Schiff: Stop the BOGO promo
SALT LAKE CITY — Enough is enough. That’s what Schiff Nutrition director, president and CEO Tarang Amin told analysts during a conference call Thursday — only four months into his tenure — regarding the predominant industry practice of funding buy-one-get-one promotions for glucosamine and chondroitin supplements.
“One of the common practices in this industry, which Schiff has also followed, is the prevalence of trade spending, such as buy-one-get-one-free, bonus bottles and other discounts,” Amin said. “These tactics erode premium brands and incent disloyal consumer behavior. Therefore, an important action we're taking is to reduce this trade spending and invest resources in consumer advertising. In fiscal year 2012, we expect to substantially increase our advertising levels.”
Schiff intends to take its sales and marketing investment as a percent of Schiff Move-Free product sales from approximately 16% in fiscal 2011 to between 22% and 24% fiscal 2012.
If successful, the move could restore growth to the sales of glucosamine and chondroitin supplements, the second-largest herbal supplement category with sales of $298.1 million for the 52 weeks ended May 15 across food, drug and mass (minus Walmart) outlets, according to SymphonyIRI Group data. Those sales were down 10.1%, compared with the year-ago period, and a lot of that retraction historically has been credited to BOGO promotions that train customers to not buy a glucosamine/chondroitin product unless they’re getting that second box for free.
Pulling away from BOGO promotions will be a welcome change to retailers, according to some suppliers. “[BOGO] is a method of gaining consumer trial,” one supplier recently told Drug Store News. “That’s what it should be used for, right? What it becomes is a mainstay — you have to have the volume,” the supplier said. “Retailers don’t want to do [BOGO]. They would rather have a regular promotion here and there,” the supplier added, “because it’s more of a margin for them.”