Bad-for-you stays staple, good-for-you drives growth

Drug Store News,  May 23, 2005  by Michelle L. Kirsche

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While drug stores meet different needs for different people, possibly the greatest illustration of the contrast in the channel is the fact that dollar sales of cigarettes top those of vitamins. In fact, the most recent numbers show that what's "bad for you" can be very, very good for the consumables category in drug stores. Certainly, the results in the consumables category bear out Walgreen Co. chairman and chief executive officer David Bernauer's strategic vision: 7-Eleven on steroids.

Cigarettes, chocolate candy, beer and soda still comprise the highest dollar-volume categories in consumables, with combined sales in the drug store channel reaching nearly $5 billion.

But it's also clear that "good for you" and "better for you" products--cigarettes aside--are driving growth, thanks to Americans' baby-steps approach toward healthier eating. The mark of success for today's convenience items is the ability to evolve quickly to fit on-the-go lifestyles and deliver nutritional value without sacrificing taste or the emotional satisfaction associated with a product.

Take carbonated soft drinks. While Coke Classic has retained its No. 1 position in the category, it's diet soda that is fueling growth in a category down more than 10 percent in drug. It's the same story with light beer, which also is fueling sales in an otherwise flat category.

The phenomenon belies a macro trend surrounding the growing battle against obesity. Despite a perceptible cooling off of all things low-carb, Americans are battling the bulge one reduced-calorie, low-fat, sugar-free, light or low-carb product at a time.

Feeding the consumer's sweet tooth without adding extra calories are products containing Splenda. More consumers are keeping their weight in check by grabbing diet soda sweetened with Splenda, including this month's newest introduction: Diet 7UP with Splenda, which joined the recently revamped Pepsi One and Diet Coke sweetened with Splenda. Groups including the Sugar Association and the Center for Science in the Public Interest are concerned, however, that McNeil Nutritionals, the maker of Splenda, is "confusing consumers into believing that Splenda contains real, all-natural sugar."

What's incontrovertible, however, is the fact that Splenda has the Midas touch, helping propel brands like CarbSmart ice cream and frozen novelties to the No. I spot on Information Resources Inc.'s top 10 list of new product pacesetters introduced in 2004. With first-year sales totaling $137 million across food, drug and mass (excluding Wal-Mart), CarbSmart is just another example of consumers' hunger for reduced-calorie, low-carb products that offer the same flavor profile as a full-fat version.

It remains to be seen in the drug store channel if the better-for-you trend will trickle down to other frozen food items, like pizza, following the introduction of Kraft Foods' South Beach Diet pizza, made with wheat crust.

And both inside and outside the frozen food aisle, new flavors in foods and beverages also should impact sales positively throughout 2005. While Pepsi recently introduced its versions of lime-flavored regular and Diet Pepsi, first-to-market Diet Coke with Lime captured the No. 3 spot on IRI's new product pacesetters list.

Look for apple as the next "it" beverage flavor targeted to Hispanic preferences. Like lime, apple, which is already an accepted member of the American flavor palate, could gain mainstream status as a popular beverage flavor.

In another nod to healthier eating, the 2005 dietary guidelines and revamped food pyramid also promote making smart choices from each of the food groups to get the most nutrition out of one's total consumed calories. Look for more consumer packaged goods companies to promote products as healthy choices--like PepsiCo, which last year introduced its "Smart Choices Made Easy" logo to its good-for-you products.

The new guidelines also should buoy categories that experienced negative slides in sales as a result of consumers' adherence to strict low-carb diets.

Saying adios to low carb could open up shelf space for new products with a positive overall nutrition profile. Even snack nuts, a $245 million-and-growing category in drug, is enjoying newly elevated status under the revised nutritional guidelines.