SPECIAL REPORT

THE BEST NEW OTCS/HBCS OF 2002

Of the 1,809 new over-the-counter and health and beauty care (HBC) items analysts at Hamacher Resource Group reviewed in 2002, only 490 were judged to be worthy of being incorporated into the planograms the firm prepares for its customers. That's 152 more than in 2001, when the Hamacher specialists regarded only 338 of 1,718 product introductions important enough to be included in the planograms. Of this year's 490 items, 474 were given a one-star, two-star, or three-star rating.

Eight of these starred items have performed above and beyond expectations, having already won a place on Hamacher's elite Top 1,000 OTC/HBC list. Those eight items are listed in the table below.

Items in the top 1,000

Crest Plus Scope Toothpaste 6.2 oz. Whitening Minty Fresh
Gillette Mach3 Turbo Cart 4 ct
Gillette Mach3 Turbo Cart 8 ct
Medisense Precision Xtra Glucose Test Strips 100 ct
Ocuvite Preservision Tabs 120 ct
ThermaCare Therapeutic Heat Wraps 2 Back sml/med
ThermaCare Therapeutic Heat Wraps 2 Back lg/xlg
ThermaCare Therapeutic Heat Wraps 3 Neck to Arm

Standards for planogram placement

While more than 40,000 branded and private-label OTC/HBC items are sold in the United States, Hamacher grants only about 6,200 (slightly more than 15%) a place in its planograms each year. So when a new item earns a place in a planogram, its analysts expect the product to outsell nearly 85% of existing OTCs/HBCs.

Standards for medium and small planograms are very stringent. To earn a place in most medium (B-size) planograms, items must rank among the top 4,000 OTCs/HBCs. To be included in the smallest (C-size) planograms, items must show signs of outselling nearly 93% of currently available items and rank in the top 2,625 OTCs/HBCs. Even more important is the product's potential to excel within its own department. Before Hamacher's analysts add an item, they must be convinced that it will outsell at least one item already in the planogram.

The chart at right shows an overview of each OTC/ HBC department:

• New items '02: The number of items reviewed for each department in 2002

• Items added: The number of new items added to the largest planogram of the department

• Items in department: The number of department items in the Hamacher database

• Number of items in planograms: The number of SKUs in the department's largest planogram

Analgesics

According to Information Resources Inc. (IRI), sales of internal analgesics declined 1% over the past year. Drugstores, however, improved their market position with a 3% sales gain. On the other hand, sales of external analgesics were up in all markets, especially drugstores. The subcategory had a 17% sales increase, led by drugstores' 19% growth. For the second straight year, introductions of pain-relieving patches drove sales, and the launch of ThermaCare, from P&G-Health, was 2002's big winner for the external analgesics subcategory, posting three of four SKUs among Hamacher's coveted Top 1,000 HBC products.

Cough and cold

It was another trying year for the cough and cold category. Of the five major subcategories—liquids and powders, tablets and packets, lip medications, nasal preparations, and cough drops—only lip medications had positive sales gains. Drugstores flourished in the lip subcategory, with an 11% increase in sales. According to IRI, nasal preparations were hit the hardest, dipping 6% compared with last year. Although there were no blockbuster new items in the category, 32 of the 69 new items earned planogram placements.

Deodorants

The deodorant category fell about 2% this year, despite 94 introductions, 46 of which won space in Hamacher planograms. The two biggest line introductions were Powerstripe from Gillette, an underarm deodorant with a bacterial-fighting strip, and Unilever's Axe, a deodorant body spray. Deodorant body spray is new to the United States, and Axe is the first to appear in the market. So far, the item is performing well. The Unilever launch has sparked other manufacturers, like P&G-Beauty's Old Spice line, to introduce body sprays hoping to compete in this arena in 2003.

Hair care

Hamacher planogrammed only 49 of the category's 262 new items. The reason? Many of the hair care products were larger sizes, more directed toward mass-market sales. Once again, there were no big hits in 2002, but several new items reached the top 400 in the department.

Oral hygiene

Every year a couple of products stand out in oral hygiene, and they merit places in Hamacher's list of best items. This year is no exception. Crest Plus Scope from P&G-Health made the Top 1,000 list, while several others gained a spot in the top 2,500. Power-assisted toothbrushes drove sales in the category for the second consecutive year. As the number of innovative toothpastes multiplies, their higher price points have added value to the department. Also tooth whitening products continue to produce impressive sales growth. According to IRI, sales of tooth whiteners grew 124% in all outlets—and 130% in drugstores.

Shaving and men's grooming

Gillette wields the dominant market share in the category once again, and two of its product introductions broke into Hamacher's Top 1,000 list. Overall, the category is doing very well. Sales of razor refills rose nearly 3%, spurring the category's growth. Sales of disposable razors fell slightly, down about 1%.

Skin care

This year, 363 products made their debut in the skin care category. However, like the hair care category, not all were appropriate for the drugstore: Sizes were too large, or the releases were less traditional bath and body lines designed for the mass-market. Hamacher planogrammed 85 of these new items. New products that seemed to perform best were line extensions of already successful brands.

Sun care

Sun care sales grew 6% in drugstores over the past year. The reasons? Better-educated consumers and higher SPFs from manufacturers. As people learn more about the damaging effects of the sun, sales of higher SPF formulas continue to rise. Several new items in 2002 boasted an SPF rating of 45 or higher. Sales growth among drugstores is great news for those retailers with seasonal displays—even minimal sales increases during the busy months help justify a small year-round section.

End-of-year introductions