KEY FOOD, DRINK & SUPPLEMENT TRENDS FOR 2023

Dutch-based FrieslandCampina Ingredients has detailed five key trends that will drive the evolution of food, drink & supplement industries in 2023:

• Building trust for planet-first nutrition The health of the planet looks set to continue as a top priority for consumers but 38% do not trust companies’ honesty about their environmental impact. However, 83% are more likely to trust 3rd-party verified sustainability claims 

• Resilience & the power of positive nutrition As the world adjusts to post-Covid life and the cost-of-living crisis, stressed consumers are seeking a sense of balance to build resilience. Many are focusing on beneficial foods, drinks & supplements, rather than removing less nutritious foods, so fortified products that satisfy body & mind will be high on the agenda

• Alternative proteins find their own feet As plant-based becomes more mainstream, consumers increasingly expect high-quality, highly nutritional products that go beyond recreating animal-based applications. Emerging technologies such as precision fermentation are opening up new opportunities for brands, but mastering taste and texture remains paramount

• Going for gut health With rising awareness of the gut microbiome’s role in supporting improved mental health, stress and sleep, brands can attract consumer attention by creating accessible self-care moments. Thanks to ingredient innovations, unique and trending formats can be created, such as teas, shots and fortified gummies using ingredients such as prebiotics

• The era of active ageing The global population is now 8bn, including a growing number of elderly individuals. The emphasis is shifting from “healthy” to “active” ageing, with older adults focused on getting the most out of life. This offers opportunities for brands to create solutions with products that support long-term strength, balance & mobility

^{Source: FrieslandCampina Ingredients 2023}

Nicholas Hall Writes: With inflation by some accounts expected to halve this year, that could mean more disposable income available for important commodities like OTCs, which may ease some of the pressure we have forecast in recent weeks. Of course, our industry will experience very strong headwinds, so there is no easy path to success, and it seems to me that the low-hanging fruit has long since been blown off the trees. But perhaps we can be a scintilla more optimistic, especially as the initial sales trends from 2023 are positive, although I continue to believe that the market will weaken as the year progresses. 

As I’ve said many times, macro and micro factors affect the generality of the market, but individual countries, categories and brands will continue to do well if marketers adopt innovative new strategies that reflect the latest consumer trends. I was particularly interested in FrieslandCampina’s findings about sustainability, which confirms that this will be a significant factor in the forward movement of consumer health in the next few years. Previously we had looked upon sustainability as inevitable, but not a claimable advantage. Now I’m beginning to think that, handled correctly, it could be a huge benefit for a company that knows which buttons to press.

Take a look at the latest CHC ingredient trends with the 2023 edition of Innovation in CHC report, coming soon! Drawn from CHC New Products Tracker, this report showcases 100 key innovations from 2022, reviewing major delivery format and ingredient trends and reviews innovation by region and country. For more information, or to purchase your copy, please contact melissa.lee@NicholasHall.com.

e-Commerce Ascential for GSK Consumer

UK-based Ascential Digital Commerce and GSK Consumer Healthcare (soon to become Haleon) will next week launch Ascential Digital Commerce Connect at the Cannes Lions International Festival of Creativity. The data-rich digital commerce platform provides clarity about GSK CH e-Commerce brand performance and improves reaction time to market dynamics in the rapidly growing e-Commerce market. The Connect platform analyses, visualises and displays marketing data about each brand and competitor to monitor key activities and answer marketers’ key questions when it comes to:

• Understanding the current brand / sales performance in the e-Commerce marketplace – standalone vs key competitors and owned channels vs major online retailers like Amazon and Alibaba
• Dissecting what brand health looks like regionally throughout EMEA, USA / N America, Asia-Pacific & Latin America
• Navigating potential challenges and outages around supply chain, R&D, disruptive markets and other key metrics
• More accurately calculating marketing spending as a percentage of gross revenue

GSK CH expects that e-Commerce growth will reach the mid-teens percentage of the business by 2025, making it a priority channel to drive overall sales.

