Beauty and wellness brands discuss how to weather the current economic climate
Drug Store News assembled a virtual panel of nascent and established brands to get a temperature check on the challenges they face in a topsy turvy economic climate.
Drug Store News: Let’s kick things off with a check in on overall business trends.
Angel Cornelius, CEO and co-founder, Maison 276: The health of our customer ultimately determines our ability to thrive and be successful. Today’s U.S. consumer is emerging from a two-year global pandemic, seeing inflationary pressure to their daily budgets and dealing with increasing interest rates. Those three elements present challenges to any overly bullish outlook in the short-term. However, the U.S. consumer has also demonstrated tremendous resiliency over the past few years, and we believe customers are willing to spend and show strong brand loyalty to companies that deliver great value and authenticity.
Yamit Sadok, senior director of marketing, Twinlab Consolidation: Despite some of the macrotrends with inflation, we are seeing a significant spike in our Resveratrol sales.
During the pandemic, consumers shifted to buying immune health products, including resveratrol. Resveratrol is a natural, immune boosting compound found in the skins and roots of berries and grapes. Resveratrol also has cardiovascular benefits, such as supporting healthy blood pressure and cholesterol levels. Additionally, we are seeing sales increases in both the Weight Management and Eye Health categories.
Darci Rosenblum, co-founder Stryke Club: With inflation on the rise and uncertain economic conditions, consumers are still investing in wellness and self care—but [they] are becoming more price sensitive and more educated on ingredients and what companies stand for.
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Kara Magdayao, brand manager, Baebody: Branding and product excellence are more important than ever. We are finding more brand loyalty with repeat purchase rates increasing.
Drug Store News: What’s driving consumer buying decisions?
Jordan Schindler, CEO and founder, Nufabrx: Consumers continue to demand simplified solutions, of which Nufabrx HealthWear falls squarely into the middle of multiple industries: health, wellness and wearable trends. Instead of having to remember to apply a messy cream or ointment plus a brace, with Nufabrx, consumers simply need to get dressed in the morning to solve health related ailments. Our first product line falls into the solution category rather than impulse or discretionary spending, resulting in Nufabrx reporting significant gains in all SKUs across all retail partners. Our longest active retail partner has seen an increase in year-over-year sales of our products by 106% for the first sixth months of 2022.
Jordan Kirk, export manager, White Glo: Consumers are trading a little more carefully and watching their spending closer than 12 months ago. Products and brands need to be delivering value for consumers to try and repeat purchases. In the teeth whitening space, this is still buoyant, as it is a simple luxury and a need that people still have. Consumers may be pushing back professional whitening treatments at dentists and utilizing more cost effective at home solutions.
Sadok: The consumer appears to be shifting their buying patterns and concerns from immune health to heart health, eye health, weight loss as well as overall health and beauty. The consumer is very receptive to consuming information about products and ingredients that will improve their well-being. However, convenience still matters, so we’ve launched new, exciting forms to consume supplements in different ways — gummies, chews, and even tea under our Alvita brand. We believe that consumers want real science, not just marketing fluff. They want proof of efficacy.
Drug Store News: Is there an impact from inflation and concern over a recession?
Antonio Amaral, president, ATP Cosmetic NA, pHPlex: Due to inflation and associated economical pressure, intensive industry competition driven by low generic drug prices and expansion of e-commerce business, U.S. pharmacy locations across all formats are trending downward. As a consequence, we are observing an industry consolidation through acquisitions and partnerships.
Consumers are looking for value products and DIY solutions.
Convenience and cost innovation are going to continue playing an important role to win with shoppers. That’s why our product, pH Plex is perfect for this economic temperature – the convenience, price point and end result is everything that the consumer is looking for.
Magdayao: We are aware of the difficulties consumers are facing with inflation and rising cost of living. Our aim as a business is to maximize operational efficiencies and reduce cost to ensure goods remain affordable for our customers – paramount in the health and personal care sector.
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Drug Store News: There is no denying costs are escalating. Have you had to take price increases?
Magdayao: Largely we have made efficiencies in marketing, and operational overheads to avoid putting rising costs of doing business back on the consumer.
