HEALTH

Elations distributing glucosamine and chondroitin beverage supplement

BY Michael Johnsen

CINCINNATI Elations on Wednesday announced new distribution of its glucosamine and chondroitin beverage supplement to more than 500 club stores in March, driving shipment volume for the month up by 65%, as compared with any single month throughout 2008.

“Elations continues to deliver what customers want and we’ve been receiving positive consumer feedback and testimonials to attest,” stated Mike Burton, Elations director of marketing. “That said, when our consumer asks, we listen. This year we are relaunching the product with an improved taste. We’ve also commissioned a clinical study with data that speaks to the efficacy of the product and how quickly relief can be felt. We will be announcing the results of that clinical with the introduction of the new formula in May.”

The supplier attributed the strong growth in part to a television campaign coupled with digital media and sampling programs. The convenience messaging communicated through these mediums, pitting Elations’ once-daily liquid format vs. the hassle of taking multiple pills, is resonating with baby boomers, the company stated.

Elations is currently available in raspberry white grape and cranberry apple flavors for a suggested retail price as high as $8.49 for a six-pack.

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Icy Hot maker Chattem feels the economic slump

BY Michael Johnsen

CHATTANOOGA, Tenn. The economy is taking its toll on consumer-packaged goods manufacturers, as inventory cut-backs and retail and increased promotional spending prove to be a drag on earnings.

“While total revenues in the first quarter were lower than expected, we remain confident about the strength of our brands and our prospects for the balance of fiscal 2009,” stated Zan Guerry, Chattem chairman and CEO, in announcing the company’s first quarter results for the period ended Feb. 28. “Retail sales of our existing brands as measured by A.C. Nielsen and mass merchandiser point-of-sale data, excluding the discontinued Icy Hot Heat Therapy and Icy Hot Pro Therapy, increased by approximately 5% and 6% for the four and thirteen weeks ending March 21, 2009, respectively.”

Chattem reported that total revenues for the first quarter of fiscal 2009 were $116.1 million, representing a 3.9% decrease. The decrease in total revenues was due primarily to a $4.3 million reduction in international revenues, the company reported, but the balance of the decrease was related to lower sales of Icy Hot, Selsun, Bullfrog and Dexatrim, “caused in part by the timing of shipments, reduced retail inventory levels and two fewer shipping days in the first quarter of fiscal 2009,” the company stated.

The recall last year of the air-activated, self-heating Icy Hot Heat Therapy patch product was also a factor, Chattem noted.

Also adversely impacting Chattem total revenues was an increase in promotional programs that are recorded as a reduction of revenue rather than as advertising and promotion expense, the company added.

Advertising and promotion expense in the first quarter of fiscal 2009 decreased by $5.9 million to $28.6 million, or 24.6% as a percentage of total revenues as compared with 28.6% of total revenues in the prior year quarter. A&P expense was lower for the first quarter of fiscal 2009 due in part to an increase in promotion programs utilized by retailers that were recorded as a reduction of revenue rather than A&P expense and price efficiencies realized on certain media purchases.

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OTC product sales increased 2.4% in 2008, new research reveals

BY Michael Johnsen

LITTLE FALLS, N.J. Manufacturers’ sales of over-the-counter drugs grew by 2.4% to $18.3 billion in 2008, according to the latest research in Nonprescription Drugs USA 2008: Market Analysis and Opportunities from worldwide consulting and research firm Kline & Company, released Tuesday.

Private-label OTC medicines were up 8.2% over the same time period, within which antacids and allergy medicines posted the highest growth last year, driven primarily by increases in sales of private-label omeprazole (Procter & Gamble’s Prilosec OTC) and cetirizine (Johnson & Johnson’s Zyrtec).

Allergy, asthma, and sinus medications were up 17.3% as a result of strong sales from Johnson & Johnson’s Zyrtec brand switch from Rx-to-OTC, as well as its equivalent private-label cetirizine; feminine products was another area that grew 7.3% in 2008 as a result of strong sales growth of personal lubricants, as well as the Rx-to-OTC switch brand Plan B by Barr Laboratories.

“By contrasting the overall growth rates for OTCs with the growth rates for private-label products we can easily make the case that more Americans were seeking value and using private-label in 2008,” stated Laura Mahecha, industry manager at Kline’s Healthcare practice.

Not all categories suffer from higher private-label growth, however, as some are able to maintain growth for branded products.

“During tough economic times, consumers are willing to spend more for some brands they are loyal to and that offer good efficacy,” Mahechas said.

If consumers view brands as being a commodity or not offering special advantages, conversely, they may be able to make the trade-off to private-label.

“As the recession continues into 2009, we expect to see increased ‘value messages’ as part of branded advertising to combat the impacts of private-label erosion. Branded OTCs may use advertising messages to stress the brand’s value, efficacy, safety, and possibly longer-lasting doses, which translates into fewer doses and therefore, costs less,” Mahecha said.

According to preliminary research for Kline’s upcoming report Impact of Recessions on the U.S. OTC Market, past declines during recessions have not been particularly steep for the industry. OTC sales declined two years in a row — from 1999 to 2000 — with overall manufacturers’ sales dropping 0.6%, and then it declined again from 2000 to 2001 by 0.5%.

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