Cough-cold season sure to be a volatile one
While no one can predict illness rates for the upcoming 2012-2013 cough, cold and flu season — unless maybe you’re reading out of the book of Nostradamus — one thing you can bank on is this: It’s going to be one volatile season.
That volatility will be borne out of quite a bit of shelf shuffling as the mega-brand Tylenol Cold makes its way back to store shelves with what many anticipate will be a very robust advertising budget. And then there’s the impact of the not-quite-recalls of Novartis’ Theraflu and Triaminic brands, which continue to resonate across supply lines. Production through Novartis’ Nebraska plant resumed in May but isn’t expected to reach full production capacity until the beginning of 2013, the company recently told analysts. Novartis also reported it will be weeding out low-performing OTC SKUs, so when Theraflu does return to full production, there will be fewer facings.
That will leave a big question mark for many buyers — do they clear their shelves for the return of Tylenol et al or do they hold back some facings for the higher-margin stopgaps that the private label and niche manufacturers had been supplying through the slow 2011-2012 season? And given that low incidence of illness this past season — Perrigo projected a normal season would have generated $25 million in additional production of store-brand cough-and-cold remedies — how do you justify those decisions by the numbers?
According to many suppliers across the cough-cold space, retailers will be building up their cough-cold inventories heading into September. The just-in-time inventory replenishment systems used today had prevented any kind of cough-cold product backload because of the slow season that just passed. And with many retail fiscal year-ends coming in the middle of cough-cold season, quite a few replenishment buys were reserved until the ensuing year’s fiscal budgets were available.