Schindler: We held out as long as we could, but ultimately after talking with our retail partners and consumers, decided that due to significant increases in raw materials, passing along a fraction of that to the consumers was acceptable. Along the way we collaborated with our retail partners, so the process was fair for everyone and the approach was received very positively.
Kirk: White Glo is a new brand in the U.S. As a 30-year-old brand in Australia we are only just establishing our footprint in the U.S., so we have not increased the pricing. In fact, we want to offer great value for customers, so each of our toothpaste includes a bonus toothbrush.
Amaral: So far, we have not increased prices despite the increases we face in our costs, driven by higher commodities prices and supply chain issues.
Drug Store News: On that topic, have supply chain issues eased up yet?
Amaral: It is getting better than it was six months ago but it’s not back to normal levels yet. Manufacture lead times are still longer plus cost and availability of shipments across supply chains are still an issue. We have leveraged our partnerships to mitigate the impact of it to our retail partners and consumers.
Magdayao: Port delays, shipping times and prices have probably peaked in 2021. However, we are not expecting a return to pre-pandemic levels any time soon.
Rosenblum: We have seen supply chain issues easing up somewhat because we can now place orders for components, etc. but the wait time to receive anything is still three to four times what it has been in the past.
Schindler: Our entire supply chain is located within 100 miles of our company’s headquarters. This was an important initiative from our ESG [sustainability] department, but it also allowed us to have tighter controls on supply side issues. As a result, outside of the normal delays that we build into the forecast, we have not had to cancel or miss shipments to any of our retail partners.
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Sadok: There is a very slow improvement in supply chain issues, but we’re happy to report we are equipped to handle consumer demand and have maintained a 98% in-stock rate. We have great relationships with our ingredient suppliers.
Cornelius: It appears that we’re emerging from the worst of recent global supply chain disruptions. I think U.S. consumers and businesses were ready to “get back to normal” once pandemic restrictions eased while the global supply chain was still in pandemic mode. This resulted in demand for raw materials and human capital that completely outstripped what the global supply chain was prepared to supply during the moment. Fortunately, it appears that those two bottlenecks have eased significantly from earlier in the year and I think we’ll continue to see a gradual return to normal.
Drug Store News: Has your brand been able to expand via any new distribution?
Sadok: I am thrilled to share that we’ve gained distribution points at Target, CVS, and Whole Foods.
Amaral: In the retail channel, pH Plex was recently placed in over 1,800 Walmart stores across the U.S. We will launch pH Plex with the high value drug store chain Mueller in their 700 stores in Germany and Austria and we will expand our business in Switzerland in a partnership with Marionnaud across 80 stores.
Schindler: We have added significant distribution and continue to do so. We are one of the fastest growing new products in the category. We had about 9000 points of distribution in 2020, 21,000 in 2021 and well over 30,000 in 2022. We expect to touch 50,000 points of distribution in early 2024 and have line of sight to 100,000 by 2025.
Drug Store News: What are your goals for 2022 and 2023?
Sadok: One of our top goals is to get resveratrol in every household to live a healthier, longer life. We will continue to innovate in the areas that matter most to our consumers with science backed ingredients and formulas. Beauty and health come from the inside. It matters what you put into your body. Through proper supplementation and self-care which is core to our mission, we help consumers on their journey to radiant health.
Cornelius: I believe that consumers broadly and beauty consumers specifically are searching for fresh, purpose driven brands that can successfully solve historical beauty pain points. I think that has driven the success of many new indie brands that were founded by people who enjoyed previous careers outside of the beauty industry. Not only does it allow these companies to offer a fresh perspective on beauty problem solving, but it also makes these brands and founders accessible and relatable to their customers in ways that build connection, community, and brand loyalty. Consequently, our goals for 2022 and 2023 include further building brand awareness and expanding our community of diverse middle-aged women in search of beauty product innovation and fresh messaging that authentically captures their energy, vibrancy, confidence, diversity, and sexiness.
Lastly, the amazing Maison 276 Community has come to expect us to deliver innovative product solutions that cleanse, moisturize, and celebrate their silver crowns. Our pipeline includes future proprietary formulations related to additional styling aids, masks, and deep conditioners to further address the hair challenges of today’s Silveristas.