National brands gain ground on store brands
The introduction of store-brand products over the past decade changed the competitive landscape in most categories, with year-over-year growth outpacing national brands. Given this, it is critical that manufacturers and retailers utilize analysis and insights to maximize opportunities for growth and anticipate an increasingly dynamic marketplace. There are clear trends emerging across many segments, with a strong store-brand presence. While store-brand market share in general is on the increase, both the rate of increase in market share, as well as actual market share, is beginning to plateau. After five years, national brand OTC products experienced positive growth relative to store brands in 2013. This was driven primarily by gains in distribution, innovation and increases in media spend. In some cases, store brands have begun to cede ground as national brands once again emerge. To be clear, store brands show no signs of going away, but the past is not a prologue in the story of market share gains or losses.
DSN has partnered with Competitive Promotion Report and IRI to create a series of exclusive reports. This month the analysis explores the market trends around the major national brands and store brands in the drug channel for the cold-allergy-sinus tablets category over the past two years, highlighting important trends for establishing sound retail strategies. The following are just a few of the key findings from this study:
Between 2012 and 2013, the category has seen a 4.3% market share change (weighted) in favor of national brands. Some brands fared better or worse than the average; however, the net effect benefits national brands.
Using the gross average to get a general picture of what happened period by period, store-brand products experienced negative growth (i.e., loss) of 5.4% while the national brand counterparts averaged 4.7% market share growth each four-week period.
The emerging leaders in market share growth are Alka-Seltzer Plus (35.9%) and Benadryl (18.9%).
Reckitt Benckiser’s successful introduction of Mucinex Fast-Max contributed to national brand growth by achieving a 3.9% market share within the first six months of material presence (i.e., all period average of 2.4%).
Average retailer margin percentage for national brands ranged from 23% (Claritin) to 38.2% (Alka-Seltzer Plus), with Zyrtec leading the pack in actual cumulative retailer margin dollars at $78.3 million over the 28 four-week periods studied.
While Alka-Seltzer Plus maintained the highest average margin percentage among national brands, it also led in market share growth by retail sales dollars. This was the case despite having average promotional volumes lower than other national brand competitors.
Store brands have continued implementation of very aggressive promotional strategies with frequency and depth of promotions greater than national brands.
Store brands and national brands have increased the percentage of units sold on promotion year-to-year by 2.7% and 2.3%, respectively.
The increase in promotional activity for store brands, coupled with the decrease in market share, indicates a need for analytic review of promotion strategy by national brand manufacturers and retailers.
For the full report, including charts, click here.