Nestlé targets doubling of e-Commerce sales by 2025

By 2025, Nestlé expects to nearly double its e-Commerce sales to 25% of group total by significantly increasing its digital marketing spend, reports Reuters. The size of the investment was not disclosed. In Q1-3 2021, Nestlé sales were CHF63.3bn (US$68.3bn), with e-Commerce, which grew 17.2% in that period, reaching 14.1% of total sales. On the back of the success of DtC sales of products such as Nespresso coffee pods (Nespresso.com) and Purina PetCare (Purina.co.uk), the company will use a similar model. Speaking at a virtual investor summit, Executive VP Bernard Meunier said markets such as USA, Europe and China would drive growth. 

Nicholas Hall commented: This is high ambition by Nestlé, bearing in mind that many of its brand leaders are available very widely through retail outlets. Whether its CHC business can also reach this level internationally is a moot point, but in its favour Nestlé competes mainly in the VMS sector, where there are lower regulatory hurdles governing e-Commerce in more conservative countries, so maybe it is a fair ambition. And why not, when we ourselves forecast that e-Commerce will hold a 23% share of the entire global CHC market by 2030?

e-Commerce has had an amazing ride in the past ten years, with very few headwinds and the Gulfstream equivalent caused by the Covid lockdown, but the latest news from China implies that this trend may not continue in such a dynamic way in future. To quote from the unusually downbeat Alibaba: “The extremely high growth that China’s overall e-Commerce market has experienced in recent years is getting harder to maintain following government crackdowns on internet retailing this year.” Perhaps the e-Commerce sector has reached the inflexion point of all growth sectors when additional revenues have to be created rather than assumed.

Among the other top CHC players, the ratio of e-Commerce sales is generally on a par with Nestlé. In Q3 2021, Unilever and Reckitt announced that e-Commerce now accounts for 12% of group net revenues, while at GSK it represents 7% of sales. However, during a recent earnings call, Consumer Healthcare CEO Brian McNamara noted that in Q1-3 2021, e-Commerce had grown in the mid-20% range, adding: “Our ongoing investment in digital capabilities continues to position us well for growth in this key channel.” With online shopping clearly appealing to consumers and continuing to grow in popularity even as lockdowns ease, it is likely other companies will have similar targets to Nestlé’s in mind.

We are pleased to announce that the next title from Nicholas Hall’s Reports will focus on Herbals & Naturals. You will be able to review the latest trends, developments and sales, look at pure herbal & natural categories, along with products within topical analgesics, cough remedies, sleep aids, plus much more. To pre-order your copy and save up to GB£2,100, or for further information, please contact melissa.lee@NicholasHall.com.

Galderma to be the latest healthcare IPO

Swiss-based derma specialist Galderma, which was spun out of Nestlé in 2019, is in talks with international investors, and banks have been appointed for a potential US$22bn initial public offering in H1 2022, reports the UK Financial Times. According to CEO Flemming Ornskov, bumper growth owing in part to the pandemic has led to accelerated strategic planning.

He added: “Digitalisation and social media have underscored something that was always part of this [business] — the emotional part. The skin is the largest organ in the body and we look at it every day. We react to it. We look at people and their skin and we judge whether they are healthy or in a good mood … Many hours spent on screens have reinforced that.”

Nicholas Hall commented: Galderma has been an outstanding success story since the company was sold by Nestlé in 2019 to three private equity companies led by EQT. We can’t rule out Galderma’s being taken over in a very lucrative acquisition, which was the fate of Shire, whose CEO, Flemming Ornskov, is now the CEO of Galderma. More likely there will be an IPO as a stepping-stone to a full listing, which makes perfect sense.

Private equity has been a significant player in the CHC market in the past ten years, but the question is always, “What next?” In some instances, private equity has sold on to a strategic buyer, as happened recently when HRA was acquired by Perrigo and The Bountiful Company was sold to Nestlé. Often private equity sells to another financial institution when it closes its fund after 5-7 years, but sometimes the asset is too big to sell on, and that is when an IPO is contemplated. Galderma is a case in point, and I’m sure the PE owners of Stada will be looking at this option very carefully.

With just over a week to go until our APAC e-Conference 2021take the opportunity to register while spaces are still available! Alongside Nicholas and the team, a panel of industry experts will host sessions on key topics including digital trends, e-Commerce, consumer / patient centricity, plus much more! For further details, or to book your place, please contact elizabeth.bernos@NicholasHall.com without delay.

Q3 Results Round-up: C&D and Prestige

In this week’s blog, we look at the latest quarterly results of two Top 20 global CHC marketers, starting with Church & Dwight, which reported net sales of US$1.3bn in Q3 2021, up 3.7%. Online sales grew by 2.2% (on top of 102% growth in Q3 2020), accounting for 14.2% of total sales.

