Coughs & Colds
May/June 2003
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Be
prepared!
The sneezin' season's here
ith the sneezin' season a sad fact of life, it makes sense to cater
to the demand. ACSN went nosing around for cures.
Time, they say, heals the pain … including that of the common cold,
cough or winter flu.
But while you're waiting for that to happen, there are any number of
'remedies' on the market that will ease the symptoms and help the sufferer
tackle their daily duties.
Grab the Business
Once the province of pharmacies alone, many of these are now available
to sell over the counter and convenience stores are in a prime position
to grab the business. It has not gone unnoticed by the manufacturers
that create the products concerned.
Boots Healthcare Australia produces a product that would be instantly
recognisable to most people who've had a sore throat: Strepsils. Early
this year, says Myf Ryan, senior product manager for Strepsils, the
company launched a brand-new pocket pack specifically designed for the
route and P&C channel.
"Strepsils is the market leading lozenge brand and it is now available
in a pack of eight in two of our most popular flavours, Orange and Honey
and Lemon.
Convenience - a key channel
for Growth
"The most recent data we have available shows that route/convenience
is the second largest channel with only the grocery channel having higher
sales. It's a channel that we have not previously really had a large
amount of business within due to the fact that we did not have a suitable
pack size. But now, it's highlighted as a key channel for growth - with
Strepsils leading the way."
It's hardly surprising Boots has made this decision. The figures Ms
Ryan quotes suggest the route channel lozenge market is valued at around
$39 million, compared with the grocery lozenge market value of about
$55 million and pharmacy a surprising $30 million.
"Clearly the route channel is hugely important for us and offers
a great opportunity for further developing the brand sales to target
real 'impulse' buyers - people who want to pick up a product and 'run'
"When we were investigating launching into the route trade, we
realised that the 24s pack would not fit with this consumer need, hence
the decision to go with a pack size that easily fits into a pocket or
handbag which will make it a popular choice."
What to Stock
Mayne Consumer Products is another company that has only recently decided
to target the convenience market, once it recognised the potential.
The company produces the Cenovis vitamin range including Vitamin C,
Echinacea, Garlic and combination products which, says marketing manager,
Craig Irwin, are ideal inclusions for a C-Store during the winter season.
"At present only a very small percentage of vitamin sales go through
the route trade but it is a growing segment of our business. We believe
a well-targeted range of vitamins can deliver incremental sales for
the route trade.
"We recommend stocking high demand products such as Vitamin C
in 500mg and 1000mg strengths as well as at least one Echinacea product
to ensure consumer demand for these products can be met. Stocking a
small number of these key lines during the cough and cold season will
provide returns."
Nestle Australia has long recognised the value of the route trade in
terms of sales. The company produces such well-known brands as Butter
Menthol, Soothers, Anticol and Throaties. This year Nestle will launch
new Butter Menthol Honey-Centre and the introduction of the 'New Improved'
Anticol.
According to Janelle Bright, marketing manager for Nestlé, the
route trade accounts for 43 per cent of total medicated sales in a market
which is valued at $80 million (grocery and route combined).
Ms Bright is happy to talk figures regarding sales volumes in the route
trade compared to grocery, which is not surprising given the company's
products account for 70 per cent of the medicated market in these two
channels. Total medicated products are worth $80 million with the breakdown
being 43 per cent in route and 57 per cent in grocery.
More Room for Improvement
When the talk turns to growth potential, our experts are optimistic
that there is more room for improvement within the route trade and within
the product sector, if things are handled intelligently.
"With an increasing number of consumers being 'time poor', we
are definitely forecasting the continued growth of the route trade and
its importance to our business," says Boots' Ms Ryan. "Whilst
we are still forecasting growth at a total market level, we believe
the route trade will grow above total market level as more and more
manufacturers try and target these consumers with 'route' specific packs."
Mayne's Craig Irwin agrees, citing data from Aztec to prove his point.
"The market in grocery is growing over seven per cent for the year
and over 12.5 per cent for the latest quarter, again making it an attractive
market to be in if this growth can be matched in route. Given the small
base in that channel, I am sure it can."
It's up to Nestle's Janelle Bright to issue a word of caution followed
by some advice. "The total medicated market was down five per cent
on an MAT basis. It is a very short, concentrated selling period and
retailers need to capitalise on the opportunity during the key winter
months.
"Throat soothers are quite often a reactive purchase so it's essential
that impulse outlets have the product there and available to provide
an immediate solution as and when consumers need it."
With 'real estate' being a scarce commodity in any C-Store, the all-important
issue is making sure that you're getting the best return possible from
every item that has shelf space. Cough and cold remedies take up a small
area for a small time and the margins will not disappoint.
"As with our standard Strepsils 24 packs, we offer a very competitive
margin to the trade which is what has helped us achieve the market leading
position we have in grocery and pharmacy," says Boots' Myf Ryan.
"We suggest a recommended retail price of $2.49 and with this
price, C-Store owners should earn around 40 per cent margin."
Mr Irwin, from Mayne, says the margin on Cenovis vitamins is upwards
of 25 per cent. Again, given the relatively small area they take up,
he suggests they are definitely worth stocking.
Obviously it would be easy to dismiss cough and cold remedies as a
strictly seasonal inclusion in your stock- and there's no arguing that
they have a strong but short-term popularity - the experts suggest it
is worth keeping a small range of selected products available year around
to cater to the odd customer who's developed a tickle in the nose or
throat.
However, at the appropriate season - now - it makes sense to highlight
the fact you are carrying them.
"The best way to maximise sales is to group these types of products
(vitamins) with other winter products you stock such as tissues to encourage
purchase. Such a small display will drive purchases.
"And our other recommendation would be to ensure you're stocking
small packs of these products to make sure they're affordable as it
will often be an emergency purchase," says Mayne's Mr Irwin.
"Our Strepsils pocket packs have been produced in a display box
that allows for easy counter or shelf placement and clearly identifies
these lozenges to the customer," says Boots' Ms Ryan. "In
order to further drive sales of this popular product, we would certainly
recommend placing these boxes on the check-out counter or in the confectionery
aisle - the arc of convenience - to encourage consumers to trial them."
Be Prepared & Stock Up Early
"The best advice I can give is to be prepared, stock up early and
ensure that you have plenty of stock throughout the season," says
Nestlé's Janelle Bright.
"Our consumer research shows that people average three to four
sore throats per year and each sore throat lasts about three to four
days. This leaves a small window of opportunity for retailers to provide
consumers with trusted brands that will help relieve that sore throat.
If there's no stock, the consumer will go elsewhere."
It's not a situation any retailer wishes to encourage. Given the short
season for these products, you can expect new and improved products
and a great deal of promotional activity and point-of-sale material
to support them over the next few months. Ask your distributor to keep
you up-to-date to ensure you can 'piggy-back' your own in-house merchandising
against the advertising spend and maximise your sales to a more aware
customer base.
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