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Report: Suppliers need to take holistic merchandising approach to health and wellness products

BY Michael Johnsen

CHICAGO — Health and wellness not only is the most compelling trend in today’s consumer packaged goods environment, but it also is among the hardest on which to capitalize, noted IRI Consulting in its new executive briefing, “What’s in Store for Health & Wellness.” Growth trends indicate that a number of products with individual health and wellness claims have recently experienced declining sales; however, there is evidence that products providing a holistic approach that advances general health and well being are gaining market traction. 

“It is critical that manufacturers of health and wellness products peg their value proposition to comprehensive health and well being, an umbrella that covers multiple attributes like natural, low calories per serving and organic,” stated Dr. Krishnakumar Davey, managing director, IRI Consulting. “Products with ‘one-off’ claims are much less likely to succeed. CPG marketers must focus on several factors that impact health and wellness to achieve long-term, sustainable success.”

While six of the top 20 products with health and wellness claims enjoyed a dollar sales growth rate higher than the food and beverage industry average in 2009-2012, just three maintained that growth momentum in 2012 alone, indicating a significant slowdown.

The report notes that dollar sales’ compound annual growth rate of six health claims grew faster than the food and beverage industry average of 3.4%. However, when dividing these results into 2009-2011 and 2012, that growth for several of these is slowing substantially, and even turning negative for some, IRI Consulting reported. For example, products with natural claims achieved a CAGR of 8% in the combined 2009-2012 period. However, in 2012 alone, this slipped to 3.9%. Dollar sales of products with natural sweetener claims grew 5.3% in 2009-2012, but when broken down into the two timeframes, sales grew 11.8% in 2009-2011, but had a negative CAGR of 6.5% in 2012.

“To achieve greater levels of success, manufacturers and retailers should develop a cohesive brand strategy that addresses questions, such as whether the company should execute against an overarching claim of well being or implement a strategy that covers both mainstream and niche products,” Davey said. “Marketers should also focus on being first to market, creating a multi-year innovation pipeline, developing a clear go-to-market and channel strategy that increases accessibility, and redefining pricing to increase affordability.”

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Hamacher Resource Group awarded 2013 Communicator Award of Distinction

BY Michael Johnsen

WAUKESHA, Wis. — Hamacher Resource Group has been honored with a 2013 Communicator Award of Distinction for Marketing/Promotion–Direct Mail in the print category. HRG was recognized for its IN.depth Product Showcase-to-Go program for consumer packaged goods manufacturers of health, beauty and wellness products. Product Showcase-to-Go offers CPG manufacturers an opportunity to get their product sample directly into the hands of decision-makers in independent pharmacies across the country.

“We have several direct marketing options to help CPG manufacturers present their brand message to independent pharmacies, and Product Showcase-to-Go has been among the most popular thus far,” stated Dave Wendland, VP HRG. “Giving pharmacists a product sample to test is a surefire way to make them aware of a brand and help them decide if it’s a fit for their store.”

HRG has won a Communicator Award every year they have entered their work in the competition, which is judged by the International Academy of Visual Arts. The company has earned a total of six Communicator Awards, in categories that include rebranding and advertising.

 

 

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Double-digit profit gains for Alliance Boots

BY Michael Johnsen

BERN, Switzerland — Alliance Boots on Wednesday reported a double-digit profit gain for its year ended March 31. Underlying profit after tax was up 12.7% to $1.2 billion, though revenue was down slightly by 2.6% to $34.2 billion. 

“2012-2013 has been a transformational year for Alliance Boots, putting us on a path to become the clear global leader in our industry," Stefano Pessina, Alliance Boots executive chairman said during a webcast presentation. "Against the background of major corporate activity … and the continuing challenging market conditions prevalent across the world, Alliance Boots has again delivered double-digit growth in underlying profit after tax," he said. "Any way you look at it, this was a strong performance, given the continuing economic difficulties across the globe."

"Looking forward, we expect the economic environment to remain difficult with ongoing pressure on both consumer and governmental expenditure," commented George Fairweather, Alliance Boots group finance director. "Despite this, we continue to be confident about our prospects and ability to pursue profitable growth." That profit will be generated organically from existing businesses, increasing profits from the joint synergy program and future acquisitions, Fairweather said.

Indeed, underlying trends in global healthcare support continued growth ahead, Pessina noted. "Demographic and social pressures continue to drive demand for health care and medicines while payers attempt to constrain overall cost. These trends increase demands for generic medicines and for high-quality services delivered in local communities, both of which we are ideally placed to meet."

In the U.K. market, where Alliance Boots operates 2,386 Boots pharmacies, the company extended its health services through a 49% stake in Sonova’s U.K. subsidiary. Sonova operates around 390 practices providing hearing healthcare solutions, mainly trading as Boots hearing care within Boots stores and Boots Opticians practices. "Through this … investment, we now have a leading position in the U.K. hearing care market," Fairweather said. And the company’s synergistic Boots Opticians division realized a 2.7% gain. 

Alliance Boots has also recast its No7 beauty brand in the past year into the global market, launching its first U.S.-based No7 boutique at the Walgreens flagship store in Hollywood. "[This builds] on No7’s established position in over 1,770 Target stores across America," Fairweather said. "And in Asia, we’ve commenced a trial with Dairy Farm, selling Boots products, including No7, in a select number of Mannings Health and Beauty stores in Hong Kong."

"One of our key strengths is our ability to deliver the benefits of our international scale to each and every customer — patient, pharmacist or suppliers — in a way that is personalized and relevant to them in their local market," Pessina concluded. "We are in a unique position to partner with both branded and selected generic pharmaceutical manufacturers across the globe, to develop their business for our mutual benefit. … No other group has the international management expertise, scale and dimension to replicate this." 


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