  • Consumer Domestic net sales were US$998.1mn, up 4.6% driven by household and personal care sales growth and acquisitions. Organic sales increased by 2.8%, owing to higher price and product mix (+6%), partially offset by lower volume (-3.2%). Vitafusion gummy vitamins were among the growth drivers
  • Consumer International net sales were US$227.0mn, a 6.3% increase, mainly driven by European organic sales performance (+8.8%), Global Markets Group organic growth (+6.9%) and currency gains. Despite continued lockdowns, organic sales increased by 2.3%, primarily owing to higher volume. Growth was driven by Waterpik oral care products and Sterimar nasal spray in Europe and Sterimar, Femfresh intimate wash, Vitafusion and L’il Critters gummy vitamins in the Global Markets Group

Comment: Reflecting ongoing trends, CEO Matthew Farrell noted during an earnings call that “Vitafusion gummy vitamins saw huge consumption growth in Q3, up 24%. Consumers have made health & wellness a priority. It appears that the new consumers that came into the category are staying, because if we look at the last year, Vitafusion household penetration is up almost 10%.”

Vitafusion remains a huge growth driver for C&D

As for Prestige Consumer Healthcare, revenues grew by 16.3% (+10.5% on an organic basis) in fiscal Q2 2022 (Jul-Sep 2021) to a record US$276.2mn.

  • North America OTC Healthcare sales were US$251.7mn vs US$216.6mn in the comparable quarter. This was driven by a strong performance across a majority of key brands vs their respective categories and increased demand in certain Covid-impacted categories such as motion sickness and travel-related channels
  • International OTC Healthcare sales totalled US$24.5mn vs US$20.8mn. The increase related primarily to a rise in consumer activity in Australia, which drove a sharp spike in demand for Hydralyte and other Covid-impacted brands, along with a foreign currency benefit of US$0.5mn

Comment from CEO, Ron Lombardi: Our record Q2 built on the strong results delivered in Q1 as our leading brands and business strategies enabled us to benefit from a higher-than-anticipated rebound in Covid-impacted areas, as well as strong consumer demand. The strong performance is broad-based with market share gains, revenue and earnings growth and is a testament to our focused execution in the current environment. Furthermore, TheraTears [acquired from Akorn on 1st July 2021] added incrementally to our strong results and we were pleased with the quick and seamless integration that is now complete.

Save the Date! We are delighted to announce that we will be heading to Athens on 4-6 May 2022 for our 32nd European CHC Conference & Action Workshop! Contact elizabeth.bernos@NicholasHall.com to reserve your space today!

Nielsen IQ: OTC pack size trends 2019-21

In this week’s blog, we share some insights and research from one of our partners, Nielsen IQ, on how purchasing patterns for OTC medicines have evolved in the US market over the past 2-3 years.

In 2019, prior to the Covid pandemic, all size ranges of OTC medications were growing 2-5%, with the larger packs slightly outpacing the smaller pack sizes. As the outbreak began, wellness concerns and “stocking up” behaviours increased, leading to accelerated growth rates of the largest sizes. In the back half of 2020, many shoppers were able use their stockpiled OTC medication purchases from earlier in the year.

Additionally, cold and flu incidence was low owing to less social interaction and the wearing of masks. As the vaccine has become widely available in 2021, normal activities are resuming but all OTC medication sales are down compared to the unsustainable growth of a year ago.

Source: Nielsen IQ. *Pain Relief, Upper Respiratory, Gastrointestinal, Sleeping and Alertness Aids.

The importance of extra large and super size pack sizes has increased consistently since the start of the pandemic. This growth traces across all the top OTC categories and to all forms of pain relief and sleep. The GI extra / super size gains are from liquids, while tablets are driving the CCA / upper respiratory growth.

The upsizing is also seen in shopping patterns. While there were 5 million less OTC medication shopping trips in 2020 compared to 2019, the number of trips in which shoppers purchased an extra or super large pack increased by 10.4 million (+3%), while smaller size trips were down to 15.4 million (-3%).

NielsenIQ Client Director Anna Mayo discussed Healthier Growth for OTC during our recent North American e-Conference 2021. If you were unable to join, contact us to purchase a recording of the session. Next on the agenda is our APAC e-Conference 2021 on 23 November. To find out more about either meeting, please contact elizabeth.bernos@NicholasHall.com.

