Unilever still seeking expansion in CHC

Pressure has been building on Unilever over the weekend, with Nelson Peltz’s activist hedge fund Trian Partners reportedly taking a position in the UK group’s shares, adding to the challenges facing CEO Alan Jope. The Unilever boss is already facing brewing shareholder discontent after its attempted takeover of GSK Consumer Health, and now confronts a fierce activist fund known for demanding streamlining and governance reforms at consumer goods groups including P&G, Sysco and Mondelez.

Following a third unsolicited bid for GSK’s Consumer Healthcare business last week, Unilever brought forward an update setting out its strategic direction. An extensive review by the Board to reposition Unilever’s portfolio into higher-growth categories concluded that the FMCG player’s future strategic direction lies in “materially expanding its presence in health, beauty and hygiene”. The company added that consumer health was a “highly complementary category, with good potential for synergies and a number of routes to build scale”.

As our CHC New Products Tracker tool indicates, the priority brand for Unilever over the past two years has been supplement Olly, which has been expanded beyond its initial US launch market into the key growth market of China. Unilever has also invested in NPD for fellow supplements SmartyPants and Liquid I.V., since acquiring both brands in 2020, as well as Derma brands Vaseline and Lifebuoy, and there is clear scope for Unilever to expand its CHC portfolio further both geographically and in terms of category focus.

Nicholas Hall’s Touchpoints: Unilever’s latest offer for GSK CH, received in December 2021, was for a total value of £50bn (US$68bn), which the GSK Board unanimously concluded “fundamentally undervalued the business and its future prospects”. Following the publication of Unilever’s strategy update, it initially looked like the company would make a sweetened offer. It stated: “GSK CH would be a strong strategic fit; 45% is in oral care and VMS — categories in which Unilever already has presence and substantial capabilities. OTC would be an attractive adjacent category, with the ability to combine Unilever’s consumer and branding expertise with GSK CH’s technical OTC capabilities.”

However, Unilever faced a growing backlash from investors, with its shares falling and ratings agency Fitch warning it could downgrade the company’s “A” credit rating if it proceeded with the deal, which would likely raise debt. A few days later, the company announced: “We note the recently-shared financial assumptions from the current owners of GSK CH and have determined that it does not change our view on fundamental value. Accordingly, we will not increase our offer above £50bn (US$68bn).

Unilever has laid its cards on the table though and will no doubt be on the lookout for another CHC target. Meanwhile, GSK maintains that the “focus remains on executing the proposed demerger, which is on track to be achieved in mid-2022”, although analysts note that the MNC may consider a deal worth around £60bn (US$82bn). It remains to be seen whether other suitors, potentially thought to include Nestlé and private equity, will make a move.

Innovation trends by region will be analysed in the latest edition of Innovation in CHC from CHC New Products Tracker. This report will also take a look at delivery format trends, offer the Top 100 innovations from 2021, as well as innovation by leading marketers. To pre-order your copy and save with the pre-publication discount, or for further information, please contact melissa.lee@NicholasHall.com.

Japan birth rate in steep decline, femtech on the rise

The birth rate in Japan is declining faster than expected, with the number of babies born in the country in 2021 estimated to have fallen to around 805,000, a figure previously predicted for 2028, according to calculations by The Asahi Shimbun. Meanwhile, the latest government figures show the number of Japanese aged 20 years on 1st January 2022 fell 40,000 from 2021 to around 1.2mn, a record low.

The decline reflects Japan’s persistent inability to reverse the falling number of births. Worryingly in a country with a dwindling workforce, the “new adult” cohort now represents just 0.96% of the population. Several 20-year olds told the UK Financial Times that their main ambition was to join a company and avoid risk, while starting a business was a “terrifying leap into the unknown”. Studies show that this generation has grown up with slow growth, low inflation and a zero-interest financial policy, and above all desires stability in business and the workplace.

Projections by the United Nations already show a decline in fertility rates in Asia, with the regional rate forecast to fall from 2.12 live births per mothers in 2020 to 1.76 by the end of this century. A more dramatic decline in fertility rate is forecast for Africa – from 4.29 in 2020 to 2.13 in 2099 – while the outlook for Europe and North America is more stable.

Source: Our World In Data. United Nations, Department of Economic and Social Affairs, Population Division (2019). 

