“This focus is on self-care; now, more than ever, well-being is so important to our shoppers today,” explained Andrea Collaro, senior director, owned brands, health and wellness, Walgreens. “They are very focused on taking care of themselves and their family members and really preventing any issues that could arise.”
Collaro was a featured speaker at the Private Label Manufacturers Association’s Private Label Week. Presented online last month, the event highlighted the latest trends in an array of fast-moving consumer goods categories, including food, beauty and, of course, wellness. As research firms confirm, now is a great time to be in private label. Cash strapped consumers are looking for cost-effective solutions and they are finding own-brands fit the bill in many instances. According to Information Resources Inc., private label can be found among the best-selling brands in many OTC categories, including parasite treatments, chest rubs, ear care products, external analgesic rubs and even acne treatment (see chart below).
“Private label trial went through the roof during COVID because customers couldn’t find their favorite national brand,” observed Collaro. “And the fact is that a lot of people who trialed own brand are sticking with own brand and they are repeating…which is great for all of us, they see the value and quality.”
Supply chain issues plagued every business in the early days, weeks and months of the pandemic, and fast-moving consumer goods were especially hard-hit; will anyone ever forget the Great Toilet Paper Shortage of 2020? Dr. Nada Sanders of Northeastern University called it a generational crisis that caused major shifts in consumer demand and major disruptions on the supply side. The good news, is that with vaccines available, there is light at the end of the tunnel.
“Consumer demand is pent up now, but when this is over, demand will be unleashed and bring big opportunities to retailers,” she said.
For now, businesses are focused on survival, but they must build a foundation for long-term resilience, she explained during a PLMA session.
“The pandemic created challenges that the supply chain was woefully unprepared to meet, we’ve all seen that,” observed Sanders. “But the pandemic has also revealed supply chain vulnerabilities that offer lessons on what to do to rebuild.”
First, global supply chains are too complex. According to Sanders, modern supply chains had evolved into intertwined global networks traversing countries and continents. As a result, a problem anywhere along the network can have tremendous ripple effects. Moreover, few companies, if any, have full knowledge of the companies that supply to their suppliers. Given this complexity, most companies do not have a good view upstream, they lack the ability to accurately assess their risk, and they lack agility to respond quickly to changing consumer demands. In one survey, 54% of executives admitted they really didn’t have visibility beyond their tier one suppliers. As a result, most companies don’t fully grasp their risk exposure.
“Complexity exacerbates capacity challenges,” said Sanders. “When consumers buy huge amounts of products, it makes it difficult to shift to different categories. Scaling capacity is a huge challenge under any condition; complexity makes it much more difficult.”
The lesson learned? Simplify the supply chain to increase visibility.
More to Learn
The second issue was a reliance on Lean and Just In Time (JIT) systems, whereby companies maintain stock for a short duration to eliminate waste. Inventory is replenished as needed.
“It is an excellent tool for controlling cost and managing cash flow, but it also means little excess inventory or capacity to absorb the impact of supply chain disruption,” said Sanders.
The result is businesses are vulnerable to even short-term material flow problems. Sanders recommends companies use what she calls, Caveats to Lean; i.e., selectively create inventory buffers against disruption in critical items at critical supply chain junctures. The lesson here is to start shifting from a pure JIT strategy to a more robust inventory management approach, with a little more inventory carry for critical items and those that have longer lead times. The third issue is the heavy reliance on off-shoring, which created risks for supply chains. These challenges multiply for companies that rely on a smaller number of suppliers that are concentrated in one geographic area. The solution? Diversify and create a balanced portfolio of suppliers across geographies. To manage risks, companies must have access to backup suppliers, build excess capacity and monitor supplier risk.
“Many companies failed to do this prior the pandemic; this must change to ensure supply chains are not vulnerable and to take advantage of rapidly changing consumer demand cycles,” said Sanders.
When the pandemic does come to an end and consumers return to stores, product assortment may look very different in OTC aisles and other categories, said Ken Harris, managing partner, Cadent Consulting Group.
