While the mercury is still high, health and beauty care buyers across the country are gearing up for the Arctic blast that inevitably ushers in the cough and cold season.
How good will business be? It all depends on Mother Nature. Last year, the cough and cold category garnered almost $2.5 billion in sales, according to InfoScan data from Information Resources, Chicago, for the 52 weeks ending June 30, 1996. However, those figures were down 3.3% from the previous year.
"Cough and cold is driven off epidemics," said Lannie McDaniel, director of GM/HBC Operations at Horner Foods, Tulsa, Okla. "It depends on the weather conditions. For example, allergies were bad this year because a wet spring made mold spore counts high. But last year we had a mild winter."
Still, McDaniel will be ready for any contingency. He bought his cough and cold products at his supplier's show in April and will set up his program, along with 3-D fixtures and endcaps, in October.
"The cough and cold season starts as soon as the kids go back to school," said Grant MacLean, director of general merchandise and HBC for Rosauers Supermarkets, Spokane, Wash. "Typically, it peaks in January and then trails off."
Supermarkets are holding their own, according to retailers SN spoke with.
Still, "those retailers that get behind the cough/cold category, and make consumers aware they are in the business, stand to reap incremental sales since people are in supermarkets many more times than they are in discount stores," said Ronnie Williams, vice president of HBC purchasing at Millbrook Distributors, Lester, Mass.
"They show customers they are in the business by having a good selection, by building endcaps and putting up racks that stay up all season, and by having secondary placements, which are crucial," Williams said.
Millbrook's salespeople currently are in the field showing supermarkets in more than 40 states manufacturers' prepacks and their own suggested endcaps, displays, racks and planograms, which will be ordered by the end of August. Many supermarkets will begin loading up in early or mid-September, but stores in the South wait until October, according to Williams.
Bill West, the nonfood merchandiser at Food Town, Maumee, Ohio, has already ordered for the cough and cold season -- which, he estimated, is actually two seasons, with peaks in October and January.
"January is the bigger of the two," West said. "In Toledo, [Ohio] we usually have cold weather until the end of March."
West has stocked most of his product for 66 stores (two-thirds of which are supermarkets), but expects to add during the season as new items come along.
He will use red arrow, plus card and preferred shopper programs to promote product this year. In most stores, he will have 8 feet of cough drops and another 12 feet to 16 feet devoted to cough and cold medicines during the flu season.
MacLean said supermarkets have to capitalize on the convenience factor in this category and offer a large selection of products, since people don't buy remedies in advance. The idea is to have what customers want when they need it, so MacLean's stores have 12 feet to 16 feet -- and sometimes 20 feet -- of space devoted to cough and cold.
Williams at Millbrook doesn't expect too many category surprises this year. Dimetapp has a new cold/allergy remedy that is a 'quick dissolve' product. "Technologically, that's new and exciting and will get some attention," he speculated, but most other new products are just line extensions.
According to Williams, the new Children's Motrin Caplets and Liquid Suspension, which was just approved by the FDA for over-the-counter distribution, will not generate a lot of excitement or do as well as Motrin's adult products.
But Food Town's West disagreed, and expects the new Motrin to do well in his stores. "The real growth area is in children's," he said. "There's more medication today available for children than ever before, and it seems to be doing very well."
Williams cited two factors that affected sales in this category last year: first, the weather, in which "there were no massive outbreaks of sickness like there have been in previous years"; and second, private-label purchases.
"Consumers now recognize the value of private-label products, and that they have the same ingredients [as the national brands]. This lowers the total dollar sales at the retail level, but it raises profit margins," he said.
West concurred with Williams in saying his private-label entries do the best, although he carries a variety of SKUs.
McDaniel gets good margins -- about 28% -- in this category, because his supplier, Value Merchandisers, is able to buy competitively, he said. Adults and children's products both do well, although he probably makes more dollar sales in adult remedies, he said.
Mike Killgallon, nongrocery buyer and merchandiser at Genuardi's Family Markets, Norristown, Pa., said his margins are about 30%. He does more business in adult products, although the children's category is growing.
Though some buyers said drug outlets still have an advantage over them because many consumers fill prescriptions there, the supermarket channel is continuing to pick up business. It will continue to do so as long as it gives consumers a wide cough and cold product assortment once the season of sniffles is underway.
Epidemically Driven
Combined sales of cough/cold and allergy/sinus medications slipped 3.3% last year to $2.5 billion for the 52 weeks ending June 30, 1996, according to InfoScan data from Information Resources Inc., Chicago.
The category is predicated upon virus and flu outbreaks with the cough/cold season beginning during back-to-school time and peaking in January.
