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.

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.

Q1 2021 Results: CCA Round-up

Five of the Top 6 global CHC marketers have now reported their Q1 2021 results, and the clear common theme is a difficult start to the year as a result of the downturn in cough, cold & allergy sales. Global No.1 GSK reported that Consumer Healthcare sales were down 9% as a direct result of the year-on-year “pantry-loading” comparison, including accelerated purchases across all categories driven by the pandemic, combined with a historically weak cold & flu season. GSK’s Respiratory Health portfolio was down 42% in Q1, with Theraflu and Robitussin declining in double-digits, and Contac hit by a high single-digit fall, all adversely impacted by a lower cold & flu season.

Global No.2 J&J reported that Consumer Health worldwide operational sales were down 2.9%, primarily driven by negative prior-year comparisons related to Covid pantry loading in Q1 2020, mainly in OTC products, which declined by 14.8% in Q1 2021 as a result of lower cough, cold & flu incidences. This was partially offset by growth in Listerine mouthwash, Johnson’s baby care products, international skin health / beauty products and Nicorette sales outside the USA.

Sanofi’s Consumer Healthcare sales decreased by 7.3% in Q1 2021, primarily reflecting the weak cough / cold season, as well as a high base for comparison in Q1 2020 and divestments of non-core products. Allergy fell by 6.2%, while Cough & Cold sales were down 59.4% in Q1 2021. This heavy decline was offset by gains for Digestive Wellness (+14.6%), Physical Wellness and Mental Wellness (+18.8%) products. In USA and Rest of the World, growth of the Digestive and Mental Wellness categories partially offset lower Cough / Cold and Pain sales, but in Europe CHC sales fell by 19.3% in Q1.

Reckitt Q1 2021 net revenue was up 4.1% (like-for-like), and e-Commerce was +24%, accounting for 13% of total net revenue, driven by increased investment. Health fell 13.0%, reflecting a volume decline of 14.2% and price / mix improvements of 1.2%, as overall price growth was offset by relatively higher trade investment in North America. The OTC portfolio fell by just under 40%; in addition to challenging comparatives owing to significant pantry-loading in March 2020, this reflects an exceptionally weak cough, cold & flu season – estimated to be around 90% lower than the prior year – resulting in declines for Strepsils, Nurofen and Mucinex.

P&G’s Health Care organic sales were up 3% in Q1 2021, while Personal Health Care organic sales fell by mid-single digits, primarily owing to pandemic-related increases in consumer and retailer inventories in the base period and a weaker than average cough, cold & flu season. Representing 14% of global sales, e-Commerce sales increased by around 50% fiscal year-to-date, with no noticeable change in shopping trends in the quarter. CFO Andre Schulten said in an earnings call that a portion of the impact of commodity cost challenges in the next fiscal year would be offset with price increases in the baby care, feminine care and adult incontinence businesses, which will go into effect in mid-September 2021.

Celine Waller VP, DB6 comments: The poor CHC results reported were set against a robust performance in Q1 2020 when consumers were stockpiling ahead of lockdown restrictions (J&J’s OTC business increased operationally by 25.8% in Q1 2020!) and we expect that they will improve as the year goes on. However, 2021 is expected to be affected by a very weak cough / cold season as lockdowns (still in effect in many markets), social distancing, hygiene measures and mask-wearing continue to suppress incidence of respiratory illnesses, while there are some doubts about whether the high consumption levels of disinfectants and immune-boosting supplements can be sustained. As such, we have lowered our expectations of CHC growth in 2021 to 2.3% in the retail market. However, as highlighted in the P&G results, the 2020 boom in e-Commerce sales is continuing into the current year and we forecast that combined CHC sales in all channels will come out at a respectable 4.0% in 2021.

We are pleased to announce that our annual bestselling report, Nicholas Hall’s CHC Yearbook 2021, is now published digitally! You can analyse key players’ performance, hot topics, global retailing, the Top 15 markets and much more! Print copies will follow soon. For more information, or to order your copy, please contact melissa.lee@NicholasHall.com.