“COVID-19 has impacted humanity, economics, politics and the healthcare infrastructure,” he told PLMA Live attendees. “A lesser, unintended consequence is the impact on CPG marketing spending and shopper behavior.”
Store trips were less frequent, basket sizes were larger, but assortment shrank and e-commerce grew exponentially. As a result, retailers realized they didn’t need a lot of items that they had stocked on shelf. Harris expects that retailers will re-evaluate what they keep on store shelves and what products will be available online only. As many have noted, e-commerce activity grew in 10 months what experts had predicted would take 10 years.
Oh the Pain!
According to IRI, sales of pain-relieving creams and balms rose nearly 14% to top $1 billion during the past 12 months. Hisamitsu’s Salonpas franchise is the No. 3 player in the external analgesics rubs space and its newest formula is Arthritis Pain Relief Gel with Diclofenac. It contains 1% diclofenac sodium that is clinical proven to reduce the pain of arthritis in major joints and is safe to use for up to 21 consecutive days, according to Hisamitsu.
Cash-strapped consumers pushed sales of private label analgesic rubs up 31%, but the big winners in the past year have been cannabidiol-based formulas. For example, sales of Hempvana soared more than 175% during the past year. Telebrands has expanded the Hempvana lineup with an array of products and devices. The Hempvana Rocket transcutaneous electrical nerve stimulator is said to send electrical pulses through skin that release endorphins and other chemicals to block pain signals in the brain, effectively reducing pain. The device is said to be an alternative to “annoying stick pads.”
Medterra’s Pain Cream with CBD, which combines peppermint and jojoba oils with efficacious amounts of menthol, arnica and hemp, was recently named CBD personal care category winner by Product of the Year USA. The Irvine, CA-based company, which makes CBD isolate derived from THC-free hemp, sells its products in more than 23,000 retail locations in the US including national grocery and drugstore chains.
Telebrands and Medterra are by no means the only companies to see the potential of CBD (read Pain Relief as Easy as C-B-D on Happi.com). The US CBD market is expected to grow exponentially, reaching $24.3 billion by 2025, according to Virginia Lee of the Brightfield Group. Last year, she told Happi that hemp-derived CBD is a very versatile ingredient and is believed to have multiple benefits including pain relief, anxiety reduction and sleep enhancement, as well as anti-inflammatory and anti-acne properties, among others. No wonder, then that CBD is finding its way into a variety of OTC formulas. In fact, sales of Sky Organics CBD Epsom Salts soared 430%, according to IRI. Marketers are finding ways to incorporate CBD into ubiquitous facial masks that have captured everyone’s attention during the pandemic. Last month, Mantra Mask introduced two sheet masks designed to cleanse, purify and nourish skin in 30 minutes or less. The pore refining mask contains 30mg of broad-spectrum CBD, along with green, white and black tea. The CBD Charcoal cleanser is designed to soothe skin and combat damage from sun exposure and toxins. It contains DMAE, vitamin C, and green and white tea. Finally, CBD Collagen Protective Spray is said to kill harmful bacteria with nanosilver; repairs and rejuvenates skin with bakuchiol, organic sulfur, turmeric and beta glucan; and moisturizes and relieves dry skin with hyaluronic acid, vitamins B3 and B5, aloe and amino acids.
According to Founder Kim Wellen, Mantra Masks have about 20 ingredients that target specific needs of skin—such as produce collagen, fight sun damage, combat acne, calm a sunburned face, hydrate and plump.
“The addition of CBD put them above and beyond our competitors,” insisted Wellen. “Scientists are finding more evidence that CBD can treat skin disorders like dry skin, psoriasis and eczema. CBD offers natural anti-inflammatory properties, as well as suppressing breakouts by regulating oil production.”
