Enlivening the Natural OTC Segment

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Enlivening the Natural OTC Segment

Enlivening the Natural OTC Segment

By Barbara Sax - 02/21/2020

Driven by consumers’ increased focus on preventive health and fueled by information on social media, the natural over-the-counter (OTC) market is taking a bite out of the traditional OTC category.

Key Takeaways 

  • While Baby Boomers seek natural products that can proactively treat conditions associated with aging, Millennial consumers — who wish to avoid such conditions altogether — are the ones significantly driving category growth. 
  • Many natural OTC products now focus on boosting immunity to prevent illness rather than on alleviating specific symptoms, with some manufacturers making use of recently developed combination products to do so. 
  • Along with immune-boosting supplements and cold/flu remedies, sleep aids and children’s products have lifted natural-segment sales.

While natural OTC products will never replace traditional OTC products, they represent an important growth opportunity — one that supermarket retailers can’t afford to ignore.

Supermarkets have expanded their natural product selections significantly over the past two years. “The proving time these products used to have in specialty stores before entering FDM [food, drug and mass-market retailers] has decreased dramatically. In some cases, FDM stores are going directly to the natural product manufacturers to have custom products made for them, and we have recently designed custom products for large grocery chains,” says Dr. Cameron Moeller, a spokesman for Alpine, Utah-based American Biotech Labs. “These natural product lines are now proven sellers in FDM, and it has simplified the consumer’s shopping experience. The demand for natural products is only going to grow.”

Boomers are seeking products that can proactively treat symptoms associated with aging, but Millennial consumers are the ones significantly driving category growth. “Younger consumers are not interested in treating symptoms — it’s all about prevention — and they are willing to pay a lot for products that help them do that,” notes Laura Mahecha, a health care analyst at Parsippany, N.J.-based Kline Market Research.

The Rise of Black Elderberry

That preventive approach has had a big impact on the cough/cold category, where a significant number of products now focus on boosting immunity to prevent colds and flu rather than on alleviating specific symptoms.

“The prevention side of the category, brands like Zicam, Emergen-C and Airborne, [is] growing faster than traditional OTCs that address symptoms,” affirms Lisa Buono, principal in Chicago-based IRI’s health care practice.

“Consumers want quality immune support supplements that can help them stay healthy,” observes Moeller. For example, American Biotech Labs has introduced Silver Biotics Silver Lozenges, which combine a silver supplement with manuka honey for an immune-boosting effect. The Kroger Co.’s Harris Teeter banner, based in Matthews, N.C., recently brought in American Biotech Labs’ Silver Biotics Silver Lozenges and flags them with “new product” shelf tags. The banner also carries Los Angeles-based PPC Group’s EZC Pack, formulated with echinacea, zinc and vitamin C.

Elderberry, known for its immune-boosting properties,  has become one of the most popular ingredients in the cough/cold aisle.
Elderberry, known for its immune-boosting properties, has become one of the most popular ingredients in the cough/cold aisle.

A Washington, D.C., location of Giant Food, a Landover, Md.-based chain owned by Ahold Delhaize USA, devotes 2 feet to natural cough/cold products, including the natural Boiron, Ricola, Sambucol and Zicam brands.

Interest in black elderberry, which contains vitamins, minerals and antioxidants believed to stimulate the immune system, has continued to surge. “Immune is a key segment, and there is no product hotter than elderberry,” asserts Kyle Lentz, category analyst for Hamacher Resource Group, a Waukesha, Wis.-based consultancy.

Products containing black elderberry have become a significant part of the natural cold and flu category, and new elderberry products continue to hit retail shelves in a variety of forms, from supplements and syrups to ever-popular gummies. Washington Depot, Conn.-based Momeez Choice recently launched a Mixed Berry with Elderberry Lolleez throat-soothing pop for kids, made with organic elderberry, that’s now available at Kroger, Wegmans Food Markets, and Stop & Shop.

In the cough/cold section, natural segment leaders Sambucol, Nature’s Way Sambucus and Zarbee’s Naturals now share shelf space with products from makers of traditional OTCs. “Major manufacturers like RB [Airborne] and Pfizer [Emergen-C and Dimetapp] have added elderberry products,” Lentz points out.  Bohemia, N.Y.-based Nature’s Bounty Co. recently introduced Elderberry Gummies as part of a three-product launch targeted to consumers’ key health concerns.