Nicholas Hall’s Touchpoints: Duncan Painter, the CEO of Ascential, is right when he says: “The next five years represent a tipping point in the retail industry. Retailers and brands with the deepest, most recent insights into the digital performance of their products and services will gain an informed, competitive edge.” There is an insatiable demand for e-Commerce data in the consumer healthcare market, and I’ve just signed off on a very substantial budget – at least by our standards – to buy in and provide improved e-Comms data to our client base, which I am very pleased to say for the first time ever now includes all six of the top CHC players.

e-Commerce accounted for 14% of all CHC sales in 2021 and this share is forecast to exactly double in the next decade, with a higher achievement in Asia, especially China. Some analysts are even more bullish – one we’ve looked at and rejected put e-Comms so high that the only outcome would be the complete collapse of the store retailer sector, and surely that is not going to happen! Indeed, we hear numerous reports of a revival of consumer interest in the physical shopping experience. Nevertheless, e-Commerce is part of the Future Resumed, as we now call the New Paradigm for CHC, but in a subtle omni-mix of physical and digital shopping that offers the maximum flexibility and choice to consumers wishing to self-medicate.

Stay tuned for the first edition of the agenda for our Asia-Pacific e-Conference, to be hosted by Nicholas and the team on 23 November! As well as exploring expanding possibilities in CHC within the region, this event will also include the presentation of our Regional CHC Creative Marketing Award. For more information, or to register, please contact elizabeth.bernos@NicholasHall.com.

NielsenIQ’s “Global Consumer Outlook”: Agility crucial in 2022

The pandemic may be entering its third year, but there are signs that governments are gearing up to living with Covid-19. NielsenIQ’s 2022 Global Consumer Outlook delves into consumer sentiment and spending, revealing how people will shop in the year ahead. With employment disruptions, supply chain breakdowns and varying recovery scenarios, the trends setting the tone for consumer behaviour in 2022 include:

• Consumers will move towards an endemic mindset 

• Virus variants will fuel different recovery trajectories

• Inflation concerns will take a toll on consumers; prepare for continued global consumer spending constraints

• New-found consumer priorities born out of the pandemic will not be compromised. Consumer prioritisation of health, wellbeing & financial security will take centre stage 

^{Source: NielsenIQ}

• Consumer spending intentions reflect a continued homebody lifestyle with cautious approaches intensified by inflationary pressures. Leisure & entertainment will continue to take a backseat against an ongoing Covid backdrop

• Necessity will be a driving force. Consumers will bring added scrutiny on expenses that fall beyond priorities & necessities

For the full Outlook, click here.

Nicholas Hall’s Touchpoints: The NielsenIQ 2022 edition of “Global Consumer Outlook” is timely as we start to think again about a possible end of the pandemic. The NielsenIQ team concludes: “In the year ahead, agility will be critical. Retailers and brands that consider different trajectories and recovery scenarios will be better placed to address consumers’ changing priorities, states of cautiousness and increasingly constrained wallets. They must ensure their offerings can morph and resonate with how the landscape will continue to evolve in the years to come.”

One of the trends that we have observed in the USA, but not in other regions to the same extent, is a prioritisation of healthcare spend by consumers on products with tangible benefits. So for the first time in some years, we’ve seen more of the growth categories focusing on treatment than prevention. Is this a blip or the start of a longer-term trend? It’s too soon to tell!

An added complication is the weakness of the global economy and the predicted rise of inflation, which are putting more pressure on consumers, who in general will have to prioritise their shopping even more than in the past. So which consumer health products will they purchase in what may be a slimmed-down overall shopping basket? And a further knock-on effect may be a reduced interest in supporting sustainable products. The survey reported in our third lead story (below) is encouraging, but the practicality might be that consumers with less disposable income then before may not be able to prioritise these products, even though this remains their ideal.

These and many other issues are in the front of our minds at the moment as we begin to scope the 4th edition of our New Paradigms report (subtitled “A Return to the New Normal”) later in 2022.

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.

GSK and Sanofi seek to stand alone

Structural reorganisation is on the agenda of two of the world’s leading CHC marketers in 2020. GSK’s consumer health tie-up with Pfizer in August 2019 was last year’s major M&A development and now the company’s next ambition is to list the new CHC business on the London Stock Exchange. As for Sanofi, the company unveiled a new strategy just before Christmas, including making Sanofi Consumer Healthcare a standalone business. In the meantime, both companies continue to trim their CHC portfolios.

In December 2019, Pfizer agreed to divest its topical pain management business, ThermaCare, to Italian-based Angelini for an undisclosed sum, reports apotheke.adhoc.de. In July 2019, the European Commission approved the consumer healthcare merger of GSK and Pfizer, conditional upon the global divestment of ThermaCare. The agreement follows Angelini’s acquisition of BoxaGrippal systemic cold & flu remedy and the Heumann herbal medicinal tea range from Sanofi in August 2019.

