This year has been a positive one for consumer healthcare, and a marked step change from last year. The OTC market is not only feeling relief after last year’s slowdown, but is showing signs of a full recovery as we see value increases of 3.7% alongside a 1.5% increase in volume across all categories.
The biggest drivers for this are down to inflationary price increases which, as a knock on effect, have prompted shoppers to trade up in the category.
People have also bought more OTC products thanks in part to a prolonged cold and flu season at the back end of last year, and an intense hayfever season that came along with this year’s early spring and hot summer.
Last year, the biggest declines in the OTC market came from the more commoditised segments such as analgesics and cold relief. This is not the case this year, where most of the growth has come from those exact segments that were pulling the overall category down last year.
The cough, cold and sore throat segment was, in fact, the fastest growing at +6.9% in value and +2.7% in units, thanks to a strong season with prolonged cold weather and higher average product prices. Strong growth also came through in pain relief with a 4.8% increase in value and 3.1% increase in volume, with paediatric analgesics up a big +10.5% in value compared with last year.
Vitamins and minerals also came through strongly this year with value growing at 3.3% ahead of units growing at 0.9%, driven primarily from own label as the biggest player in the category. The segment to see the highest average price increases, gastrointestinal at +8.1%, achieved a 3.9% growth but a decline of 2.4% in volume, a dynamic we see across the top brands where price increases are stimulating the value growth.
While this year paints a much more positive picture than the last, it still reinforces the importance of seasonality as the key to unlocking growth in OTC.Well-planned, strategic promotions continue to be essential to maximise continued growth across the category and manufacturers and retailers will need to keep a sharp focus here amidst promotional budgets that remain under pressure.