C&D CEO: Gummy business booming, intimacy health migrating online

2/10/2017
EWING, N.J. — Church & Dwight earlier this week reported fourth-quarter growth across its domestic consumer business of 3.4% to $695.4 million, for the period ended Dec. 31. With that, organic sales increased by 2.7%, thanks in part to the performance of the copmany's Vitafusion and L'il Critters gummy vitamin products, Church & Dwight noted, as well as growth across its intimacy health brand Trojan.

The performance is expected to carry into 2017, the company, noted. "We expect reported and organic sales growth of approximately 3% supported by our new product introductions," commented Matthew Farrell, C&D CEO.  "We expect to increase marketing spending to 12.3% of net sales, a 10 basis point increase, in support of our new products.”

Church & Dwight in 2012 acquired the Vitafusion brand on the promise that gummy vitamins would evolve into a vibrant niche within the overall vitamin segment. At the time of the acquisition, gummy vitamins represented 3% of the category. Today it repesents 11% of the overall category, which generated $6.9 billion in sales on 4% growth across total U.S. multi-outlets for the 52 weeks ended Dec. 25, according to IRI. "Almost 70% of U.S. adults take a dietary supplement and of those, 75% take a multivitamin, and we are the No. 1 gummy vitamin both in adult and in children's vitamins," Farrell said. "And a new innovation for us, we're entering the energy category," he told analysts. "We're entering the energy space with an energy gummy source from green tea and our new gummy has a great taste consistent with the Vitafusion line."

Regarding condoms, Farrell noted that more and more of that business is migrating out of retail to online, representing a significant opportunity to attract more female purchasers to the category. "There's a shift to digital going on right now and the shift to digital is becoming increasingly part of the story for many CPG companies," Farrell said. "So, [in] 2017 we're introducing a condom aimed at the female buyer. One out of three condoms are purchased by women," he said. Church & Dwight is innovating in the condom category with Trojan XOXO featuring three points of differentiation: a soft touch, aloe-based lubricant and a unique carrying case. And for the first time Church & Dwight will be advertising a condom line across network television to help promote the brand, Farrell added.

Condoms represent a huge opportunity online, Farrell said. "I personally see it as a huge opportunity for us. I'm not really worried. I don't see it as a threat or disruptive," he said.

Beyond vitamins and intimacy health, several recent acquisitions made by Church & Dwight are also expected to boost the bottom line in 2017. For example, Church & Dwight is looking to become a key player in the hemorrhoid category with the recent purchase of Anusol and Rectinol from Johnson & Johnson in December. According to the company, these are the No. 1 or No. 2 hemorrhoid care brands mainly sold in the U.K., Canada, Australia and South Africa with 2016 annual sales of $24 million.

And earlier this year Church & Dwight acquired the Viviscal business from Lifes2Good Holdings for $160 million. Viviscal is the No. 1 non-drug hair care supplement brand mainly sold in the U.S. and the U.K. with annual 2016 sales of $44 million.

“We believe 2017 will be an exciting year for Church & Dwight based on our continued focus on innovation and confidence in gross margin expansion," Farrell said. "For the first quarter, we expect reported and organic sales growth of approximately 1%-2%.”

 
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