Meanwhile, it was announced this month that BI is to sell Buscopan antispasmodic and Buscofem menstrual pain analgesic to Hypera Pharma in Brazil for Rs1.3bn (US$329mn). The deal, which is subject to approval by Administrative Council for Economic Defence (CADE), is in line with Hypera’s strategy of strengthening its portfolio with “established brands with high growth potential”. Under the terms of its 2017 business swap with BI, Sanofi has acquisition preference for the brands and could still pose a counteroffer. However, industry sources suggest that the company is unlikely to exercise this right.

In December 2019, Sanofi unveiled a new strategy to drive innovation and growth, focusing on three core global business units: Specialty Care, Vaccines and General Medicines. Consumer Healthcare will be a standalone business unit with integrated R&D and manufacturing functions. CEO Paul Hudson explained: “Our objective for the CH business is to unlock value and entrepreneurial energy by growing faster than the market over the mid-term. We believe the new standalone structure, coupled with plans to accelerate the OTC switches for Cialis and Tamiflu, will position the business well to accomplish this ambition.” Hudson added that the Rx erectile dysfunction treatment and flu remedy are expected to switch by 2026, adding around US$1bn to Sanofi’s top line.

Are you looking to make a strategic or bolt-on acquisition? If so, our Consultancy team would be happy to have a confidential discussion with you. Our specialist team can negotiate the successful acquisition of companies and brands, asset swaps, fostering and financing. We work with a number of strategic and financial partners to evaluate potential opportunities – for buyers and sellers – in the M&A, licensing and fundraising space. To find out more, please contact ekaterina.panteleeva@NicholasHall.com.

CHPA Report & Conference

Last week, to tie in with its Annual Executive Conference (AEC), the Consumer Healthcare Products Association released a white paper that found, on average, every dollar spent on OTC medicines saves the US healthcare system around US$7.20, resulting in nearly US$146bn in savings annually. CHPA President & CEO Scott Melville commented that the “healthcare system undervalues the contribution of our industry’s products”, and explained that the research will support legislative initiatives promoting financial incentives for consumers to buy OTCs using health insurance flexible spending plans.

Done in partnership with IRI, the study was conducted in part to raise the profile of OTC products in USA. It found that around 90% of people who buy an OTC product for a condition would seek medical care if the OTC product had not been available. The study analysed nine OTC categories to identify the primary contributors of cost savings to the healthcare system. The categories include allergy, analgesics, antifungals, cough / cold / flu, lower GI, medicated skin, upper GI, sleep and smoking control. The research showed that OTC medicines provide additional value through expanded access to more than 27mn consumers who would otherwise forgo treatment – more than 13mn Americans for allergies alone.

Writing from Florida, Nicholas Hall said: “Trust was a major theme of CHPA’s Annual Executive Conference … Edelman presented data showing that consumer trust of healthcare is improving after plummeting last year. Speakers agreed that trust goes beyond building brands. In a session I moderated on Tuesday, Bayer CH President Heiko Schipper said that our industry needs to, “articulate better what we do. We are doing a lot of good things like being responsible for the environment and employee diversity”.

Taisho Executive VP Ken Uehara agreed: “Trust can’t be built instantly, certainly for our company, it’s our most important asset.” Alan Main, Executive VP, Sanofi, commented that in the past it was about building the brand: “I still think the brand comes first in people’s minds, but we have to look after the brands, not just for five years but for 30-40 years.” Katie Devine, who is moving into a new leadership role at J&J, said companies can choose not to reply to every tweet, but should maintain a fact-based conversation about being responsible in the treatment of employees, the population and planet.

Other questions I addressed to the Leadership Panel concerned the lack of Rx-to-OTC switch (Alan Main said switch has an important role to play in the future of self-care); CBD (all panellists believe it will develop well beyond the current US$500mn quoted by IRI, although Katie’s point, “I know how to switch from Rx to OTC, but not from illegal to legal”, was well taken); and the number one item on their wish list — speed to market and improved innovation were favourites … I liked the concentrated format of this year’s AEC, with two half-day sessions, which allowed time for networking, and was proud to have been one of three Preferred Sponsors of the meeting, in the good company of Google and the Emerson Group.”