Meanwhile, the growing market for Femtech, with its increased focus on female empowerment and independence, is having direct benefits for the CHC market for sexual health & fertility, according to a new report from Nicholas Hall. Women’s health is becoming less of a “one size fits all” category as marketers increasingly recognise diversity within the demographic group. Female-led tech companies are avoiding the discreet and euphemistic marketing historically employed for intimate care, instead directly challenging taboos. A key benefit of FemTech is its ability to meet women’s health needs underserved by current services, such as existing health monitoring apps based on insufficiently diverse data or algorithms and values based on male norms. 

Comment from Nicholas Hall Reports Managing Editor, Ian Crook: Launches such as Natural Cycles, the first FDA-cleared birth control app, and menstrual aid Lunette have brought improved access to intimate health resources. Marketing for Lunette is typical of the FemTech concept, focusing on women with a variety of body types and highlighting diversity to expand the brand’s audience and challenge a historical lack of interest in the health needs of minorities. As technology improves and marketers increasingly recognise gaps in women’s healthcare, we are seeing targeted launches offering real solutions, from better menopause care to app-driven fertility sensors, giving women the tools needed to take their health into their own hands.

FemTech features in a dedicated chapter in the newly-published Sexual Health & Fertility report, alongside coverage of contraception, intimate care, pregnancy & fertility and much more. For further details, or to place your order, please contact melissa.lee@NicholasHall.com.

Global dementia cases set to triple

The number of people aged 40+ years with dementia could nearly triple worldwide from 57mn in 2019 to 153mn by 2050. This is according to a study of 195 countries funded by the Bill & Melinda Gates Foundation, published in The Lancet Public Health on 6th January 2022. The projected increase is largely owing to the ageing population and population growth.

However, the study also looks at four risk factors – smoking, obesity, high blood sugar and low education – and highlights their impact on future trends. While improvements in global education access are projected to reduce dementia prevalence by 6.2mn cases by 2050, this will be offset by anticipated trends in obesity, high blood sugar and smoking, which are expected to result in an additional 6.8mn cases.

Nicholas Hall’s Touchpoints: This study was conducted by the University of Washington, and to quote the lead author, Emma Nichols: “We need to focus more on prevention and control of risk factors before they result in dementia. Even modest advances in preventing dementia or delaying its progression would pay remarkable dividends. To have the greatest impact, we need to reduce exposure to the leading risk factors. For most, this means scaling up locally-appropriate, low-cost programmes that support healthier diets, more exercise, quitting smoking and better access to education.”

Is there a role for consumer healthcare here? I believe there is! Not least, it is noticeable that herbal products sold for memory & brain health have been growing consistently during the past five years, with a spike in demand in 2020. Taking all channels of distribution into account, this category is valued at over a billion dollars, with the USA accounting for about 50% of sales. In Prevagen, it has produced a mega-brand, which is why both Reckitt and P&G have entered the fray. At a time of continuing interest in M&A, it’s encouraging to see that there are a number of CHC categories delivering substantial organic growth.

Herbal memory and brain health supplements will be reviewed in our forthcoming report, Herbals & Naturals, which will track the leading H&N marketers, highlight developments, sales and success strategies. To pre-order your copy and save up to GB£2,100, or for further information, please contact melissa.lee@NicholasHall.com.

CRN survey shows sharp rise in US VMS usage in 2021

The Council for Responsible Nutrition has revealed initial findings from its 2021 Consumer Survey on Dietary Supplements, which was fielded by Ipsos in August and involved 3,089 adults aged 18+ years. Vitamin D usage has significantly increased (52% vs 42% in 2020), as has zinc (22% vs 15%) and vitamin C (40% vs 35%); all could be helpful for combatting Covid-19 and boosting overall immunity. Further, 50% of supplement users report a change to their supplement routine since the start of the pandemic; 55% of those indicated that this includes adding new supplements to their existing routine.

ClearCut Analytics Director of Sales Jake Bernstein told attendees of the CRN Annual Conference, where the findings were unveiled, that dietary supplement sales on Amazon have risen by 43% and predicted that 25% of sales will be purchased online by 2024. Ashwagandha and collagen were the Amazon star performers.

Nicholas Hall’s Touchpoints: This important research is another building block in helping us to understand how consumer attitudes have changed during the Covid-19 lockdown. As CRN’s Brian Wommack comments: “With 80% of Americans using supplements, these products are now mainstream and broadly accepted by the public. Just as important, 79% of Americans believe the dietary supplement industry is trustworthy, a jump of 5% from 2020.” This data and these comments will be taken into account in our ongoing evaluation of whether the CHC market is moving back to treatment and reversing the recent trend towards prevention & immunity. 