US Herbal Sales Enjoy Record Rise

Annual sales of herbal dietary supplements in USA passed US$10bn for the first time in 2020, according to the American Botanical Council’s 2020 Herb Market Report, which is based on US retail sales data provided by SPINS and the Nutrition Business Journal. Consumers spent an estimated US$11.3bn, +17.3% vs 2019. This is more than double the annual growth reported that year and the first time the segment has experienced double-digit growth in at least two decades.

  • In mainstream US retail outlets, elderberry was the top-selling herbal supplement ingredient, with sales totalling US$275mn+
  • Ashwagandha root had the largest percentage sales growth (+185.2%) in the mainstream channel. Widely used in Ayurveda, the well-known adaptogen is believed to increase the body’s ability to adapt to different forms of stress
Source: SPINS (52 weeks ending 27th December 2020)
  • Apple cider vinegar supplements saw strong sales growth in both mainstream and natural retail channels, with those marketed for digestive health and “cleanse and detox” the top focus
  • Natural retail outlet shoppers also prioritised fungi supplements, including some marketed for immune and cognitive health such as Chaga, which made its first appearance among the Top 40 in the natural channel ingredients, although human clinical research is lacking

Comment from study co-author Tyler Smith: Consumer trends in herbal supplements have never been more pronounced – the pandemic’s effects on supplement purchases can be seen in almost every data point for 2020. Throughout the year, consumers sought out products commonly used for immune health, stress relief and digestive support, likely in response to pandemic-related stressors. However, sales of products for age-related concerns such as prostate and heart health also grew in 2020, which suggests that consumers were turning to herbal supplements for both acute and chronic conditions.

Now is your final chance to register to join Nicholas and the team next week for our North American e-Conference 2021, reviewing marketing solutions across the region. To register, or for further details, please contact elizabeth.bernos@NicholasHall.com without delay.

OTC Switch Update: China and Austria news

Significant Rx-to-OTC switch developments have recently been announced in the Chinese and Austrian markets. In China, the NMPA medical agency has approved the following switches from Rx to OTC (Class A, pharmacy-only):
 
• Slow-release ambroxol hydrochloride tablets 75mg (dual status cough remedy)
• Lactulose oral solution 67g per 100ml in 100ml or 200ml bottles (dual status laxative)
• Saccharomyces boulardii sachets 0.25g per bag (antidiarrhoeal)
• Glucosamine sulphate potassium capsules 0.25g (joint health)
• TCM systemic cold & flu remedies: Shufeng Jiedu Capsules (0.52g per capsule) and Qingkailing Effervescent Tablets (1g per tablet, dual status)
• TCM sore throat remedies: Huangshi Xiangsheng Tea 0.8g per sachet and Huangshi Xiangsheng Lozenge 0.6g per tablet (both dual status)
Source: Nicholas Hall’s Rx-to-OTC Switch Hot Topic Report

In Austria, Stada has launched Aurasin Akut (zolmitriptan 2.5mg tablets; 2-count SKU; suitable for consumers aged 18-65 years), which is indicated for the acute treatment of the headache phase of migraine attacks, with or without aura. Said to be a “game changer” by the marketer, this is the first non-prescription triptan in Austria after Stada received OTC authorisation for Zolmitriptan Stada 2.5mg in April 2021, while other zolmitriptan-based products remain Rx. A+P support will include radio, print and online activity from August 2021. This development brings Austria in line with the rest of DACH subregion: in Germany sumatriptan was switched from Rx-to-OTC status, and age restrictions (18-65 years) for almotriptan and naratriptan were removed, effective November 2020; while in Switzerland, as of July 2021, multiple triptans can be dispensed without a prescription following face-to-face consultation with the pharmacist.

Comment from Head of Consumer Healthcare at Stada Austria, Ulrich Grottenthaler: With the introduction of Aurasin Akut, a targeted, OTC, well-tolerated treatment for acute migraine attacks is made possible for the first time. The active ingredient zolmitriptan is already well established and also acts where the migraine pain originates. This sets us apart from other non-Rx painkillers. With Aurasin Akut, we enable patients who have once been diagnosed with migraine to get the best therapy for acute migraine attacks in an uncomplicated way and without a prescription in Austrian pharmacies — simply and quickly!

Now is your last chance to join this week’s hot topic webinar focusing on Immunity & Other Drivers of Consumer Healthcare for Europe. Taking place Wednesday 21 July, topics on the agenda will include WOW! brands, e-Commerce and disinfection, plus much more. To register, or to find out more, please contact elizabeth.bernos@NicholasHall.com.

CVS Study: Consumers taking better control of health

CVS Health’s just-published 2021 Health Care Insights Study, which asked 1,000 consumers and 400 providers for their thoughts on the state of healthcare and how they are navigating this evolving landscape, reveals preferences for a more personalised, customisable and accessible experience.

