CINCINNATI -- Supermarkets report initial sales of Aleve, the new over-the-counter analgesic from Procter & Gamble here, are good despite reports of early lowballing and lukewarm manufacturer support.
With the product's introduction the second week in June, food retailers have reacted enthusiastically to the first analgesic to make the switch from prescription to over-the-counter since ibuprofen in 1984. They have taken the industry's advice to stock newly switched OTC products quickly and promote them with off-shelf displays, signs, information brochures and, in some cases, advertisements.
P&G has been granted a three-year exclusivity by the Federal Drug Administration to market Aleve, a low-dose form of the popular prescription drug naproxen sodium. Analysts have projected Aleve will generate $200 million in its first year on the $2.4 billion analgesic market.
"Aleve is selling very well. There is no question of that," said a buyer for a large Midwestern chain with sales around $1 billion, who wished to remain anonymous.
"It's doing really well, coming on very strong," agreed Dan Van Zant, general merchandise, health and beauty care buyer and merchandiser for C & K Market, Brookings, Ore. "We sure hope it will continue as the national ads hit. We have very high expectations for the brand. We automatically distributed that merchandise to the stores, which isn't part of our normal program. But we did it in the case of Aleve because we wanted to make sure we had early placement."
Jan Winn, director of HBC and general merchandise at Big Y Supermarkets, Springfield, Mass., said: "The 24-count Aleve is doing significantly better than the 50-count because it carries a lower price. Plus, being a new item, people want to try it out first in a smaller amount before buying a larger pack count."
Other supermarket executives, however, said Aleve has yet to blaze a trail to the front of their analgesics category, but added they still expect the product to fire strongly in the next few months.
"Aleve's been selling pretty well, not as gun fire as I thought it would be, but it's been good," said Allen Karpe director of HBC and pharmacy for Valu Food, Baltimore. "Sales will be great eventually, especially once P&G's advertising starts rolling."
Charles Yahn, vice president for general merchandise at Associated Wholesalers, York, Pa., added Aleve is "selling fair since our retailers started stocking it." He attributed the product's slow start to the fact that P&G's advertising did not begin until July. "The 50-count Aleve sells better in line where shoppers have the choice of 24-count or the 50-count," he added.
Oddly, though, competition for Aleve sales has prompted price wars on the product in some markets, an unusual loss of profitability for a product in its first 90 days on the market. Retailers who spoke to SN said they were not selling Aleve below cost, adding that the practice did not make sense to them.
"There's no point in selling below cost," exclaimed the retailer from the large Midwestern chain. "You have to make some money on it! What a mess!
"One of the things the manufacturers pushed was if the you get customers buying the OTC-product at your store first, when the private label comes out and you have a real chance to make the bucks, you have them there for that," added the source, trying to explain why some retailers might slash Aleve prices. "But taking the whole issue to this extreme seems to be a little ridiculous. It's just baloney." Karpe of Valu Food said, "We're not below cost in this market."
Said Van Zant of C & K: "We're going to take our normal margins. Some of our competitors are selling it below our cost. The oldest possible strategy is to foster their low-price image, and that's an excellent way to do it, with a new brand. But we're in the business to make a profit."
Winn agreed she saw "no point in selling Aleve at or below cost, for a high-low operator like Big Y."
Added Dan Dailey, senior HBC buyer at Carr Gottstein Foods, Anchorage, Alaska, "We wouldn't come out with a new item and lose money."
The buyer from the Midwestern chain said a launch of a new product like Aleve can foster senseless marketing techniques, one of which she witnessed at some chains in her area.
"People in this market, their ads broke on Monday and they didn't have the product till Wednesday. They put that in the ad, 'Not Available Till Wed.," the source said. "I find this absolutely phenomenal. Can you imagine a customer seeing this and thinking they can go and get the product and then it's not there because they didn't read the ad's fine print. You know how customers are. Ads like that are a nuisance for consumers."
