An elixir is needed to stimulate hair-regrowth sales at supermarkets as private label mounts a surge to dislodge Rogaine as the No. 1 dollar-volume seller.
Sales volume of hair-regrowth products in food stores sank 23.3% for the year ended March 29, and unit sales dropped off 5.7%, according to Information Resources Inc., Chicago.
Less-expensive private-label brands from manufacturers such as Teva, Copley and Perrigo have been making enormous inroads in market share since the Kalamazoo, Mich.-based Pharmacia & Upjohn pioneered Rogaine and launched hair regrowth at retail when it won Food and Drug Administration approval to have the product sold over-the-counter in April 1996.
Private label got a break when the FDA a few weeks later rejected Pharmacia's request for marketing exclusivity, paving the way for generics to follow Rogaine from behind pharmacy counters to health and beauty care shelves. Private label sells at a fraction of Rogaine's average price of $24.
"When the generic minoxidils came out, the bottom totally fell out" on Rogaine sales, said Joseph Jeffries, pharmacist for Riesbeck Food Markets, Columbus, Ohio. "They're pennies to what Rogaine costs."
The result has been a sea-change in market share. Private-label dollar sales shot up 42% from April 1997 to March 1998 over the same period a year earlier, while Rogaine's dollar volume plummeted 40.4%, according to IRI. Rogaine products are still comfortably ahead of the pack, controlling 59% of the category's dollar volume, compared with the private labels' 36.3%. When measured by unit sales, private label as a group actually outsold the Rogaine line, 2.57 million units to 2.33 million.
Although the generics are reeling in market share, Pharmacia & Upjohn isn't sitting idly by. IRI's sales are only now reflecting the drug manufacturer's new Rogaine Extra Strength For Men, introduced at the start of the year. The new product contains a 5% minoxidil ingredient, as opposed to the 2% in regular Rogaine and the generics.
Unlike regular Rogaine, Extra Strength Rogaine was awarded marketing exclusivity until the year 2000 by the FDA in November, giving its maker an opportunity to regain market share it has lost to competition.
The hair-regrowth category might also get a much-needed boost from another major player that recently entered the market. Merck & Co., White House Station, N.J., is pushing a prescription-only oral antibaldness treatment called Propecia, whose main effective ingredient is 1 mg of finasteride. Propecia was made available nationwide in mid-January. (Propecia is not a new drug for Merck. The company marketed it as a prostate drug under the name Proscar.)
The debut of Extra Strength Rogaine and Propecia -- both FDA-approved, unlike their competitors -- may reshape the hair-regrowth playing field yet again. Yet early impressions from the front line are less than glowing.
"It's always been slow," HBC buyer Verdie Henderson of Minyard Food Stores, Coppell, Texas, said of hair-regrowth product sales. "When we first got Extra Strength [Rogaine], we got several orders, but now it's slacked off. People just don't want to pay those prices at a grocery. They expect bargains."
Even a less-expensive minoxidil product from Consort that is bundled with a shampoo seems anchored to shelves, Henderson said. She said she believes the segment will continue to languish in supermarkets, though Minyard has no plans to discontinue carrying the products.
Other grocery chains are so unimpressed with hair-regrowth products, they decline to carry them. "The retail price is so high, we decided it wouldn't be worthwhile," said Susan Spring, HBC buyer at an IGA owned by W. Lee Flowers & Co., Scranton, Pa.
While the high price points for men's hair-regrowth products mean less inventory turnover, they also mean higher margins -- about 30%. That gives Reisbeck's Jeffries, for one, the incentive to be creative in marketing the products.
Jeffries is considering bringing a hair stylist into his stores occasionally to push the Extra Strength Rogaine and other minoxidil brands. "That would add credibility" to the products, he said. He also plans to add the minoxidil products to a lineup of goods that a visiting dermatologist answers consumers' questions about.
Extra Strength Rogaine is available in a Starter Kit (one 2-fluid-ounce bottle) for $30 and a twin-pack for $50 (two 2-fluid-ounce bottles). The Starter Kit price is about the same as what regular-strength Rogaine sold for at retail. Propecia, which sells its pills wholesale for $1.25 each, offers a 30-pill option and a 90-pill Pro-Pak. Supermarket pharmacists typically sell the one-pill-a-day Propecia products for about $49 and from $120 to $150, respectively.
In addition to their high prices, hair-regrowth products are criticized by marketers and consumers for the long time they take to show results.
Pharmacists report many customers give up before hair starts growing again. Propecia says 83% of men involved in its clinical trials saw some sort of change -- retention of hair or hair regrowth -- after three months of tablet-popping. The new Extra Strength Rogaine is touted as working twice as fast as its regular-strength brethren, or after two months rather than four.
For a category that has a high intimidation factor for customers who may be uncomfortable discussing hair loss, advertising may be key for pushing the industry over the top. Pharmacia & Upjohn is spending $80 million on advertising this year to get the word out on Extra Strength Rogaine, more than twice what it spent on the regular-strength version in its first year. Green Bay Packers football coach Mike Holmgren and basketball star Karl Malone offer Extra Strength Rogaine testimonials in consumer advertising spots, and Holmgren appears in an instructional video sold in the Starter Kit.
Propecia spokesman Christopher Allman said Merck will roll out a direct-to-consumer campaign "once we feel like we've reached a certain awareness level."
Because Propecia is physician-prescribed, there is little supermarkets can do to help promote the product, other than educate their pharmacists about its benefits, Allman said. "Pharmacists play an important role in educating consumers about all therapies," he said. "They should know who it's for, what the side effects are and what results are."
There appears little chance Merck will follow Pharmacia's example and try to take Propecia over-the-counter, since Propecia's side effects include possible impotence. Merck said clinical tests show a 2% incidence of impotence in users, adding that 58% of those saw the side effect disappear after continued use of the drug.