85% of Hispanic Americans live near a Walgreens, and now the products they buy will be there too
Walgreens and Televisa Consumer Products announced an expansion of their distribution across Walgreens with the inclination to share additional insights into the Hispanic community. Televisa’s product portfolio spans from beauty items in haircare and skincare to OTC solutions in the cough/cold and pain relief categories.
Did you ever wonder what would happen if a broadcaster dabbled in the consumer packaged goods world? Would they be able to drive trial at an exponentially cheaper rate because they could flood their own airwaves with in-house commercials and product placements? Maybe. In the U.S. market it’d be difficult and becoming ever more so given the continued fracturing of media outlets. Network television operations today have to contend with hundreds of cable/satellite channels that are each creating their own content, not to mention relatively new primetime competitors like the Internet or mobile apps. In other words, it’d be difficult to reach a critical mass of viewers and at the same time substitute paid product placements with in-house (in other words not paid) product placements in the U.S. media marketplace.
But that’s not necessarily the case with the media juggernaut Grupo Televisa — a Spanish-language broadcaster and content producer that’s larger than ABC, NBC and CBS combined. Grupo Televisa, which owns roughly half of Televisa, develops 65,000 hours of content each year, much of that telenovelas, and has an agreement with U.S. Spanish-language broadcaster to broadcast that content to U.S. viewers over the next 15 years. And together Grupo Televisa and Univision likely have a much deeper penetration into the Hispanic market than a U.S. broadcaster would have reaching the entire U.S. market. "We have believed that the Spanish-speaking market in the U.S. is a very important market," Grupo Televisa Azcarraga Jean chairman and CEO told CNBC on "Squawk Box" this fall. "When you see a population of more than 55 million and growing at the rate it’s growing" there’s room for Univision to expand its business.
So it really might not cost all that much to promote those Televisa products heavily against the fast-growing U.S. Hispanic population and sharing with those consumers that those products can be found at a local Walgreens.
As Greg Wasson noted in his recent address to shareholders, 85% of Hispanic Americans live within 5 miles of a Walgreens. And now those Americans are going to learn that some of the products with which they’re already familiar through the programming they’re already watching is available at the drug store they’ll soon be patronizing.
It seems that Walgreens and Televisa have already tested the waters and are now looking to make a slightly bigger splash. But it also seems that if this partnership continues to go well, coupling initiatives like Walgreens’ Balance Rewards loyalty program and the chain’s proximity to the Spanish market with a CPG manufacturer who also happens to have a pretty extensive reach into that Spanish market may become a pretty powerful combination.
Hurricane Sandy efforts drive Ahold 4Q sales
AMSTERDAM — Ahold reported sales of $10.4 billion for fourth quarter 2012 and $43.6 billion for the entire fiscal year, the company said in an earnings report.
That marked a 7.5% sales increase compared with fourth quarter 2011 and an 8.5% increase compared with fiscal year 2011, respectively.
The company’s U.S. business — which includes the Stop & Shop, Giant-Landover and Giant-Carlisle supermarket banners and the Peapod online grocery service — had sales of $6.1 billion during the quarter and $25.8 billion for the year, representing sales increases of 4.3% and 3.1% over fourth quarter 2011 and fiscal year 2011, respectively. The company said the increase in U.S. sales for the quarter was driven partly by its efforts to keep stores open during Hurricane Sandy. Comps for the quarter increased by 2.8% and increased 1.9% for the fiscal year.
Costco’s new PBM: It’s all about differentiation
Costco announced in its January 2013 magazine that it would begin offering pharmacy benefit management services, targeting small businesses and highlighting a 200-employee company based in Washington state.
It remains to be seen whether the club retailer’s efforts to compete with the existing PBM businesses of companies like CVS Caremark, Walgreens and Walmart will be successful, and analysts like Citi’s Deborah Weinswig appear skeptical that they will. But whatever the outcome, it’s clear that Costco is looking to compete in a bigger way.
Pharmaceutical industry consultant and author of the blog Drug Channels, Adam Fein, described the current prescription-growth environment as slow. Indeed, the generic wave is resulting in a major commoditization of the drug market, to the point where mass-merchandiser Meijer is even giving away the generic version of Pfizer’s cholesterol drug Lipitor (atorvastatin) for free. Fein also noted that in a PBM industry that is consolidating, winning requires scale or differentiation, and that Costco Health Solutions could build its business with generics.
In such an environment, what will matter for pharmacy retailers is how they differentiate themselves to drive customers to their stores. For many, such as the three biggest drug store chains, this means things like loyalty cards, particularly Rite Aid’s Wellness+ card, which rewards customers for using the pharmacy. But for Costco, as Fein wrote, the new PBM targets self-insured employers that are close to Costco stores; even though the PBM’s network will includes tens of thousands of independent pharmacies, it’ll also make picking up drugs at the local Costco all the more convenient, especially when one considers the club retailer’s existing specialty pharmacy business. In other words, Costco’s PBM may lack the scale of giants like Express Scripts, CVS/Caremark or Catamaran, but it does have the chance to differentiate itself. And Costco has long specialized in catering to small businesses anyway.
Even if some analysts’ skepticism about Costco’s latest move is correct, and it doesn’t gain enough traction or manage to compete with the bigger and more established PBMs, the whole point of being in the retailing business is to drive foot traffic, and if CHS manages to do that, then the club retailer’s foray into the PBM business might just work.