Although it has been reported that P&G plans to spend $100 million to advertise Aleve, retailers also complained about the lack of support given to Aleve's launch.
P&G, however, disputed these claims.
"We don't have that perspective," said Kristin Burbank, spokeswoman for P&G. "If there are issues or questions from retailers, they'll be dealt with through normal channels. I'm not aware of any complaints in particular."
But retailer comments told a different story.
"I'm not a P&G fan anymore, though I used to be," said Karpe of Valu Food, who chastised the manufacturer's "weak" ad monies. "They don't do much for the consumer. There's not much done for the trade. I'd have liked to see more money going to us."
Winn of Big Y agreed. "I'd rate manufacturer support of Aleve as minimal," she said. "The deals are lousy because it is a value-priced item, and P&G is apparently taking the position that Aleve's newness and publicity will sell it.
"I still think Aleve will do well," she conceded. "Most drugs do succeed in a switch, and if P&G does what they said they'd do and spend the way they've said, I can't believe Aleve will fail."
C & K's Van Zant commented: "From my standpoint as a retailer, I have not seen any support. There hasn't been anyone here to detail me on Aleve at all. The only information I received was through my wholesaler."
While the Midwestern buyer said the chain received "no manufacturer support at all," the retailer added: "We were told from the beginning they wouldn't turn on TV or anything till July 25. So I don't expect it for a couple more weeks. That was their promise, so I don't think they shirked their responsibility or let anyone down, but we were hoping because there was so much hoopla to get the product on the shelf first."
Yahn of Associated Wholesalers said his stores "got some consumer information from P&G, but not as much as I had expected. They sent pads of handouts sheets like coupons that you put up at the shelf and people pull one off and read it.
"Manufacturer support so far has been nonexistent, although they are spending $100 million in a national TV program," he added. "My philosophy on a new product like Aleve is that while it is in the our stores the consumers see it, and this fall when [the P&G ad program] kicks off, they'll recall having seen the product up at our stores."
Only Dailey of Carr Gottstein praised P&G's manufacturer support.
"It has been excellent," he said. "They gave us a ship date and arrival date, and it ran on time. Their national ad program was not supposed to break until the end of July or early August, and I saw the first ad July 6, so they moved up their advertising and I think they did a great job."
Retailer's promotional programs on Aleve varied.
"I sent a shipper to each store, a floor display," said Van Zant of C & K. "It's been cut into the regular analgesics department as well as a shipper being left out for 30 days. "Even though the national ads haven't hit, customers are looking for the merchandise. The word is out, I guess.
"It's interesting. I was in one of our stores yesterday and there was a customer standing, looking
for 'that Aleve.' I said, 'As a matter of fact, we have a display of it over here.' So I know they're out there looking for it."
Dailey said Carr Gottstein stocked Aleve in stores June 14 and ran its first promotional ad June 15. "We featured ads for 50s with a lot of linage telling customers what Aleve's all about. P&G shipped us information packs of pamphlets for our pharmacy counters for customers to take that explained about the product," he added.
Van Zant said: "We're putting up new item signs; they're circular signs with standout hooks the customer can easily see. It stays up for 30 days."
The Midwestern retailer has put pamphlets and information at pharmacy counters, but has not run ads to date. "The company has not started supporting it yet, why should we?" the buyer asked. "Why spend a lot of money on it? Think about it. When the customer gets a little more educated, then push the info and the product."
Winn of Big Y said her chain is "displaying Aleve by Advil and using ads and floor stands to merchandise it. We're hanging the manufacturer-supplied information pamphlets on the floor stands, too."
Said Karpe of Valu Food: "P&G, as usual, printed up as much as they could. We had that on the shelf, with in-store coupons." His store has also featured Aleve in ads and circulars. P&G officials would not comment on any possible sales or market share projections, but said they were happy with Aleve's launch.
"Ads have broken and we've been shipping for about a month. There's been strong feedback from retailers and consumers," said Burbank of P&G.