Where is Cough-Cold Going?

May 07, 2007

By Laura Klepacki, special to GMDC

Through a host of quick business retention maneuvers, overall industry sales of cough, cold and allergy medications have remained strong despite restrictions imposed by the Combat Methamphetamine Epidemic Act.

Not all segments, however, went unscathed. Supermarket private label has taken a big hit.

The Act, intended to thwart the illicit use of the key ingredient pseudoephedrine (PSE) in the making of street drugs, went into full effect in September 2006. It limits consumer purchase amounts and requires stock to be placed in locked cases or behind pharmacy counters. Several states already had laws on the books making it additionally challenging for retailers operating in various states.

Despite the pressures on manufacturers and retailers, remarkably, total category sales in food, drug and mass stores except Wal-Mart, rose over the 52-weeks ended March 25, according to Information Resources Inc. For instance, sales of cold, allergy and sinus items in liquid and powder forms inched up 3.9 percent to $630.6 million and sales in the tablet/packet segment climbed 7.2 percent to $2.13 billion.

Supermarket volume has not been so robust. Sales of cold, allergy and sinus items in liquid and powder form declined 3.4 percent to $224.9 million, with private label plummeting 29 percent to $30.3 million. For the tablet/packet sector, sales were flat at $683.8 million, with private label dropping 18 percent to $98.1 million.

Supermarkets have suffered because many lack pharmacy counters – the actual number has declined from 10,867 to 9,972 in recent years. Furthermore, pharmacy counters do not have the extended hours of the total store, so access is further limited.

Private label did better at drugstores.

At drugstores, sales of cold, allergy and sinus liquid/powder rose 6.3 percent to $355.2 million, with private label down 18.5 percent to $57.4 million. In the more important tablet/packet segment, however, sales did climb 11 percent to $1.28 billion, with private label volume up 5.8 percent.

Branded manufacturers reacted quickly with reformulations. For instance, Sudafed jumped in with the new Sudafed PE, replacing PSE with the active ingredient phenylephrine. Now it offers products both behind the counter and in open stock sections. Sudafed PE lasts only four hours, compared to six for the original.

Claritin didn’t reformulate, but created an advertising campaign to make customers aware of where the products are now found in-store, noted Julie Lux, spokeswoman for Schering-Plough, Claritin’s manufacturer. Sales have responded strongly.

Manufacturers are now working with retailers to improve stocking and organization of these behind-the-counter sections.

For as noted by pharmacist Robert Egelund of the Hy-Vee supermarket chain in West Des Moines, Iowa, space is extremely tight. Hy-Vee, for one, has slashed its cough/cold stock-keeping units from 160 to 50.

“Our sales have decreased dramatically,” he said. When deciding what to keep, Hy-Vee has favored private label in many cases over national brands.

Discussion Questions: What is the long-term outlook for the cough-cold category?
Are retailers missing an opportunity with PSE products behind the counter by
not training clerks to promote private label when customers are seeking PSE

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3 Comments on "Where is Cough-Cold Going?"

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Mark Lilien
15 years 22 days ago

Store staff generally don’t have time to promote anything personally, let alone private label PSE products. Is there anyone left in America who hasn’t already made up his/her mind about whether it’s worthwhile to buy private label OTC drugs? The best PSE approach: the brands who’ve made cardboard cards similar to their product labels, which are displayed in the former shelf sections. Customers bring the cards to the staff who give them the product desired in exchange.

Mary Baum
Mary Baum
15 years 18 days ago

If it really is taking five minutes to fill a customer’s request for a branded PSE product, it seems to me that’s ample time to suggest the store’s cheaper alternative.

What if stores put a non-pharmacist back there at the height of the season just to handle the cough-cold business, and maybe gave the PSE customers their own line or numbering system, taking them out of the pharmacy crush?

David Biernbaum
15 years 18 days ago
Overall, sales on cough and cold products that contain pseudoephedrine (PSE) largely still depend on demand, the strength of any given cough, cold, or allergy season, and consumer habits of what they purchased in the past, and that’s probably why Claritin and other PSE products have not declined too much in chain drug and discount where pharmacies are available. However, I predict that in years to come, consumers will become increasingly frustrated with having to wait in a pharmacy line to purchase PSE products. The current system in place in most pharmacies is time-consuming for the busy consumer that isn’t in the pharmacy line for any other reason. Some pharmacies are taking as long as 5 minutes just to process each customer that is purchasing a PSE item while other customers stand in front, and behind, waiting to process prescriptions. I suspect that PSE products are still doing well because consumers still desire PSE products out of habit and some probably do not feel that other formulations work for them quite as well. In terms… Read more »

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