However this turns out, one clear learning emerges: consumer trends move slowly, accelerated only by mega-happenings such as the recent pandemic. By comparison, fashions in the pharmaceutical industry, including its CHC daughter, are highly volatile. 

Our Innovation in CHC 2021 report assesses 10 major trending ingredients, with a strong focus on VMS. Drawing from CHC New Products Tracker, this report also explores trends in NPD activity by company, reviews the best CHC innovations and much more. For more information or to order your copy, please contact melissa.lee@NicholasHall.com.

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.

Spotlight on WBA, plus US and UK retail

In its latest results, Walgreens Boots Alliance announced that fiscal 2021 sales from continuing operations rose by 7.5% on a constant currency basis to US$132.5bn, exceeding expectations. In Q4 fiscal 2021 (June-August 2021), sales increased by 11.8% to US$34.3bn.

  • United States had Q4 sales of US$28.8bn, up by 6.6%. Retail sales grew by 6.5%. Comparable sales were up 8.1%, reflecting an 8.9% rise in comparable pharmacy sales and 6.2% growth in comparable retail sales. Excluding tobacco & e-cigarettes, sales increased by 7.2%, reflecting broad-based growth across all categories. In particular, health & wellness sales were 14% ahead, aided by cough / cold & flu, at-home Covid tests and vitamins.
  • International sales rose by 61.8% to US$5.5bn, including a favourable currency impact of 9.2%. Sales were up 52.6% (CC), including higher sales associated with the formation of the company’s wholesale j-v in Germany. Excluding this, sales rose by 9.3% (CC), reflecting the ongoing recovery in the UK market, where Covid restrictions were lifted in July 2021. Boots UK comparable retail sales were up by 15.0%, with footfall on the high street recovering although still below pre-Covid levels. Boots.com continued to perform ahead of expectations, with digital sales in Q4 more than doubling vs pre-Covid levels.

Both the US and UK CHC markets struggled for growth in the MAT Q2 2021 period – as per the chart below – but there were signs in the WBA results of a strong recovery in retail pharmacy sales in both markets in July and August 2021.

WBA has also announced its new consumer-centric healthcare strategy to drive sustainable, long-term growth. The plan features the launch of Walgreens Health, a technology-enabled care model powered by a nationally-scaled, locally-delivered healthcare platform. Walgreens Health will bring equitable, personalised, healthcare to communities across USA in-store, at home, in the doctor’s office and via a mobile app. WBA’s aim also includes reimagining retail through expanded health & wellness offerings and mass personalisation; accelerating WBA brands and digital offerings; and expanding the Transformational Cost Management programme.

In addition, WBA has increased its ownership stake in VillageMD from 30% to 63% to advance its strategic position in the delivery of value-based primary care, a fast-growing segment of the healthcare system. The US$5.2bn investment will accelerate the opening of at least 600 Village Medical at Walgreens primary care practices in 30+ US markets by 2025 and 1,000 by 2027, with more than half of those practices in medically underserved communities. 

Now is your final chance to enter our Nicholas Hall’s CHC Marketing Awardstaking place during our APAC e-Conference 2021 on 23 November! If you wish to put your brands in the spotlight, enter your campaign before 22 October. To find out more about this online meeting or awards criteria, please contact elizabeth.bernos@NicholasHall.com.

Macro Trends: Economic & Demographic Outlook

In this week’s blog, we look at two recent reports on macro trends that will have a future impact on the consumer healthcare market. The first looks at short-term economic trends and the second longer-term demographic trends.

Last week the International Monetary Fund has revised down its forecast for global economic growth in 2021 to slightly below its July 2021 forecast of 6%. At a virtual G20 event, IMF Managing Director Kristalina Georgieva said: “The most immediate obstacle is the ‘great vaccination divide’ – too many countries with too little access to vaccines, leaving too many people unprotected. At the same time, countries remain deeply divided in their ability to respond – in being able to support the recovery, and in their ability to invest for the future.”

“We face a global recovery that remains ‘hobbled’ by the pandemic and its impact. We are unable to walk forward properly — it is like walking with stones in our shoes.” Three of the most painful stones are divergence in economic growth, inflation and global public debt. As the chart below indicates, the sectors currently facing the largest inflationary pressures include transportation and food, whereas prices in the health sector remain stable.