Even as access to health insurance coverage (55%) and location of care (43%) remain among the top factors that influence consumer healthcare decisions, more people are exploring different avenues of care, with a slight movement away from primary care providers (PCPs) to other healthcare resources. Routine care from PCPs has dropped since last year (56% vs 62%), while the use of online resources (19% vs 12%), community health centres (19% vs 15%) and local pharmacies (17% vs 11%) have grown in preference.

Other findings include:

  • 77% said the pandemic has led them to pay more attention to their health in general, while 50% indicated previous stay-at-home orders helped them achieve their health goals
  • In addition to increased substance use, feelings of stress have been pervasive, especially for men, who reported slightly higher levels of stress vs female respondents over the significant shifts that took place during quarantine
  • Young adults (18-34 years) were most impacted by the pandemic and the most likely age group to report depression (35%) and a higher rate of mental illness (28%) vs total respondents (23%)

Comment from CVS Health President & CEO, Karen Lynch: Over the past year-and-a-half, we have witnessed a dramatic shift in consumer healthcare preferences and needs. These shifts towards personalised care have the potential to impact our healthcare system well past the pandemic, with many people taking a more engaged approach to their own health. Going forward, we have an opportunity to take what we’ve learned and continue to foster an integrated health model that is centred around the needs of the individual.

Will consumer interest in boosting immunity outlast Covid? Is the shift to prevention products sustainable? These important questions will be explored in our forthcoming hot topic report focusing on Immunity. A number of categories including antivirals, immune supplements and vitamins C & D will be featured, alongside the latest launch activity and much more. To pre-order your copy and save with the pre-publication discount, or to find out more, please contact Melissa.Lee@NicholasHall.com.

MAT Q1 2021: Global CHC sales fall 0.6%

According to Nicholas Hall’s global sales database DB6, the retail (bricks & mortar) CHC market generated global sales of US$148bn, down by -0.6% versus a year ago. Further heavy decline for cough, cold & allergy (-14.5%), especially in North America and Western Europe, was largely responsible for the global fall in CHC sales. The Americas declined by -0.4%, driven by a -1.9% fall in North America, but slightly offset by a positive performance by LatAm markets (+8.5%), notably double-digit growth in Brazil (+10.6%).

Asia remained relatively weak (+2.6%); despite strong growth in China (+7.1%), the region continues to be impacted by loss of revenue from overseas visitors in key markets Japan (-9.1%) and Australia (-8.0%). Europe saw a significant downturn (-5.5%), heavily impacted by declines in CCA and analgesics in Western Europe. Key markets Germany (-13.3%) and UK (-13.9%) fell by double-digits during the MAT Q1 2021 period. In C&E Europe, meanwhile, Russia continued to post a positive performance (+4.1%), albeit at a slower rate than year-end.

As for global performance by major category, vitamins, minerals & supplements (+5.3%) remained the fastest-growing category – albeit at a slower rate than year-end 2020 – with immune-associated categories continuing to benefit from greater consumer focus on wellness maintenance and protection. Dermatologicals increased by +4.5%, its buoyancy largely attributed to the performance of antiseptics & disinfectants (+53.1%) during the pandemic. Lifestyle CHC grew by +2.4%, driven by double-digit increases in sedatives & sleep aids (+14.5%) as well as smaller categories such as obesity treatments, emergency hormonal contraception and erectile dysfunction.

Gastrointestinals returned a low level increase (+1.2%), while analgesics saw a decline of -1.8% globally, with systemics down -4.3%, largely owing to the effects of pantry loading at the start of the pandemic. Cough, cold & allergy saw the strongest decline, with sales falling by -14.5% in the 12 months to end March. Pantry loading, as well as the effects of lockdown restrictions, social distancing, mask wearing and hygiene measures resulted in significantly reduced incidence of respiratory pathologies.

At a time when consumers are highly aware of the importance of maintaining their immune system, we are pleased to announce that Immunity will be the focus of our next hot topic report! We will review a number of categories including antivirals, immune supplements and vitamins C & D and explore the latest launch activity, plus much more. To pre-order your copy and save with the pre-publication discount, or to find out more, please contact Melissa.Lee@NicholasHall.com.

Seasonal respiratory viruses re-emerge post-Covid

Recent reports from the UK and USA suggest a severe cold & flu season may be in store during winter 2021-22. With lockdown restrictions, increased hygiene measures and social distancing in force for over a year to reduce the risk of contracting Covid-19, the incidence of common respiratory viruses has been very low. However, with the lack of exposure to illnesses (especially among young children), many of us have not built up antibodies and as a result our immune systems may have been inadvertently weakened.

