From shopping in charity shops to embracing DIY, Brits increasingly love a bargain. And in today’s cost-conscious climate, the hunt for a deal is extending into more unusual areas – like the medicines aisle.
Sales of winter remedies on promotion have risen by 61.6% over the past year [Kantar 52 w/e 9 June 2024] – driven primarily by volume deals, then temporary price reductions. As prices have risen by an average of 8.6%, shoppers are looking to save the pennies, even when under the weather.
It’s a trend that has been noted by the supermarkets. “Customers appreciate getting a good deal – and the current environment, where households continue to face into financial pressures, means shoppers are savvier than ever,” says Kirshley Paul, Asda healthcare buying manager. “The major winter remedy brands can be more expensive than some own label alternatives, so promos can help to close that gap.”
So will the desire for savings become a major force in the category in the longer term? What does that mean for brands? And which retailers are poised to win?
Overall, a milder winter dented take-home volumes of winter remedies last year by 5.5%, falling to 224 million packs [Kantar]. It means that, despite price rises, the value of the category edged up by just 2.4% to £569.1m. That performance was reflected in sales of the category’s largest retailer – Boots – which grew by a modest 2.9% in value to maintain share of nearly 25%.
“Households continue to face financial pressures… shoppers are savvier than ever”
Kirshley Paul, Asda healthcare buying manager
But if promotional strategies are anything to go by, supermarkets are on track for a larger slice of the pie. Take Asda. Despite a disappointing 1.5% dip in category value sales last year, it hopes to lure in ever more shoppers with its Star Products rewards scheme.
The scheme offers cash rewards for buying highlighted products, amounting to 10% of the product’s price – and winter remedies have formed part of that offer. Asda says it has frequently listed cough relief medicines Zarbee’s and Bronchostop as Star Products, and they’ve “performed well” as a result.
Tesco, which increased its category value by 8% this year, also points to the power of promotions. “We are proud to have strong availability on our ranges, which means we can offer more promotions to help customers keep costs down,” says a spokesman.
- It’s been a tough season for the top 10 winter remedies brands. All are in volume decline apart from Otrivine, which put 322,456 more units through tills. That helped the brand add £2.7m to its value, which hit £22.3m last year.
- The other top nine players failed to drive volume growth, with value gains primarily driven by price increases.
- Sudafed, for example, grew 6% in value, but volumes fell 5.8% to 10.3 million units. Vicks’ value, meanwhile, went up by 3.9% while unit growth dipped by 8.3% to £7.2m.
- It’s a sign of a winter remedies market that has struggled to replicate sales of the previous year, when cold and flu cases were at high levels. Sales have dropped 0.7% in value and 7.5% in volume.
- Many shoppers have opted for cheaper own label alternatives, notes NIQ analytics executive Kevin Chen. Ongoing supply chain issues have also affected category performance, he adds.
- As shoppers “continue to remain cautious with their spending”, pricing strategies and promotional activity will be the main factors affecting category performance over the next year, he believes.
- Ensuring a steady supply chain will also be “crucial” for brands, adds Chen.
Discounter gains
In this cost-conscious climate, savvy shoppers are turning to the discounters for their cold and flu medicines, too.
Kantar data shows Aldi and Lidl delivered the largest category value gains of any retailer in our data set, of 70.6% and 11.7% respectively. These were admittedly from a low base: Aldi has 1.5% and Lidl 2.3% of category value share.
While high-volume products such as paracetamol and ibuprofen are sold year round, Marc Houppermans, executive partner at Discount Retail Consulting, says Aldi and Lidl achieved most winter remedy sales through in-season deals on different pack sizes and flavours for cold and flu medicine.
“These winter remedy products do not sell well all year round and also have expiration dates,” he says. “And as rotation levels are one of the KPIs of discount retailing, adding winter remedies to the seasonal special buys assortment makes most sense.”