The popularity of black elderberry is a testament to the power of social media and highlights an information shift in the category. “Pharma once controlled the message in OTC, but that’s changing,” says Mahecha. “Sambucol exploded at retail when medical professionals started to recommend the product. Retailers couldn’t keep it in the store.”

“These products surface online, then generate word of mouth, and once they get to mass retail, sales explode,” says Buono. Buyers with a finger on the pulse of the natural product social media space can get ahead of trends for their consumers.

New Combinations

“Younger consumers are not interested in treating symptoms — it’s all about prevention — and they are willing to pay a lot for products that help them do that,” - Laura Mahecha

Meanwhile, the probiotic segment, once a huge growth area, has experienced some stalling. “We’re starting to see scientific data questioning how effective probiotics are,” observes Buono.

New research that indicates probiotics are best absorbed when taken with a prebiotic has sparked the introduction of combination products. “Synbiotic formulations, which combine a prebiotic and probiotic, have become more popular,” notes Mahecha. Last year, Austin, Taxas-based Enviromedica launched Terraflora, a broad-spectrum synbiotic.

A shakeout may be looming for the category. While plenty of consumers take probiotics on a regular basis, retailers are identifying their best-selling products. Probiotics from Los Angeles-based Jarrow, for example, routinely sell out at some locations of MOM’s Organic Market, a 19-unit chain based in Rockville, Md., despite the product’s high retail price tag.

Lentz also sees probiotic ingredients branching out into other categories, including cold and allergy products, as part of a push for a holistic approach to well-being. “We’re seeing secondary facings of probiotic products at retail in the cold and allergy sections,” he says.

Natural OTC products targeted to kids continue to grow. Formulations such as gummies and lollipops offer new delivery solutions.
Natural OTC products targeted to kids continue to grow. Formulations such as gummies and lollipops offer new delivery solutions.

While consumers get a lot of their information about natural OTC products online, there’s still plenty of confusion about ingredients. In response, more manufacturers are introducing combination products that address specific health concerns. “That’s a trend we’ve seen forever in health care,” notes Buono. “Consumers don’t know ingredients very well.” Bundling ingredients in one formulation makes selection easier — particularly at locations where sales help is absent.

Nature’s Bounty has taken that approach with three products launched last year. The company’s data and analytics revealed that self-care, sleep and stress relief are among the top issues for consumers, particularly Millennials and Gen Xers. Accordingly, Nature’s Bounty introduced Anxiety & Stress Relief and Sleep3 formulations designed to address these specific wellness concerns. Lentz sees a subsection of “sleep, stress and anxiety” products being created in supplement sections. “Lavender, valerian root and, to a lesser extent, St. John’s wort are key ingredients for this new range of products,” he says.

Seeking a Better Night’s Sleep

Additionally, it’s no surprise that natural sleep aids are growing — The Centers for Disease Control and Prevention (CDC) estimate that 35% of American adults don’t get enough sleep, and that failure to get a solid seven hours of recommended shuteye can contribute to serious health problems such as obesity, diabetes, high blood pressure, heart disease, stroke and mental stress.

“With so much exposure to electronic screens and caffeine consumption, sleep aids are an ever-growing category, and natural sleep aids are growing much faster than monographed OTC products,” says Mahecha.

Combination products containing valerian, chamomile, melatonin and even CBD are showing significant growth as consumers take a prophylactic approach to treating sleeplessness.

“Many natural sleep supplements were showing double-digit increases,” continues Mahecha. Zarbee’s Naturals sleep supplements, for instance, saw sales increases of almost 200%, and sales of Olly Sleep Melatonin Gummy were up 74%, according to IRI all-channel data for the 52-week period ending Dec. 29, 2019. IRI data also shows that Cincinnati-based Procter & Gamble’s drug-free Vicks ZzzQuil PURE Zzzs tablets, in both kid and adult formulations, experienced triple-digit dollar sales increases.

Natural products have established a stronghold in the children’s OTC segment in particular. “Parents feel more comfortable with products that are free of dyes and sweeteners,” explains Buono. “Since traditional respiratory OTCs for kids under 2 years of age have been pulled off the market, these products have become even more popular.” Data from Hamacher shows Zarbee’s Naturals as the No. 2 brand in the pediatric cough/cold market, right behind Mucinex.