Nothing to Sneeze At

March 12, 2010
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A name brand just doesn’t carry the clout it used to in the cough and cold remedies sector. Today’s economically trying times - in combination with consumers’ growing level of trust in the safety and effectiveness of retailer’s over-the-counter offerings - mean Susie Shopper increasingly is willing to soothe her sniffles with a private label remedy.



A name brand just doesn’t carry the clout it used to in the cough and cold remedies sector. Today’s economically trying times - in combination with consumers’ growing level of trust in the safety and effectiveness of retailer’s over-the-counter (OTC) offerings - mean Susie Shopper increasingly is willing to soothe her sniffles with a private label remedy.

In fact, data from Chicago-based Information Resources Inc. show private label greatly outperformed the total category in each of four key cough and cold sectors during the 52 weeks ending Dec. 27, 2009 (see the table).

The big question, of course, is how to keep that momentum going.



Keeping Up with the Joneses

One factor critical to ongoing private label success will be retailers’ ability to keep up with the latest trends in product formats and packaging. And the national brands still set the pace here.

“Product cycles are going pretty fast, as the products are starting to change quickly,” notes Beth Sobel, director of the Pharmaceutical Division of Hartland, Wis.-based Triad Pharmaceutical. “Retailers now have a fairly long lead time to get artwork approved and testing done. They need to be looking a little bit further ahead in the timelines.”

And some of the trends retailers might want to plan for, at least on the liquid side, are those toward dye-free and sugar-free children’s formulations. Sobel notes that the Tylenol Plus line and some of the Tylenol acetaminophen suspensions already have gone the dye-free route, while Benadryl now comes in a dye-free, sugar-free version.

Yet another trend on the liquid side is that toward drug-free products such as saline solutions for kids, Sobel says, adding that this trend could be part of the fallout from last year’s massive recall on children’s cough and cold products stemming from dosing-device confusion on the part of consumers. (In November 2009, FDA issued draft guidance related to dosage delivery devices for OTC liquid drugs.)

Vinima Kerof, director of marketing for PL Developments of Westbury, N.Y., agrees.

“The infant remedy recalls, FDA warnings [and] reformulations of PSE (pseudoephedrine) products have all created poor public opinion of some medications,” she says. “It seems consumers are confused about what is safe and which products will have the least risk of misdosing, so they are turning more and more to natural and non-medicated ingredients.”

But Sobel notes a big push toward unit dosing, too, as another way of dealing with all the dosing confusion. She points to Benadryl Perfect Measure and Robitussin To Go (both of which rely on prefilled single-use spoons) as examples of this trend in action.

Arnie Margolis, director of sales for Centerbrook, Conn.-based Tower Laboratories, sees interest in single-dose formats on the effervescent side as well.

“Alka Seltzer Plus has introduced a non-effervescent crystal pack, and Bayer is offering a single dose of effervescing crystals,” he says. “Store brand effervescent products are in a growth mode and doing well. Speed of action is always important.”

Yet another trend is widespread consumer interest in decongestant/anti-mucus products, says Len Smith, vice president of sales and marketing, retail division for Deseret Laboratories, St. George, Utah.

“The Claritin D, Zyrtec D - those products are going off the wall,” he says. “They’re leading the categories.”

Private label soft gels, too, continue to show significant growth, Smith adds, as they are easier for consumers to swallow and break down faster than tablets. Fast tabs, strips that essentially melt in the mouth, also are picking up steam.

Finally, Kerof says key retailers have reported strong sales of PSE-containing products, despite their move behind the pharmacy counter, with consumers still preferring these items over easier-to-purchase phenylephrine-containing OTC products. She also sees a strong trend toward single- and dual-active ingredient products in both solid and liquid gel forms.

“The older traditional multi-active ingredient items such as the Dayquil/Nyquil items have slipped behind these items in the overall rankings,” she says.

Of course, the right product mix - in the right quantities - also plays a role in private label’s success. Retailers must become somewhat adept at “predicting” the future here, suggests Lenny Luongo, vice president of new business development for A&Z Pharmaceutical in Pittsburgh.