The appeal of the discounters in this area is reiterated by Clive Black, vice chair at Shore Capital. “Squeezed living standards in 2022 and 2023 only served to encourage folks to the discount channel, and private label at that,” he says.
Indeed, own label has enjoyed a 10.8% rise in value sales to £105m over the past year, while brands have edged up just 0.8% to £491m [Kantar].
“It is only in 2024 with UK real living standards on the rise that proprietary brands [are] reassessing share losses and the effectiveness of some price gauging… we may be seeing private label and discount potentially peak,” Black adds.
Even at that peak, own label is still less than a fifth of category value, indicating a high proportion of shoppers remain loyal to brands, says Kantar analyst Joseph Cherian.
“We may be seeing private label and discount potentially peak”
Clive Black, vice chair at Shore Capital
That’s not to say brands aren’t feeling the pressure, though. Nine of the top 10 players failed to grow volume over the past year [NIQ]. The fastest falling were Covonia, down 23.7% to 4.6m units, and Benylin, which dropped 16.7% to 6.3m units. Only Otrivine grew in both value and volume, adding £2.7m while shifting 322.5k more units.
There is an obvious reason why brands are struggling. “Price increase is the primary reason for unit decline and driving down demand as shoppers look for affordable alternatives,” says NIQ analytics executive Kevin Chen.
But last year’s milder winter also played a key part in hampering growth, as manufacturer Reckitt Benckiser pointed out in its half-year results. “Seasonal brands Mucinex, Strepsils, Delsym and Lemsip declined [in volume], impacted by a weak end to the cold and flu season and retailer inventory destocking,” it said.
Fisherman’s Friend regional business manager Jon R White says the “middle brands” are also feeling the pinch, with shoppers “clearly dividing into two very distinct camps at either end of the premium vs value scale”.Trading down to own label has been a key feature of the winter remedies market over the past year, as prices have risen by an average of 8.6%.
- Own label rose 10.8% in value, while brands edged up 0.8%. The difference is yet more stark in volume terms. While own label grew 4.1%, brands suffered a 7.5% dip.
- The trend was most apparent in cough liquids, where own label sales grew by over a third, and branded sales fell 2.2%.
- However, own label still accounts for less than a fifth of the total winter remedies category value, indicating there is still “a high proportion of shoppers loyal to buying brands”, says Kantar analyst Joseph Cherian.
- Amid cost concerns, sales on promotion increased by 61.6%, driven by volume deals. That’s despite winter remedies historically being “less promoted due to the nature of this category”, notes Cherian.
- The uptick in prices was most apparent in decongestants, which were up by an average of 12.5%. By contrast, cold treatments experienced the smallest increase, up by just 1.7%.
Beyond winter season
Clearly, brands have their work cut out for them. Their future will rely on communicating their functional and innovative credentials, says Shore Capital’s Black.
“Many shoppers have become interested in the functionality of the product over the brand in isolation, meaning that the future of [brands] is inextricably linked to value be that functional, innovation, packaging, volume and so forth,” he says. “So for proprietary brands, they have a lot to think about… to be in the right place at the right time with the right offer.”
“Shoppers are more focused on having a product ‘on hand’ in the home than on brand”
David Sables, CEO of Sentinel Management Consultants
Halls, which dropped 4.9% to £35.4m [NIQ], feels it is cut out for the challenge. “Relief candy sales peak in winter with the annual arrival of the traditional cough and cold season,” says Mondelez International trade communications manager Susan Nash. “However, in recent years the category has continued to justify and expand its place on store shelves all year round.”
That’s particularly been driven by Covid, which isn’t just confined to winter – as proven by the latest summer wave.
“Covid has ‘normalised’ winter medicines and made them more generic, with the seasonal aspect massively diluted,” says David Sables, CEO of Sentinel Management Consultants. “Shoppers are more focused on having a product ‘on hand’ in the home.”
The big challenge for brands will be to make sure they are the ones on hand when the moment comes.
Source : The Grocer
