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5/22/2008
Legislation Placing Pseudoephedrine Products Behind the Counter Has Dramatic Effect on Sales Accordi
CHICAGO and NEW ORLEANS - June 6, 2005 — Across the country, consumers seeking relief of allergy/cough/cold symptoms will be required to alter their typical shopping process in many states and within several leading retailers nationwide by requesting their preferred products at the pharmacy counter, rather than simply selecting them from the shelf. In fact, their favorite product may not even be available, as shelf space behind the counter is limited and not all brands will have a space.
Designed to inhibit the use of over-the-counter products containing pseudoephedrine (PSE) in the making of the illegal drug methamphetamine, current and pending legislation across the majority of states, proposed national legislation, and initiatives of major retailers to place products containing PSE behind pharmacy counters are not only changing the way consumers shop, but are also creating major new forecasting, marketing, and merchandising challenges for manufacturers and retailers. The varying requirements by state have added tremendous complexity to effectively managing this category.
To help industry participants understand the current and potential impact of these events on category sales and opportunity, Information Resources, Inc. (IRI), the leading global provider of enterprise market information solutions for the CPG, Retail, and Healthcare industries, conducted an extensive study of sales trends in Oklahoma and Illinois – states in which PSE legislation has been in effect long enough to measure impact – pre and post legislation. Study results were revealed today at the NACDS Marketplace Conference in New Orleans by Robert Doyle, Senior Vice President of IRI’s Healthcare Solutions Group.
Dramatic Sales Impact in Oklahoma
The study found that in Oklahoma, where legislation requiring that all pill-form PSE products be placed behind pharmacy counters was enacted in April 2004, the number of PSE items available to consumers was reduced by over one-third. Further, during the twelve-month period following legislation, PSE product volume sales in Oklahoma declined 16% versus the prior year, while non-PSE product sales increased 24% across food, drug and mass merchandise channels (excluding Wal-Mart.) Many consumers are choosing to switch to non-PSE products, rather than spending the extra time to request PSE products at the pharmacy.
The legislation has not affected all sales channels equally. PSE product sales actually increased significantly in drug stores in the weeks following legislation, but suffered major declines in grocery stores, where item reduction was more dramatic and opportunity was more limited due to the number of stores without pharmacies. The net result has been a shifting in volume share of PSE products from grocery stores to drug stores. This is bad news for grocery stores, which are likely missing out on the sale of other products, as well, when consumers go to drug stores instead for their allergy/cough/cold products.
Minimal Sales Impact in Illinois
Less stringent legislation that only requires single-ingredient PSE products (but not combination products), to be placed behind the counter, reported compliance issues in urban areas and a strong allergy season, post-legislation, reduced the sales impact in Illinois. While sales growth of non-PSE products has recently outpaced PSE product growth, the PSE growth trend in Illinois is positive.
“The allergy/cough/cold category is in a state of flux. Both manufacturers and retailers are struggling to accurately assess demand for both PSE and non-PSE alternatives and need to quickly implement strong consumer marketing and communication programs to ensure that they protect and grow share within this incredibly valuable consumer segment,” explains Doyle. “Ongoing, state-by-state and retailer-by-retailer tracking of consumer purchase behavior and sales trends is imperative, as is strong collaboration between manufacturers and retailers.”
About the Report
Findings presented in Planning for the Unplanned: Understanding the Impact of New and Potential State Legislation on the Cough/Cold Category are based upon an extensive analysis of several IRI data sources: the InfoScan® sales tracking service, the RxPulse® Patient Panel, and the MedProfiler™ Health & Wellness survey, as well as interviews with leading retailers and manufacturers.
About Information Resources, Inc.
Information Resources, Inc. (IRI) is the leading global provider of enterprise market information solutions for the CPG, Retail, and Healthcare industries. IRI is the first company to leverage the power of real-time market information, advanced analytic insights, and enterprise performance management technology to improve the profitability and operational effectiveness of the world’s leading CPG, retail and healthcare companies. The Company uniquely provides a total view of the market, enabling maximum business performance throughout the enterprise. IRI's solutions make the consumer-driven, real-time enterprise possible. More information is available at www.infores.com.
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