As for demographic trends, according to a report in The Times newspaper last week there will be more Nigerians than Europeans in 60 years’ time. Some two-thirds of Africans are aged under-25 years (in Senegal the average age is 19 years) and many capitals and cities on the continent are unable to cope with this “youthquake”, with no time or money to build the basic infrastructure, often coupled with a high cost of living. While this youthful energy could be a good thing, the lack of opportunities – coupled with climate migration – is driving many of the younger generation to leave Africa, with Europe becoming a spill over zone.

Nicholas Hall Writes: “Many of these new consumers will rapidly become empowered, and although it is not a factor that will influence next year’s P&L, sensible companies will start to plan for much larger immigrant communities, which will have very determined views on the CHC products they buy (and anyone who doubts this has only to take a look at the very specialised products sold to the Hispanic community in North America by companies like Genomma). Indeed, some of these populations will be made up of ‘illegals’, who will not sign up to see community physicians and for whom CHC will be primary care and possibly much more. And for that, I fear, we are not at all prepared as countries or an industry.

You can save up to GB£2,500 when you pre-order our forthcoming Hot Topic report, Sexual Health & Fertility! This title will delve into key topics, such as home diagnostics, intimate care, ED and many others, as well as tracking NPD and Rx-to-OTC switch activity, plus much more. To pre-order your copy, or for further details, please contact melissa.lee@NicholasHall.com.

MAT Q2 2021: Global CHC Market Trends

The latest update from Nicholas Hall’s CHC database DB6 indicates that in MAT Q2 2021, the retail (bricks & mortar) CHC market returned to growth following a decline in the previous reporting period – the first seen since DB6 records began. Overall global CHC sales were up 1.7% to US$151bn.

In terms of performance by geography, the Americas returned to positive growth (+1.3%), with a flat performance in North America bolstered by LatAm markets, including double-digit growth in Brazil (+10.6%). USA remains the clear No.1 CHC market globally, and grew modestly (+0.2%).

Asia-Pacific was the best performing region (+4.8%); while it continues to be impacted by loss of revenue from overseas visitors in key markets Japan (-4.0%) and Australia (-5.5%), high single-digit increases in China and India helped to lift the topline.

Source: Nicholas Hall’s global CHC sales database DB6 (all values at MSP).

Europe continues to decline (-2.0%), still heavily impacted by retraction in CCA and analgesics in Western Europe in particular. Key markets Germany (-8.5%) and UK (-10.8%) fell significantly, although this was partly offset by a positive trend in C&E Europe (+3.6%), with Russia maintaining mid-single digit increase (+4.1%) and Poland returning to growth after a decline in the previous reporting period.

Nicholas Hall Writes: “In 2020 we saw the market grow across the board during the first half, ease back in the second half, perform very badly in Q1 this year and return to growth in Q2. Is this a trend? Is it as simple as drawing the line forward to the point where we regain the pre-pandemic 3.7% retail sector growth rate? We all have our own point of view, but it would be a brave soul prepared to make a firm prediction. So in the best tradition of being a thrusting brand manager, I’m going to hedge my bets until I see the Q3 figures from DB6.

We are pleased to announce that Nicholas Hall’s DB6 mid-year update for 2021 is now available! Subscribers can access over 150,000 pieces of data, with more than 30,000 records covering 13,000+ brands and 3,000 companies across 63 countries. To find out more or to set up a free demo, please contact kate.holdcroft@NicholasHall.com.

North America Conference Report

Nicholas Hall’s North America e-Conference was held last week, with various speakers giving inspiring presentations on the latest trends in the CHC market, innovations, rising brands, keys to brand success, modern marketing strategies and future growth categories.

Nicholas Hall began the webinar by unpacking current key trends in the industry, such as high interest in probiotic & prebiotic products and CBD, despite markets for both flatlining. He examined how many jumped on the immunity bandwagon in response to the pandemic, with brands such as elderberry-based Sambucol experiencing great success in 2020, but also how this category has seen a slowdown in the first few months of 2021. Nicholas concluded with a look ahead at Infinity Zones (future growth categories), which include probiotics, food allergy & intolerance, cannabis, sexual health and obesity (among others).

The following talks focused on the non-prescription imperative, and how the current challenge of access to health treatment in the USA may best be addressed. Mary Alice Lawless discussed the new and exciting capabilities of Biograph by Amwell, which uses fully customisable, layered frameworks for proper implementation of labelling strategies and allows for communication and education to be personalised to an individual profile. Jim Parker and Joseph McGovern discussed the issue of undertreatment in the USA and the steps that can be taken to increase and improve access to treatments on a non-prescription basis, including CHC product development and advances in technology to help consumers self-diagnose conditions and ensure proper self-selection. Clark Richardson finished this section of the webinar, concluding that the next crops of OTC switch candidates will require different tools to help consumers safely select and use medications, and that comprehension studies, self-selection studies and actual use studies must be undertaken.

