Pre- and probiotics: The growth of good bacteria
Many American consumers remain unfamiliar with pre- and probiotics and their benefits. Their shopping baskets are often based on a pharmacist’s recommendation, encouraging a probiotic to coincide with their course of antibiotics. Shoppers hear, “It may help prevent diarrhea,” so they make the purchase. What they seldom understand is that probiotics are much more than just a diarrhea preventive. In fact, probiotics can be found in the ears, nose, mouth, lungs, urinary tract and more, and are linked to overall health, not just gastrointestinal health.
(Click here to view the full Category Review.)
Despite this low awareness of the benefits of probiotics, great strides have been made since the early 2000s when probiotics started to gain a foothold in the United States. According to a report titled “Probiotics: A Global Strategic Business Report” published by Global Industry Analysts, double-digit, year-on-year growth is expected for dietary supplements containing a probiotic. At that rate, it’s estimated that sales for these types of supplements will grow to $858 million by the year 2020 from a base of $480 million in 2014. Looking at probiotics as a whole, including foods, sales reached $3.5 billion in 2014 and are projected to reach $5.75 billion by 2020.
Placement of probiotics
With the increase in the number and types of pre- and probiotics, increased shopper confusion has ensued. Although customers may shop for probiotics online, some 68% of all supplements are still sold through traditional retail channels. So proper placement is paramount.
Some manufacturers have strived to eliminate confusion by launching the exact same item within separate categories. The products have their own name and their own UPC but are essentially the same product. It’s beneficial for those who typically shop in the digestive health aisles, as well as for those who purchase items from the vitamins and dietary supplement section.
Shelf signage and shelf cards are a good start when marketing probiotics. Benefit-driven shelf signage not only educates customers about their benefits, but draws attention to the subcategory as a whole. In the case of Florajen, shelf cards let the customer know that this product is refrigerated and found behind the counter. Consumers take the card to the pharmacy counter, or the refrigerator near the section, to pick up this brand.
Who shops the category?
The primary purchasers are wellness-driven adults who use probiotics for personal health regimen use. These customers are generally aware of the benefits of daily probiotic use and should be reminded of the overall impact a healthy immune system has on daily activities. Although these customers may more often look for pre-and probiotics in the vitamins and dietary supplements department, placement in the digestive health category is also a logical destination.
Episodic users shop the category when a specific need arises. They are worried about the episodic treatment of stomach issues that arise from time to time, but also are information driven and understand that the use of probiotics have additional benefits for their children. This group is also more likely to ask questions about the bacteria count, as well as the bacteria strains.
And finally, there is a group of prescription users purchasing a digestive aid because of the side effects of their medications. Their use of probiotics is short-lived and usually taken when given a prescription that disrupts the intestinal system. Typically, this group needs to be reminded that a probiotic should be used and will make the purchase when the pharmacist suggests.
Cutting through the clutter
Product packaging is improving, messaging about pre- and probiotics is increasing, and conversations between healthcare professionals and consumers are becoming more prevalent. This is all beginning to coalesce into better-informed consumers and enriched purchase decisions.
Manufacturers such as America’s Naturals have emerged (Family Flora) honing their probiotic/prebiotic ingredient blends to address specific health conditions. This approach is designed to “take the guesswork out of the purchase,” said Kathleen Brock, company SVP.
FloraTummys is another brand designed to guide consumer choices. Formulated for kids, FloraTummys helps maintain kids’ natural immune defenses and promotes digestive health. Rather than a line extension of an adult-oriented product, company founder Frank Melfa elected to focus specifically on a kids’ line.
Growing in popularity
Year-on-year growth of pre- and probiotics continues to show great promise.
Comparing unit sales by subcategory and segment for the 52 weeks ended March 31, 2015, to the 52 week-period ended March 31, 2011, at drug wholesalers in the United States, using Hamacher Resource Group warehouse withdrawal data, revealed:
The largest decline in unit sales was registered by acid controllers, which dropped almost 14% in four years. The average margin range for branded acid controllers is 19.8% to 29.4%.
The largest increase in unit sales during the same period was registered by prebiotics and probiotics, increasing more than 75%. Unit sales rate of the products is almost 70% compared with acid controllers. The average margin range for prebiotics and probiotics is 38.3% to 44.1%.
As the category evolves and become increasingly crowded, innovation will surely continue to emerge from brands. New shelf strategies, consumer signage and closer alignment between patients, pharmacists, and other healthcare professionals will also lead to improved consumer understanding, awareness and outcomes.
Kyle Lentz is a senior analyst at Hamacher Resource Group.