“Global warming has had a major effect on the seasons’ changes,” he says. “The retailer needs to decide when to be prepared for their cough and cold season. One of the biggest challenges is to have cough and cold products on the shelves for the consumers at any time.”

Retailers should conduct their own cough and cold category reviews to determine which cough and cold products they should carry to meet the needs of their specific customers. Luongo adds.

“It’s never too early in the cough and cold season to have cough and cold products displayed, ready for their customers to buy,” he says.



Challenging Times

But retailers might be finding it difficult these days to be quick followers, trend-wise, in the cough and cold remedies arena. As Sobel notes, FDA regulations have been changing very quickly, as the agency steps up its vigilance on the entire category.

“Certainly everybody that has a savvy private label program is ramping up the standards for testing and protocols and keeping up with all the changes,” she says. “But I think some of the smaller private label [manufacturers] are having to get raised to [higher] standards and held to the same accountability as everyone else.”

Kerof says the sector appears to be in a “state of flux,” as suppliers, retailers and consumers all wait for FDA to make final rulings related to combination products and (frequently abused) dextromethorphan products.

Sobel notes that many retailers now are formalizing OTC programs around testing and standards, performing a bit more due diligence in relation to both the products and the vendors supplying those products. She expects to see more consolidation on the supplier side, too, as a bigger footprint will be needed to perform all of the tasks retailers now will require.

In addition to dealing with rapidly changing regulations, retailers must keep up with any changes in national brand product format and packaging. Many industry players believe a national-brand-equivalent look and feel are still important.

“The worst thing you can do is sell a Claritin-type product and have a circular tablet if the brand is oval, or a different size,” Smith stresses. “On the OTC side, you want the look to be the same as what the brand is because the consumer recognizes that.”

But Kerof contends the reality is not so black and white.

“Unlike the past, where consumers looked for the exact same size/flavor/shape/dose as the brand, we have seen consumers trusting the differences that private brands have to offer,” she says. “They want ‘more’ and are open to new flavors [and] dosage forms that do not exist in the brands today. We have seen success with value-size items that are not an exact match [to] the brand.”

Although quality product is the most important factor in selecting a supplier, Smith also cautions retailers against relying on only one supplier for the entire store brand cough and cold remedies assortment.

“First, they dictate,” he says. “Second, from a price control perspective, they are taking the competitive pricing out of it because they control so much.”


Eye on Growth

Despite regulatory and other challenges, the outlook looks quite healthy for store brand cough and cold remedies. Still, strategic merchandising and promotion efforts can go a long way to further enhance private label share.

On the merchandising side, Smith recommends flagging store brand products with “comparable to X brand” types of statements. And if a retailer runs a branded display on an end cap, he encourages them to include private label products in that display as well.

“One of the best things I saw is when Kroger did a [display] on Swine Flu,” he notes. “They had antibacterial soap in there, hand sanitizers and four or five other branded items in there. Then they had private label items in there with them.”

And don’t treat your store brand as an afterthought on the shelves.

“When store brands have been given the same number or more facings than the brand, there has been improvement in margin and volume,” Margolis notes. “One possibility is that the increased visibility demonstrates the retailer’s commitment and confidence in their brand.”

Convenience continues to sell, too, so promotions aimed at easing life’s little challenges work well. Sobel says combo “home and away packs” - for example, a 4-ounce liquid for home use with a 1-ounce or 2-ounce “bonus” liquid attached to it - appeal to travelers or to moms schlepping a diaper bag around.

Kerof agrees, particularly for earlier in the season, when consumers tend to stock up.

“This may entice a customer to try out a product based on the ‘value,’” she says, “especially if they usually would not opt to purchase a private label item.”

Smith also advises shadowing the national brands when it comes to discounts, at a price point that’s 20 percent below them. But too large of a price gap, he stresses, could portray store brand products as somehow inferior.

Finally - and probably most important - retailers must continue to find ways to build consumer trust.

“The best way to do this is through a combination of the right quality, packaging and price,” Kerof says. “Consumers are more discerning today in the choices they make, so retailers and manufacturers need to work together to create mutually beneficial programs that will build store brand loyalty and drive sales at the point of purchase.” PLB

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