The Non-Prescription Imperative: Switch to return as key driver of US OTC growth

Next up, Douglas Stukenborg gave insight into the keys to success he discovered when helping to create the Welly plaster brand. His tips included the need to start with the problem in a category rather than the answer, to limit/leverage distribution to manage risk and to launch fast & fix fast. Second in the segment on Challenger Brands, Daniel Hassan described how brands IB Gard, REMfresh and Fiber Choice became successful while 85% of new CPG brands fail. His advice included building enduring brands in the drug free space, creating patented prescription-quality innovations, winning support in the medical community, and providing science to allow educated consumers to believe in products and to allow doctors to recommend products.

Anna Mayo and Corinne Shindelar then discussed online sales trends, movement towards subscription services for vitamin products, the increasing popularity of click and collect and DTC brands, the trend towards clean and natural and plant-based products among younger consumers, the growth of the natural/organic industry, the increase in herbal supplement sales in the USA and the growth of consumer interest in GMO-free, cruelty free and vegan products. Finally, Michelle Bottomley described the “Modern Marketer’s Tool Kit”, with focus shifting from product-centric to consumer-centric, and from product sales to consumer portfolio growth. She also discussed how modern marketing can flex across a continuum of art & science to utilise multiple channels and integrate all communications to give 360-degree surround of the target consumer with a seamless, personalised experience at every point of contact. Steve Sowerby rounded off the conference with a helpful summary of each speaker’s contributions and some interesting closing thoughts for the industry moving ahead.

If you were unable to join, contact us to purchase a recording of the North America session. Next on the agenda is our APAC e-Conference 2021 on 23 November and the Latin America e-Conference 2021 on 14 December. To find out more about these conferences, entry submission criteria for any of the awards, or to book your place, please contact elizabeth.bernos@NicholasHall.com.

Three surveys assess Covid’s impact on our health

Three surveys published in recent weeks have gauged the impact of the Covid-19 pandemic on our dietary and supplement habits, our use of technology and our mental health. Here we present a quick survey of the findings in all three studies.

According to a survey of 13,000 people in 24 countries conducted by OnePoll on behalf of the Council for Responsible Nutrition and Herbalife Nutrition, eight in 10 US citizens believe their health is “work in progress”. Some 89% of respondents worldwide are taking steps to improve their health, with 81% reporting that the pandemic helped to kickstart them.

Vitamins and supplements are a priority for many; when asked about how their health goals have changed, half said they are more focused on eating healthier, including supplementing their diet with vitamins & minerals, with the average respondent spending around US$286 each year. However, only 69% reported feeling knowledgeable about the health benefits and 77% would like to know more. Some 30% are most likely to get information about vitamins and supplements from internet searches, media and social media, followed by consulting with their doctor (27%).

Source: OnePoll / Herbalife / CRN

According to a survey from Saudi-based cultural institute Ithra, 91% of people globally are spending more time online because of the pandemic, and 44% are worried about the impact of internet and smartphone use on their health. Respondents in Sub-Saharan Africa and South Asia appear most worried, with 74% and 56% respectively fearing the negative consequences of the internet on wellbeing vs 27% in Europe and Central Asia. Consistent with their increased use of devices, younger people are experiencing more physical symptoms than their elders, with 50% of Gen Z respondents complaining of tiredness, poor sleep and headaches.

And, finally, a study published in BJPsych Open revealed the mental health of adults aged over 50 has been significantly compromised by Covid-19. University of Surrey researchers analysed data in 5,331 participants from the English Longitudinal Study of Ageing. Self-reported depression in June and July 2020 were compared with baseline data from 2-3 years prior. Some 26% met the criteria for clinical depression during the pandemic vs 14% in previous years. Women were found to be at a much higher risk, as well as people living alone and those with long-term health conditions. Women living in an urban environment showed a larger increase in depression symptoms than those in more rural areas. The research also found that individuals at the younger end of the 50+ population suffered more.

In just 2 weeks, you can join Nicholas and a panel of industry experts at our North American e-Conference 2021Sponsored by Catalent, you can look forward to hearing about consumer shopping behaviours, the non-prescription imperative, natural channel retail world and much more. To register, or for further details, please contact elizabeth.bernos@NicholasHall.com.