Nicholas Hall will discuss the latest Market Trends and Innovation impacting the CHC market at our annual North American CHC Conference (26-27 June) in collaboration with our partners EverythingHealth. As well as the chance to network with other industry players, you can hear from Google, Jefferson Health, Persuadable Research and other industry experts. Don’t hesitate — book before 31 March to save with our generous early-bird booking discount! To find out more about this event, please contact elizabeth.bernos@NicholasHall.com.

Q1 2018: Focus on Middle East & Africa

Our blog this week takes a closer look at some of the trends & developments that emerged from the Q1 2018 OTC update on the Middle East & Africa. With growth of 6.7% in the year to end-March 2018, the region now generates nearly US$9.0bn in sales (a 6.5% share of the global OTC market) and outperformed all regions except Latin America.

Here are 4 key learnings from the latest Q1 update:

1. South Africa’s OTC market broke through the US$1bn barrier in Q1. Now established as a Top 20 OTC market globally, South Africa generates sales of just over US$1.0bn following 8.6% growth in the MAT Q1 2018 period. OTC sales are forecast to total US$1.8bn by 2027, powered by demographic change (rising middle-class of consumers) and growing investment. Indian companies are showing strong interest, with Cipla now the No.7 OTC marketer in South Africa, while Dr Reddy’s and Lupin have announced plans to expand operations in the country.
2. Turkey remains the powerhouse of regional OTC growth. Up 14% in the MAT Q1 2018 period, Turkey is fundamental to the rapid OTC progress of the region. Compared to South Africa, multinationals have a more prominent share of Turkey’s OTC market, with Abdi Ibrahim the only local company in the Top 5 – Bayer, Sanofi, GSK and RB are all Top 5 OTC marketers enjoying double-digit growth. The prospect of an official OTC classification in Turkey is encouraging MNCs to invest for future growth.  
3. Scope for VMS development in Middle East & Africa. One noticeable fact about OTC sales in the region is how heavily reliant the market is on the analgesics and CCA categories. The same is true for the No.1 OTC marketer GSK,  which generates almost 80% of its portfolio turnover in the region from analgesics and CCA. Whereas VMS takes a 30.2% share of the global OTC market, it takes just a 26% share of the Middle East & Africa market, highlighting the need for more VMS product development and investment in education about lifestyle & wellness.
4. Scope for Lifestyle OTCs development too. Compared to a global share of nearly 10% for Lifestyle OTCs, the category only takes an 8.6% share of Middle East & Africa’s OTC market. Eye care, sedatives & sleep aids and systemic cardiovasculars (low-dose aspirin) currently dominate in the region, while smoking control and EHC only have a small share compared to the global average. As the regulatory landscape evolves and becomes more favourable to OTC, we would expect to see more products making the transition from Rx to OTC status in the region.

Join us in Dubai on 5th November for our CHC Training Academy Workshop, which will empower you and your team with the tools, tips and techniques you need to maximise your potential, with the ultimate goal of achieving sustainable growth for your Consumer Healthcare business.

BMS to sell French subsidiary?

According to an exclusive report in Reuters, BMS is looking to sell its French OTC subsidiary, Upsa, in a potential deal which could exceed €1bn (US$1.2bn). Deutsche Bank and Jefferies are said to be preparing the auction process, which will begin after the summer. It is rumoured that potential bidders may include Stada, Zentiva, Mylan and P&G, while Recordati could also decide to make a play for the company.

Upsa has been in operation for over 80 years and the company itself is a well-established brand in France, by far BMS’s key OTC market. According to DB6, BMS generated global OTC sales of US$477mn in 2017, 60% of which were generated in France (US$285mn). BMS’ next two biggest OTC markets are Belgium and China.

Upsa’s key brands are Dafalgan and Efferalgan analgesics (both paracetamol), as well as the paracetamol-based Fervex systemic cold & flu line. According to the latest OTC DASHBOARD trend report, Upsa is the No.2 OTC marketer in France behind Sanofi but sales there fell by 4.8% in 2017, with mid-single digit declines for Dafalgan and Efferalgan.

Price cuts for reimbursed semi-ethical painkillers like Dafalgan and Efferalgan have contributed to the decline in France, causing marketers like Upsa to shift focus from reimbursed options to pure OTCs; reimbursed Efferalgan SKUs were rebranded as Efferalganmed in October 2015. In December 2017, the marketer also rebranded Fervex medical device options as Les Élémentaires, in response to rising concerns about the use of umbrella branding which could confuse consumers.

