Drugstores hold the key to strong cold and allergy sales

February 6, 2006

The Hamacher Resource Group provided the information for this article. The Milwaukee company provides marketing services and business intelligence to the healthcare industry. Wholesalers, manufacturers, and retailers partner with Hamacher Resource Group to improve their profitability. For more information, visit

The Hamacher Resource Group provided the information for this article. The Milwaukee company provides marketing services and business intelligence to the healthcare industry. Wholesalers, manufacturers, and retailers partner with Hamacher Resource Group to improve their profitability. For more information, visit www.hamacher.com.

Throughout 2005 drug retailers held their collective breath, waiting to learn how the nationwide patchwork of pseudoephedrine (PSE) sales restrictions would affect the cold and allergy category's bottom line. While the worst of the cold season is still ahead of us, allergy season has passed and with it much of the initial fear surrounding how sales would be affected. Early numbers indicate no slowdown at all for cold/allergy/sinus liquid and tablet sales in drug outlets. In fact, drugstores have realized significant overall category gains when compared with the same time last year, according to Information Resources Inc. (IRI), based on dollar sales for the 52 weeks ended Oct. 2, 2005.

As of 2003, an estimated 18.4 million adult Americans suffered from diagnosed hay fever. Another 30 million were estimated to suffer from sinusitis. Moreover, the average adult weathers two to four colds each year. All of these conditions precipitate the regular purchase of over-the-counter allergy and sinus medicines, most of which contained PSE until 2004, when manufacturers first began reformulating their products to not include PSE. No matter the condition that causes nasal congestion, consumers want relief, as conveniently as possible. Thankfully for drugstores, they are the outlet of choice when it comes to OTC cold and allergy medicines.

Cold and allergy sales see healthy increase, despite PSE challenge
It's not news that the summer months can be prime time for those suffering from seasonal allergies, but this past summer held special significance because it was the first substantial test of how cold and allergy product sales would fare in the new PSE-restricted landscape.

According to IRI for the 52-week period ended Oct. 2, 2005, sales of cold/allergy/sinus liquids in drug outlets were nearly $350 million, an increase of 11.5% versus the same time span a year earlier. Sales of cold/allergy/sinus tablets—the form most targeted by PSE legislation—topped $1 billion in drug outlets, up 13.3% over the prior year. Across all outlets (food, drug, and mass-merchandisers, or FDMX) the story was nearly the same: Sales of cold/allergy/sinus liquids increased 6.9%, tablet sales increased 8%.

As is typical during summer, liquid sales were down versus the prior quarter, 9.8% in drug outlets and 9.3% in FDMX during July, August, and September. Tablet sales were off even more during the same months a—14.2% decline in drug outlets and 14.1% in FDMX. But despite those short-term shortfalls, the 2005 summer allergy season still ranked far above the summer of 2004, when liquid sales plummeted 32.5% in drug outlets and tablets fell off 26.9%. (The larger 2004 decline may have been due to a milder-than-normal summer allergy season.)

Bottom line, cold/allergy/sinus product sales declined during the summer of 2005, but not nearly as much as during 2004. Even with many large retailers voluntarily pulling all of their PSE products behind the counter, and even with many manufacturers reformulating their most popular SKUs with phenylephrine or other ingredients, the category still surged ahead. If the 2005 allergy season was the first test of a PSE-restricted and/or PSE-free world, drugstores passed with flying colors.

Educate, educate, educate
While those working in retail healthcare know more than they ever wanted to know about PSE and its contribution to the methamphetamine challenge, it's almost a sure bet that pharmacy customers know virtually nothing about PSE, other than that it's somehow connected with drugmaking. For many shoppers, even a hint of that type of stigma is enough to drive them away from making a purchase. The key to retaining PSE sales is educating your customers.