This has prompted warnings of a potential surge in influenza as measures are lifted; data released this week by the UK’s Office of National Statistics show that in the week ending 11th June, 84 death certificates issued in England & Wales mentioned Covid, while 1,163 deaths involving flu and pneumonia were registered. Additionally, a recent study by the Houston Methodist Research Institute shows the rapid re-emergence of seasonal respiratory viruses following the relaxing of Covid-19 restrictions in Texas in March 2021.

This trend was also reported in a recent article in STAT, in which Trevor Bedford, a computational biologist who monitors which viruses are circulating via the Nextstrain service, was quoted as saying: “Just in the last month [May 2021] or so we’ve started to pick up small amounts of seasonal coronavirus, RSV, metapneumovirus, etc. It’s the first time since April 2020 where we’re starting to see other things circulating.”

There is particular concern that by the time universities, colleges, schools and nurseries reopen this autumn across the northern hemisphere, there will be perfect conditions for high transmission of seasonal respiratory viruses, particularly RSV (respiratory syncytial virus). Andrew Pavia, Chief of the Division of Pediatric Infectious Diseases at the University of Utah, warned: “There will be two years’ worth of kids who are naïve to RSV, instead of one birth cohort. That could be fertile ground for a big RSV year.”

Epidemiologist Professor Neil Ferguson of Imperial College, a member of the UK Government’s Scientific Advisory Group for Emergencies, said in a BBC interview that we must be prepared for a potentially “quite significant” flu epidemic and increased hospitalisations this winter. To help save National Health Service resources, researchers are investigating whether seasonal flu jabs and a Covid vaccine can be administered at the same time.

We are pleased to announce that our Eye Health report is now published and available to order! You can review case studies of key brands, NPD activity and much more. Plus, ensure you have registered for the free webinar on 30 June here to discuss the topline findings. For more information, please contact melissa.lee@NicholasHall.com.

Rx-to-OTC switch drivers

Allergy and sexual health are two areas of the global CHC market that continue to expand in sales thanks to Rx to non-prescription switch activity in various markets. In Japan, the Ministry of Health, Labour & Welfare’s Evaluation (MHLW) Review Conference will discuss the potential Rx-to-OTC switch of emergency hormonal contraceptives at a meeting this week.

According to CHC Insight Asia-Pacific Senior Editor, Nicola Allan: “In June 2019, an MHLW steering committee permitted pharmacists to dispense EHCs during a face-to-face transaction after the consumer has had an online consultation with a doctor. Previously, the patient had to see a doctor face-to-face to obtain a prescription to give to the pharmacist. More than 9,000 pharmacists have undertaken training that allows them to participate in the new scheme, which has prompted the MHLW to consider further liberalisation of EHC sales.”

Meanwhile, in the UK, following an application from Sanofi, the Medicines & Healthcare products Regulatory Agency last week reclassified Nasacort Allergy Relief (triamcinolone acetonide 55mcg / dose) nasal spray from Pharmacy medicine to General Sales List. The suspension can be used for the relief of symptoms associated with seasonal allergic rhinitis, including sneezing, itchy and runny nose, itchy red or watery eyes, nasal congestion or sinus discomfort in adults aged 18+ years.

In terms of switch drivers, governments seeking to reduce healthcare costs remains a primary factor, but also important is the empowerment of consumers as they increasingly use digital solutions to improve and monitor their health, a trend that is being leveraged into test & treat models. Commenting on the just-published Rx-to-OTC Switch Hot Topic Report, CIMA Senior Market Analyst Victoria Blake said the report “considers the impact of Covid on struggling healthcare systems, and the increased burden on the undertreated population. While traditional mechanisms have proved too slow in recent years, the next generation of switches – such as statins, triptans, oral contraceptives and CBD – require new thinking and a different approach.”

According to Nicholas Hall, “we could be entering a Golden Age. Voltaren Arthritis Pain Relief Gel’s successful US launch; OTC approval for low-dose cannabis in Australia; the possibility of OTC oral contraceptives in a major Western market for the first time; plus recent statements by Sanofi on the likely switches of the antiviral Tamiflu and the erectile dysfunction treatment Cialis. These are just the tonic this industry needs as the recovery from Covid gets underway.”

Our hot topic report Rx-to-OTC Switch is now published! Written by Nicholas Hall’s CIMA team in association with switch expert Joe McGovern of Biograph Inc, you can access information on the historic and current switch environments in key global markets, including an overview of pipeline and strategic considerations. For more information, or to purchase your copy, please contact melissa.lee@NicholasHall.com