With M&A activity in the CHC industry rapidly increasing, it might be the right time for your business to explore interesting and suitable growth opportunities coming from M&A. Our specialist M&A boutique is working with a number of strategic and financial partners to assess potential opportunities — for buyers and sellers — and is well placed to discuss the current business climate and possible synergies. To find out more, please contact ammar.basit@NicholasHall.com.

MAT Q1 2018: Global OTC growth steady at 4.1%

According to Nicholas Hall’s global OTC database, DB6, the OTC market maintained 4.1% growth in the 12 months to end-March 2018. This steady but slower rate of global OTC growth compares to a faster pace during the first three quarters of 2017, when growth peaked at 4.6%.

The key factor in the persistent slowdown in Q1 2018 was lower OTC growth in the USA (+2.5% vs +2.8% for calendar 2017), with faster development held back by a weak allergy season. As highlighted in our OTC DASHBOARD market summary for North America, the impact of recent Rx-to-OTC switch activity in the US market has also been minimal.

Some positives emerged in the MAT Q1 2018 data. OTC growth in Western Europe improved to 1.8%, boosted by a high incidence of cough & cold in the first quarter of this year, while Latin America’s OTC market continued to increase strongly (+11.8%), with leading country Brazil up by 9.8%.

The OTC performance in Asia-Pacific (+4.7%) was mixed, with China (+6.3%) and India (+7.9%) improving upon their 2017 growth, however Japan and Australia remained flat in Q1 2018. Growth in the Middle East & Africa remained stable at 6.7%, while Central & Eastern Europe decelerated further to 5.5%, with weakening growth in both Russia (+3.5%) and Poland (+3.3%).

If you are not a subscriber and would like to find out more about what DB6 covers, please contact kayleigh.griffinhooper@NicholasHall.com for a free demo.

 

Q4 2017 Update Now Live!

We’ve just updated the OTC DASHBOARD website with full-year 2017 data and trends for all regions and all 64 countries that we track worldwide. There’s no better way to start exploring this vast reserve of information than our new homepage, which provides at-a-glance global OTC sales by region, marketer and category, as well as an interactive global map with data on the Top 20 countries. Here, we round up some of the highlights from the latest Q4 2017 update.

One of the major trends in Q4 2017 was the drop-off in global OTC growth. A 4.1% rise in 2017 was the lowest annual growth for the global OTC market since 2014, with Europe (+2.7%) and North America (+2.9%) at the heart of the slowdown. Asia-Pacific was up 4.3%, while the two smallest major regions – Latin America (+11.8%) and the Middle East & Africa (+6.7%) – grew fastest.

Looking at categories, Derma (+2.5%) underperformed most, while CCA growth slowed to just 4.3% by end-2017, with vitality continuing to drain out of allergy remedies (+3.1%). Cough remedies (+5.4%) and systemic cold & flu (+4.0%) also reported much lower growth by year-end, especially in Europe.

The overall shares of the global OTC market by major category remained stable in 2017. Analgesics (+4.5%) and Lifestyle OTCs (+4.5%) were the main driving force behind OTC growth, and the Rx-to-OTC switch of Viagra Connect in the UK in 2018 bodes well for development of the erectile dysfunction category. GIs advanced by 4.3%, while VMS (+4.2%) produced another year of solid growth.

As for marketers, the Top 5 remained unchanged in 2017 despite further M&A activity and speculation; in Pfizer’s earnings call yesterday, CEO Ian Read said he has not yet received an acceptable offer for the OTC business and may decide to retain it. The major recent M&A news was that P&G has agreed to buy Merck KGaA Consumer Health and at the same time to dissolve its PGT joint-venture with Teva. By our calculations, the new P&G will rank 7th in the global OTC marketer rankings by value, and the new Teva (assuming it retains its OTC business) will rank 12th.

Other highlights:

• Looking at OTC brand rankings, analgesics Tylenol and Advil – both of which are former global No.1 OTC brands – now trail by a fair distance behind new No.1 brand Vicks, which grew by 12% in 2017

• Abbott moved ahead of Merck KGaA to claim a spot in the global OTC Top 20, following dynamic growth of 10.6%, including double-digit rises for laxative Duphalac in Russia and antidiarrhoeal Pedialyte in the USA

Log on to OTC DASHBOARD now for access to all Q4 2017 data and trends.