Execs expect Olay Vitamins to bring new users to supplements

Drug Store News, June 9, 2003 by Michael Johnsen

Consumer packaged goods powerhouse Procter & Gamble licensed its Olay brand to dietary supplement stalwart Pharmavite in April with a line of 15 products to ship August, marking the first time a major beauty supplier has made such a bold move into the dietary supplement aisle.

"Olay Vitamins will combine Olay's skin care expertise and Pharmavite's knowledge of women's health and nutritional needs to deliver a line of vitamins that connects, feeds and supports both internal health and external beauty," commented Tom Zimmerman, Pharmavite's vice president of business development.

In short, Pharmavite and P&G hope to make P&G's Olay beauty consumer into Pharmavite's natural health buyer, and vice versa.

The companies expect "about 23 percent of Olay Vitamins' volume will be coming from new users to the category," said Barbara Lindquist, Pharmavite's senior product manager for Olay Vitamins-including brand-loyal customers who already buy P&G's line of Olay facial moisturizers and cleansers. "It's the first [supplement] line of its kind that's entirely targeted toward women with a power brand such as Olay that brings together ... women's needs for beauty and their needs for health ... at a reasonable food/drug/mass price," Lindquist added.

L'Oreal and Swiss food group Nestle brokered a similar deal last year to develop and market a cosmetic nutritional supplement line. The two companies formed a joint venture called Laboratoires Inneov, which in March launched its first product for women over 40, Inneov Firmness, in Belgium, France, Germany, Portugal and Spain. The company plans to expand distribution into Austria, Greece, Italy and Switzerland in 2004. There has not yet been an announcement to launch the product in the United States, however.

As a licensed product, the Olay Vitamins line is Pharmavite's to manage. Hence, a brand name that resonates strongly through the beauty aisles will be placed in the dietary supplement set. The thinking goes that women are shopping for both beauty and health purchases and expect to find their health solutions where other health solutions are sold, even though the Olay brand, long associated with skin care, may at first seem slightly out of place in that space. "We actually did quite a bit of research behind the line," Lindquist said. "We asked more than 1,900 consumers about the concept behind Olay Vitamins. Pharmavite found that the majority of those consumers expect to find Olay Vitamins in the vitamin aisle. That's the first area they'd look."

For the most part, retailers are taking on the entire line, Lindquist reported. To make room for all 15 SKUs, Pharmavite assisted retailers in identifying underperforming products within the category. "Our category management team is working closely with each account on placement for Olay Vitamins," Lindquist said. "We work with them to identify what the slow-moving items might be in that particular set," as well as situations where multiple facings of a single SKU exist that could be consolidated, she added.

"We're looking at Olay [Vitamins] as an incremental opportunity" in the dietary supplement space, she said. When you look at the demographics of skin care users in addition to the demographics of vitamin users, there tends to be a large overlap, she added.

Neither company would divulge their initial a d spend behind the launch of Olay Vitamins, but Lindquist noted that the campaign would be extensive and would include T V, print, consumer promotions, free-standing inserts and plenty of point-of-purchase signage. Some of those in-store materials will be placed in the skin care aisle to let beauty customers know about the Olay Vitamins opportunity. "[And this] will encourage additional sales of Olay Vitamins," Lindquist said.

Indeed, as if placing the Olay brand in dietary supplements won't already catch a passerby's eyes, P&G and Pharmavite have teamed to produce a 21-page flip-card shelf-talker that explains what Olay Vitamins brings to the beauty table.

"At this point, we're also exploring with Procter & Gamble cross-merchandising opportunities with [Olay Vitamins] and skin care products," Lindquist said.

In its extensive consumer research and test marketing of Olay Vitamins, Pharmavite found that 78 percent of those consumers who participated reported they would "definitely or probably" buy the pro duct. Nearly 2-out-of-3 consumers who tested the products reported that they felt Olay Vitamins performed "better than expected." And almost 3-out-of-4 women who tried the product reported an improvement in the appearance of their skin after four weeks of use.

Olay Vitamins are formulated to bring a "beauty from within" concept to America's medicine chest. The line includes two multivitamin formulations for a woman's overall health and wellness, as well as several products specifically formulated to address healthy skin and women's over wellness. "We approached Pharmavite [with the Olay licensing agreement] because they are a leader in the nutritional supplement industry," commented Bill Brace, P&G's Olay marketing director.