Delsym

This year, the cough-cold story is all about supply and demand.

The well-heralded flu vaccine shortage created an awful lot of demand--people were tripping over themselves to get that guarded shot--but because people didn't get sick with a cold or a flu as often as they did last year, that same consumer never actually made it to the cough-cold aisle to make an over-the-counter purchase decision. Short supply, high demand; slight demand, overabundant supply.

"Many in the industry believed that the flu shot shortage might boost the [cough-cold] market," noted Priscilla Kaufman, marketing manager for Delsym. The logic is simple: More people with an upper respiratory infection translates into more cough-cold sales. But people just didn't get sick this fall with either the flu or a cold--regardless of whether they got that flu shot. The incidence of the flu is so small in comparison to the common cold," commented Albert Piechotta, director of marketing at Quigley, suggesting that a benign flu season does not necessarily correspond to a mild cold season.

However, this season was a double whammy: low illness rates for both viral illnesses.

Coupled with year-ago comparisons, when people were sick with the cold early and often, this season had the makings of a dismal beginning for cough-cold sales.

"Q4 ended up 30.1 percent below last year's [upper respiratory illness rates] from Sept. 15 through Dec. 31," commented Gerald Kress, chief executive officer of Surveillance Data. But a trend that worked against retailers in fourth quarter 2004 will work in their favor over first quarter 2005. The season was expected to peak sometime last month, Kress said. Compare those sales against a weak first quarter 2004, and things look more promising. "We look at [illness rates for] the whole season being about flat," Kress said. In other words, a dramatic downturn in fourth quarter 2004 will be made up in a dramatic upswing in first quarter 2005, extending through March.

While last year's flu shortage had no direct impact on the sale of cough and cold medicines, there is the possibility that the media hype surrounding cold and flu raised awareness--and sales--for preventative measures like hand sanitizers, antiviral tissues and natural remedies. In fact, sales of hand sanitizers were up 26.3 percent in the drug channel for the 12 weeks ended Jan. 23, according to Information Resources Inc., reaching a $5.7 million base. Typically, hand sanitizers are positioned among hand soaps, but a secondary placement in the cough-cold aisle may help drive incremental sales, appealing to moms who want to contain a cold virus that's broken into their household.

Looking to spring allergy sales, the affected population will trend down between 2 percent and 4 percent, Kress said. The summer population, affected by allergies will be down 6 percent to 7 percent. "Grass pollen doesn't affect as many people as tree pollen or ragweed, so in the summertime, you see a lessening in demand," Kress said.

Allergy ought to pick up in the fall, however, by approximately 3 percent to 5 percent. "Overall, the season will be down slightly because the spring season is the big season," Kress said.

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