As both retailers and healthcare providers, it's up to pharmacy staff to make sure shoppers don't shy away from the cold and allergy department because of a misperception about PSE. You almost can't do enough in your cold and allergy aisle to communicate that PSE is still safe and effective and is available at the pharmacy counter, and/or that products formulated with phenylephrine (or another ingredient) are a very viable alternative (and often the precursor) to PSE.

At a minimum, every store needs shelf signage in its cold and allergy department and a knowledgeable staff who can speak intelligently about PSE. Not one of your shoppers should ever leave the pharmacy with the impression that PSE is not safe for them to ingest. Above all, do not simply empty your shelves of PSE products and leave a bare area in your cold and allergy department. If you must move product behind the pharmacy counter, provide direction to your shoppers at the department level so they aren't left wondering where their favorite medicine is. If you don't let them know through clear and professional (that is, not quickly hand-lettered) signage that they have to ask at the pharmacy counter, you might lose sales.

The cards are in drugstores' favor
When customers do appear at your counter, make the most of the interaction. Whether your PSE products are shelved behind the counter or you have opted to phase in non-PSE products, customers will have questions. And customers at your counter mean opportunities to discuss symptoms or suggest add-on sales—for example, a chance to mention the two-for-one cough drop sale or your new stock of vaporizers.

And, rest assured, customers will appear. Much of the PSE legislation either pending or passed in various states gives the edge to retailers with a pharmacist on the premises. That removes several layers of drugstore competition—convenience stores, most food outlets, and some mass retailers. Meanwhile, legislation is still pending in a number of states, not to mention at the federal level. If drug retailers seize the momentum—and the spotlight—they can help ensure this cold season is as much a success as the 2005 allergy season already was.

   
OutletSalesOutlet share
Drug$1,404,710,00055%
Food & mass$1,133,040,00045%
OutletSalesOutlet share
Drug$348,570,00054%
Food & mass$301,720,00046%
OutletSalesOutlet share
Drug$1,056,140,00056%
Food & mass$831,320,00044%
   

Table 2Never-out list by subcategory
Partial list provided by Hamacher Resource Group.

Adult cough, cold and flu
Airborne Effervescent Tablets 10 ct
Robitussin DM 4 oz.
Delsym 12-Hour Cough Relief 3 oz.
Robitussin CF 4 oz.
Mucinex Expectorant Tablets 40 ct
Private-label loratadine tablets 10-mg 30 ct
Private-label tussin cough syrup DM 4 oz.

Cough drops, sore throat relief
Halls Sugar Free Cough Drops Mint/Menthol 25 ct
Halls Cough Drops Cherry 30 ct
Chloraseptic Lozenges Cherry 18 ct
Private-label cough drops Cherry 30 ct
Private-label cough drops Menthol 30 ct

Allergy, sinus, and combinations
Benadryl Allergy Kapseal 24 ct
Claritin-D 24-Hour Tablets 10 ct
Sudafed 30mg Tablets 24 ct
Advil Cold & Sinus Caplets 20 ct

Nasal preparations
Vicks Vapor Inhaler .007 oz.
Afrin Spray 15-ml Original
Ayr Saline Mist 50 ml
Breathe Right Large Tan 30 ct.
Private-label saline nasal spray 1.5 oz.

Lip preparations
Abreva Cold Sore Cream 2 gm
Carmex .25-oz. Jar
Carmex .35-oz. Tube
Neosporin LT Lip Treatment .25 oz.
Chapstick Cherry .15 oz.

Respiratory treatments
Primatene Mist .5 oz.
Primatene Mist Refill .5 oz.
Vicks Vaporub 1.76 oz.
Vicks Vaporub 3.53 oz.

Children's cough and cold
Claritin Syrup Children's 4 oz. Fruit
Benadryl Children's Allergy Liquid 4 oz.
Pediacare Infant Decongestant and Cough 15 ml
Dimetapp DM Elixir 4 oz.
Tylenol Infant & Children's Drops 15 ml Cherry