Wet, Wild And Wonderful

That's the winter and the prospects for cough and cold sales, if done right.

The weather forecasters are predicting a nasty winter over much of the country. "Get Ready for a Wet, Wild Winter Ahead!" screams the Farmers' Almanac 2012 headline. In fact, the publication says this winter will bring "clime and punishment, a season of unusually cold and stormy weather," with bone-chilling cold and lots of rain and snow, depending on where you live.

Some suppliers of over-the-counter (OTC) cough and cold medications say that's great news, since they believe nasty weather brings increased sales. In that case, supermarket operators stand to cash in if they plan ahead, manage inventory, and merchandise and promote effectively.

"The biggest determinant for us in terms of sales in the season from September to March is the incidence of cough/cold/flu among the general population, and that's directly proportionate to the weather," says Jon R. White, regional business manager, USA, Canada and the Caribbean for the Fisherman's Friend brand of throat lozenges, distributed by Orange, Conn.-based Pez Candy. "With bad weather expected in many parts of the country, that will impact the entire category."

But Scott Hanslip, VP of OTC health at Plymouth Meeting, Pa.-based SDI, which provides analytical information to the pharmaceutical industry, government and retailers, say it's a myth that the weather influences what he calls "viral spread."

Many factors are responsible for the rate at which consumers purchase OTC cough/ cold/flu products, he explains, including the difficult economy, which prompts many consumers to administer self-treatment instead of going to the doctor for a prescription. The economy may also prompt some consumers to switch to less costly private label products, although branded dollar sales in the category have been holding steady, according to Chicago-based Symphony-IRI. Other factors, like changes in label laws, product recalls and product choices, also have an impact on purchasing decisions, adds Hanslip.

The company's flu/cold/respiratory activity notification (FAN) program data, based on reports of doctor's office visits that are coded for specific illnesses, is used to develop production, inventory and marketing strategies that meet current consumer needs in individual markets.

Retailer Strategies

"The only thing you can count on with this category is that it is consistently inconsistent," says Hanslip. "You can't go by last year. Different symptoms and severity factors drive conditions, and as symptoms of flu-like symptoms, sore throats, coughs, earaches and fevers start to build, the degree of severity plays an important role."

Thus, he notes, retailers need to develop a safety stock strategy based on seasons. "If you don't manage the season, you will lose out because you will be out of stock," he cautions. "You can minimize the risk by anticipating and aligning with market conditions to adjust on-hands and on-orders as needed."

This year's flu, cough and cold season, which for SDI began in September and runs through August, got off to a slow start, with incidence in the United States down by 11 percent through Oct. 1. But Hanslip is quick to point out that "improvements" of about 10 percent nationwide were experienced in October, and SDI advised clients in many markets to prepare for increases in incidence — and a corresponding boost in demand.

"Supermarkets, in particular, have a challenge," says Bill Higgins, president of Ricola USA Inc. in Parsippany, N.J. "If they wait until consumers are experiencing heavy symptoms before they merchandise and promote cough/cold products, their customers will go to drug stores. So the opportunity for supermarkets is to build the shopping basket through strategic promotion and display. If they know the approximate time that illness happens, they can build displays."

Often, Higgins says, when FAN data shows a decline in consumers seeing the doctor for a sore throat or a cold, it doesn't necessarily correlate to a reduction in those ailments, because retail sales may still increase.

Jay Betz, president and chief executive officer at Tulsa, Okla.-based TriCord Pharmaceuticals, makers of Lavi Dead Sea sinus wash, nasal decongestant and nasal moisturizer, agrees that the down economy is prompting many consumers to self-medicate, but says increased access to information, such as through the Internet, may provide consumers with greater confidence in self-diagnosing.

Supermarkets can capitalize on that trend, he adds, by providing easy access to pharmacy staff for general questions, offering appropriate health screenings and programs such as flu shots, and ensuring products they carry have been "well proven as effective and safe."

Relief Now

Noting that more than half the adult U.S. population uses OTC cough and cold medication, Tony Sommer, senior director for customer service at Somerset, N.J.-based Meda Pharmaceuticals Inc., believes the driving force for consumers looking for these products is their immediate need for relief. Meda, the consumer health care arm of the Swedish pharmaceutical manufacturer Meda AB, acquired the Contac brand of cold medication from GlaxoSmithKline.

People "are willing to switch and try new things; they just want to feel better," Sommer explains, citing propriety research undertaken by the company. "They can be influenced at the shelf, and they may stock up. They stand there trying to figure it out. So, as they walk the store, if they are interrupted by an end cap display, that can help. They may stop there, evaluate those options, and if they don't find what they want, they'll continue to the rest of the shelf. You have to have your merchandising right."

Having shelves that aren't "shoppable" is a big mistake, he warns. "I would recommend that retailers undertake a productivity analysis and make sure they are getting the right bang for their buck per linear inch. They need to be on top of category management according to the season."

Clip strips located elsewhere in the store can also be effective, experts say. "We had a large national retailer that did a strong clip program at multiple points throughout the store last year, and they saw much higher incremental sales," says Ricola USA's Higgins.

"The consumption is enormous, and consumers will buy displayed product at competitive prices if available," says Denis Cronin, U.S. master broker for Jakemans Lozenges, produced by Jakemans Ltd in Boston, England. "Retailers also need to have available new products that fill a need, but especially in this category. Piano-grams are usually updated annually for the cough and cold season, but many retailers will revise this midyear."

Higgins stresses that grocery retailers also generally have a price advantage over their drug store competitors. "Their everyday low price is often significantly lower than most drug retailers, which are high-low," he says. PG