paying big retail rents on Grafton Street in the last 12 months and a UK Chinese medicine multiple poised to enter the Irish market, the alternative medicine and health food industry is clearly thriving.

Worth an estimated €45-€50 million per annum, according to the Irish Association of Health Stores (IAHS), the industry has experienced substantial growth in the last few years.

Celebrating its first year on Grafton Street last week, Health Matters, a small independent chain of health food stores, is reporting a healthy year of trading.

The ambitious move to set up shop on Grafton Street was prompted by good trading in the chain's other two stores in Bray and the Ashleaf Shopping Centre in Crumlin, and the clear need for a health food store on Dublin's main thoroughfare, according to store manager Liz Beattie.

Further up Grafton Street Nature's Way opened a new outlet at the end of 2004 and is believed to be paying rent in the region of €500,000 a year.

Nature's Way is part of Holland and Barrett, which is the leading retailer of vitamins, minerals and herbal supplements in the UK and Ireland.

In the last 12 months the chain has opened four new outlets - Grafton Street, Mahon Point Shopping Centre in Cork, the Sky Centre in Shannon and Clare Hall in Coolock - bringing to nine the number of stores in Ireland. It has 13 stores in Northern Ireland.

The chain is looking at opening more outlets around the country, according to Kieron Diamond of Ganly Walters.

Around the corner on Wicklow Street, Nourish opened its fifth store last June. This branch specialises in organic skin care and organic foods - the shop stocks freshly baked bread every day.

Meanwhile, UK Chinese herbal medicine multiple, Dr China, is planning to open between 15 and 20 outlets in Ireland, according to Naomi Howard from Hamilton Osborne King.

The chain, which has 70 stores in the UK, is the leader in Chinese herbal medicine and also offers acupuncture, massage, cupping and other traditional Chinese treatments from therapy rooms in store.

To protect the privacy of its clients, the chain prefers to operate from shopping centres rather than the high street, according to Howard, who said the company is in an advanced stage of negotiation on four locations. It hopes, in the medium term, to open around eight stores in Dublin and expand to the likes of Galway, Cork and Limerick.

The independent health store sector, which includes a number of small chains such as Nourish, The Health Store and the Galway-based Evergreen, as well as once-off operators, has been trading very well for the past few years, according to chairperson of the IAHS Jill Bell.

The fact that pharmacies and supermarkets are getting in on the act and stocking health foods and products is a clear indication of the success of the industry. Pharmacies are "worried" by the success of the sector, according to Bell.

The growth in the market is a result in a change of attitudes towards food and health, and has been significantly boosted by health food gurus like Gillian McKeith of Channel 4's You Are What You Eat.

"It is based on the premise that food is the primary source of health and ill health," says Bell. "This is driving people to look at their sources of food. With BSC, e-coli and beef issues, people are becoming worried and are interested in finding out what they are eating and, in particular, what their children are eating. People are also more wary of drugs and side effects. The pharmaceutical industry has taken a few hard knocks recently and we see people looking for safe alternatives."

Food intolerances are also a big factor in the growth of the sector, she added.

All eyes in the industry were on the EU earlier this month. The European Court of Justice in Luxembourg delivered its verdict on a challenge mounted by a natural health lobby group against the controversial EU Food Supplements Directive.

The judges confirmed the validity of the directive, which will be implemented from August 1st, 2005 and allow only products which are contained on a specific list to be sold in the EU.

This list, according to the alliance, omits more than 300 widely used forms of vitamins and minerals and could have a considerable impact on the industry.