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Probiotics segment takes off

BY DSN STAFF

It’s a popping category, probiotics, in as much as the whole idea behind beneficial bacteria in the digestive tract is being heralded by the likes of Dannon in a comprehensive consumer advertising campaign for its probiotic-containing yogurt, Activia, launched last year, and in as much as the good flora concept also is finally gaining traction among healthcare providers.

Activia generated in excess of $128 million in its first year on shelf among mass retailers (with the exclusion of Wal-Mart), according to Information Resources Inc., which named Activia its No. 4 leading new product pacesetter for 2006 earlier this year.

“The amount of data and information that there is on probiotics and the fact that they can and do have an ability to deliver health benefits [is one of the drivers behind the popularity of probiotics],” said Carl Freund, vice president of sales and marketing for Ganeden Biotech. Consequently, doctors are beginning to view probiotics in a more positive light as opposed to pigeon-holing probiotics as an alternative medicine with questionable efficacy.

“And the consumer’s becoming more aware of [probiotics],” Freund said, thanks in part to Dannon’s support of Activia. “Not only because there’s been more news and information … but it’s been a topic discussed in the news.”

IRI placed the probiotic/acidophilus market (supplements only, not yogurts) at $32 million for the 52 weeks ended Sept. 9 across food, drug and mass (minus Wal-Mart), and growing at a 29 percent clip. When you back in the estimated Wal-Mart probiotic sales into that figure, that would place the category at $42.7 million, a lot closer to the $45 million market size estimated by some of the purveyors in the category.

Analysts at Frost and Sullivan last month tagged the overall probiotic category (supplements and foods) as much more robust—generating $698 million in sales across 2006 with the potential to reach $1.7 billion by 2013. “As a result of continued advertising and combined marketing strategies, mainly from processors of finished goods, the level of consumer awareness of the different types of probiotics has improved significantly in the last five years,” noted Frost and Sullivan research analyst Maria Januszczak. “This has driven research efforts into the development of alternative delivery formats in the probiotics category that can appeal to a wider range of consumers, and food and supplement manufacturers are also eager to join the bandwagon and apply probiotics in their existing products.”

The category is growing in part because of several clinicals that have established a link between probiotic use and the relief of such digestive disorders as diarrhea and the improvement of the immune system. And the education on prevention versus masking symptoms has been very positive in the natural channel, which has long been tabbed as a predictor of future trends in the mass channel.

The digestive system is home to more than 400 species of bacteria, and 70 percent of the body’s immune system is actually in the intestinal tract. A recent study from the University of Reading in the United Kingdom stated that the level of positive bacteria in the gut diminishes by 1,000 times by the time we reach the age of 60 to 65.

Part of the popularity behind probiotics, outside of its proven efficacy, is the base number of potential customers—consumers under the weather (especially those taking antibiotics, which attack good stomach bacteria right along with any illness-causing bacteria) and aging consumers. Potentially the greatest prognosticator of future potential growth, though, is when a big consumer-packaged goods company decides it makes sense to enter the probiotic market. Procter & Gamble earlier this year launched Align, a probiotic indicated for the relief of constipation, diarrhea, abdominal discomfort, urgency, gas and bloating. “Align was developed to help people with a wide range of episodic digestive upsets,” stated Mauricio Troncoso, marketing director for Align, at the time of the summer launch.

Ganeden Biotech this summer launched Sustenex, a daily probiotic supplement that’s been proven effective in establishing more healthy or beneficial bacteria in the intestinal tract and boosting the immune system. Sustenex contains GanedenBC30, a safe and powerful strain of the bacteria Bacillus coagulans.

“The probiotic bacteria GanedenBC30 was included in Sustenex because of its superior ability to survive harsh stomach acid, colonize the intestines and perform many useful functions in the digestive system,” stated Andrew Lefkowitz, president of Ganeden Biotech.

Biocodex has made its move to solidify a presence in the United States with a repackaging of its probiotic Florastor. “While Florastor has been available for half a century around the world, to most Americans, it is an exciting new probiotic product for intestinal health,” stated Mary Berry, U.S. marketing manager at Biocodex. According to the company, Florastor is the only probiotic mentioned by the World Health Organization for use in managing recurrent disease associated with clostridium difficile, a disease that can cause diarrhea.

“Unlike most bacterial-based probiotics sold in the United States, Florastor utilizes a freeze-dried form of a beneficial yeast called saccharomyces boulardii, a natural ingredient that is clinically proven to be effective in managing intestinal issues ranging from acute diarrhea associated with food poisoning to chronic inflammatory conditions, such as Crohn’s disease or ulcerative colitis, and traveler’s diarrhea,” the company stated.

Innovation is not limited to supplement makers. Dannon followed the launch of Activia with Shift, another probiotic dairy-based energy drink under the Stonyfield Farm label. And Kellogg introduced Kashi Vive, a non-dairy probiotic cereal.

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Fred’s reports both monthly and quarterly record sales

BY Allison Cerra

MEMPHIS, Tenn. Fred’s Inc. reported record sales for the five-week and eight-month periods which ended Oct. 6, 2007.

The company said Friday that its total sales for the month increased 2 percent to $161.4 million compared to the same period last year. Total sales for the year-to-date period increased 5 percent to $1.157 billion.

Same store sales for the month rose 1 percent on top of a 5 percent increase in September last year. On a comparable store basis, sales increased 1.3 percent through the first eight months of fiscal 2007 compared with a 2.7 percent gain in the year-earlier period. Same-store sales are a key predictor of how well the company performs in stores that have been open for several years, and how well the newly open stores will do in the future.

“September sales came in at the low end of our forecasted range of a 1 percent to 3 percent increase, affected by unusually warm weather across our markets and the disruption caused by the updating of 98 stores under our refresher program,” said Fred’s Stores chief executive officer Michael J. Hayes. “We look forward to finishing our refresher program in October with the last 60 stores and to a better economic environment for our customers going forward, as the benefits of the minimum wage increase and the focus of Federal Reserve Board on the credit crunch take hold.”

Fred’s opened four stores at the end of September, bringing total store openings to 22 for the year-to-date period. These new store openings have been balanced by the company’s decision to close underperforming stores. In the remaining months, Fred’s Stores said that it plans to open 14 additional stores, with no further planned closings, which will result in a net increase in stores of 2 percent for the year.

Fred’s Inc. operates 702 discount general merchandise stores, including 24 franchised stores in the southeastern United States.

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Target to open another 61 stores nationwide

BY Allison Cerra

MINNEAPOLIS Target announced that it will be opening an additional 61 Target stores, the company said Friday.

The stores, which will all open Oct. 14, will open in 22 different states. The majority of the stores are making their debut in Arizona, California, Ohio and Texas.

In addition to offering the latest in trend-right merchandise, Target also brings a 44-year tradition of community involvement. The retail chain commits itself to local communities donating more than $3 million each week to area nonprofit organizations, becoming involved in local volunteerism efforts through Target Volunteers, and orchestrating other special projects that help meet area social service, arts and education needs.

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