ANTI-BACTERIAL PRODUCTS -- OINTMENT AND CREAM MARKET TURNS PRO-ANTI-BACTERIALS
by Ed Finkel
August 18, 2010
Private label makers of anti-bacterial creams and ointments say their products continue to experience growth in an otherwise flat economy — and the statistics back them up.
Data from SymphonyIRI Group, a Chicago-based market research firm, for the 52 weeks ending June 13, show sales growth of just less than 1 percent for all first aid ointments and antiseptics, as compared with 3.4 percent for private label, which reached approximately $207 million
Average price per unit rose 2 cents for the entire subcategory and 3 cents for private label.
For external analgesic rubs, SymphonyIRI’s figures from the same period show the total category saw sales drop approximately 7.2 percent, while private label gained 7.7 percent to $32 million. Average price per unit dropped 9 cents for the entire category but rose 18 percent for private label. The data include sales at supermarkets, drugstores and mass merchandise outlets but do not include sales at Walmart.
A May 2009 report on medicated skincare products from Mintel International Group, Chicago, says the market decreased very slightly (0.2 percent) from 2007 and 2008. Mintel predicted an overall 3 percent decline when adjusted for inflation from 2008 to 2013.
But while the overall category experienced modest 4.4 percent growth in sales from 2006 to 2008, private label sales rose 16.3 percent during that same period, from $336 million to $391 million — better than all but one of the top five manufacturers, GlaxoSmithKline, which saw 26.5 percent growth, according to Mintel.
Mintel defines the medicated skincare products category as including acne treatments, foot care, lip balm, lice treatment, wart removers, first aid ointments, insect first aid products and anti-itch treatments. Within the subcategory of first aid ointments, private label makers saw 10.2 percent growth from 2006-2008, from $177 million to $195 million, as compared with 7.0 percent among all manufacturers — outpacing two of the top three brand names.
SciVolutions Inc., Gastonia, N.C., concentrates its business on wound dressings and has several products in development that will be categorized as anti-rash and anti-fungal ointments and creams, says Alan Nash, president and CEO. He sees the growth of anti-bacterials, which SciVolutions sells both at retail and directly to hospitals, as essential to cutting the rates of skin infection.
“Seventy percent of people putting on dressings, putting on creams and ointments, do not properly clean the skin,” Nash says. “When you don’t properly clean, you open the skin up to the possibility of breakdown. … Using products that properly clean the largest organ in your body, which is your skin, is really important.”
The use of anti-bacterials in hospitals, along with the use of gloves and simple hand-washing, has cut rates of infection dramatically over the past three or four years, Nash notes. “The rate of infections at hospitals has dropped like a rock,” he says. “Anti-bacterials, used appropriately, keep you safe.”
Custom HBC Corp., Waconia, Minn., sells about 200 different anti-bacterial products primarily to the promotional industry — companies that are buying trade-show giveaways and the like — as well as to school districts and universities, who want hand sanitizer, among other products, says Mary Pernula, director of marketing.
The company has been doing particularly well in the fall, when students return to school and concerns about the flu arise, she says. Schools, universities and retail stores have been offering anti-bacterial products in public places as customers increasingly expect it and seek it out.
“A lot of schools and educational institutions are buying much more in the last year or two,” Pernula says. “All those places that have a mass audience are looking at anti-bacterials a lot more than they used to.”
Nash sees opportunity for anti-bacterial creams and ointments, along with the skincare industry in general, as baby boomers reach retirement age, with 77 million people getting to age 65 in the next 18 years.
“Their bodies are breaking down. Your skin is thinning out,” he says. “We see it in wound care. The collagen isn’t what it used to be. … As your skin breaks down, it loses its elasticity.” That leads to maladies like bed sores, pressure sores and a higher incidence of simple abrasions, he adds.
Baby boomers also combine bad health and lifestyle habits of the past with high spending habits of the present, which helps to create opportunities in the ointment and cream category, Nash says.
“When my sister and I were kids, she had one of those sun reflectors, tin foil with cardboard. They sat out in the sun and cooked,” he says. “Melanoma, it’s a good 30 years before it decides to pay you back, and it’s starting to pop up like crazy. They used cocoa butter, baby oil and God knows what else to get those great-looking tans. Ointments and creams will have a huge role to play in saving and restoring skin.”
And baby boomers are unlikely to be abstemious about going to the drugstore, Nash believes.
“Unlike our parents’ generation, my generation spends more money on themselves. They will go into the market place, and they will spend more on cures,” he says. “Skin damage, and the rewards from 30 to 40 years ago, are going to pop up more, and more, and more.”
The Mintel report also puts forth the notion that the poor economy might be helping to drive growth for products that treat relatively minor ailments.
“Consumers are looking for alternatives to costly visits to the doctor, and thus are turning to DIY remedies,” the report states.
One trend in ingredients for anti-bacterials is from alcohol- to non-alcohol-based, Pernula says.
“We sell a lot of non-alcohol because we’re one of the few companies that offer it,” she says. “Schools won’t use products with alcohol in them. And alcohol evaporates right away, which means it kills the germs on your hand — but when you touch the door handle, you get germs right away. The chemical in non-alcohol-based [products] has a residual effect. It will stay on your hand and keep killing germs.”
Displays and packaging for creams and ointments are following many of the same trends as retailing in general, Nash says. Stores are moving to fewer, wider aisles with fewer displays “because they are trying to get the consumer in and out of the store faster.” End caps are considerably more prevalent than mid-aisle material.
During the last decade, SciVolutions has moved with the rest of the retail industry toward more sustainable packaging, Nash says. “We’ve cut the depth of our packages by 50 percent vs. four years ago, and cut freight costs by 40 percent, which has allowed us to tread water as the price of fuel went up. All of our packaging today, from a manufacturing standpoint, it’s very integrated. We can change packages and sizes of packages on our equipment, in a matter of minutes.”
SciVolutions has been working on boxes that are mathematical multiples in size of one another, which means “we have seven or eight box sizes that fit over 70 products,” Nash says. “Minimizing that [number of box sizes] gives you better play in your packaging and makes it more sustainable.”
Custom HBC has been working on a lenticular lens package for one of its spray bottles, called Logo-In-Motion, which “looks like your artwork is moving when you turn to spray it,” Pernula says. Lenticular printing gives the illusion of depth and movement.
Another packaging move for the company has been toward kits for the flu and other uses. “We’re going to be focusing on kits for specific issues that we can sell to clinics, and pharmacies,” she says.
Zaks sees modest changes in packaging such as “moving from cardboard to blister packs, things like that,” he says. “Or changes to a larger size [of ointment tube]. The most common one we deal with is 1 oz. People keep coming up with 3/4-oz. or slightly larger tubes, but that’s about it.” PLB
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