Behind the Mask
Kline Group Senior Analyst Dana Kreutzer noted that mask-wearforces consumers to change their skin care routines in efforts to minimize or eliminate breakouts. She said there has been an uptick in existing treatment products with acne-fighting ingredients like benzoyl peroxide and salicylic acid as a result, but usage has not been limited to these traditional formulas. Marketers have also promoted products with calming and gentle properties, like soothing toners and fragrance-free moisturizers.
For example, Peach & Lily, a retailer dedicated to Korean skin care and K-Beauty products that also sells its in-house line at Ulta, created a landing page for “Maskne Essentials” that spanned across cleansers, toners, and essences, and also included its popular Acne Spot Dots.
“Mask-wearing has not been the sole reason for an increase in the usage of acne-targeting products though as similar to the hair thinning/hair loss segment, consumers also faced increased levels of stress related to the pandemic and stay-at-home orders,” noted Kreutzer.
She predicted that social distancing and mask-wearing routines aren’t going away any time soon. Mask-wearing is likely to continue for the short-term despite the roll out of the vaccine, and, at the very least become the new normal in public transportation like subways, trains and buses. Wellen predicts that mask-wearing will continue for the next six months, if not longer.
“Once wearing masks are over we will pivot to something else, which we have already started studying, but until then, we hope to help as many people as we can fight the acne forming under their masks,” she explained. “Even if we only touch a small population we will be happy. I see what wearing a mask has done to my kids by having them on for seven hours at school and it is horrible. This kit has already helped our friends who tested them.”
James Beckman, MD, explained that skin needs to have fresh air to allow evaporation of sweat. Wearing a mask not only blocks air flow to skin surface, it also allows humidified “breath air” to warm and soften the skin surface; a natural incubator for producing excessive bacteria.
Beckman explained stress causes cortisol levels to increase and sebaceous glands respond to significant increases in cortisol levels by producing more waxy sebum. At some point the sebaceous gland opening becomes blocked, oxygenated air is cut off.
The otherwise simple skin bacteria begin to break down the sebum into irritating small particles in the anerobic conditions. The irritation causes inflammation that leads to redness, swelling and the signs of an impending breakout. If the sebaceous ducts do not open to allow drainage, a small infection occurs, and pustules form.
“Teenagers have rampant fluctuations in hormone levels as part of developing so we see more severe breakouts in these years,” explained Beckman. “But female hormones change concentrations monthly as part of the ovarian cycle. The similarity of these hormones in structure set off similar sebum increases that often result in adult acne. Most women that suffer from monthly acne can almost pinpoint when breakouts are about to begin based on time of the month changes.”
Beckman maintains that his Reversion Clear Skin System is a unique tool to control acne. Reversion controls the conditions that allow acne to thrive rather than simply “treating a disease” with an antibiotic. Reversion utilizes a clarifying cleanser containing 1.0% salicylic acid.
“This not only cleanses the skin and the individual follicles themselves, but helps in reducing number of bacteria present while providing exfoliation as a tool to keep skin cell buildup down on the follicle walls,” he explained.
The Purifying Toner also contains salicylic acid to treat existing breakouts while it eliminates excess oil and “shine” to the skin and benzoyl peroxide keeps bacteria count reduced. Beckman explained that the formula’s 7.5% concentration catches an emerging breakout early to demolish it before it enlarges. Active stubborn pustular lesions are effectively arrested and then subside. According to Beckman, there is a second focus for the Reversion Acne Control System.
“It is well known that if acne lesions can be prevented or removed within six weeks after formation, lasting acne scarring can be prevented,” he told Happi. “A part of our vision is to prevent the psychological scarring from severe acne.”
Johnson & Johnson is the No. 1 player in the OTC acne category and Neutrogena is the No. 1 brand, according to IRI. Neutrogena’s new Acne Proofing formulas are said to act like a shield to treat acne above and below the skin surface, preserve the barrier and prevent breakouts.
Few ailments garnered more headlines during the pandemic than maskne (for more on maskne, see Efficacy Challenges, Happi, November 2020). With stress levels climbing, so are instances of acne, but not every new entrant into the acne treatment space has faith in OTC remedies, which had sales of $580 million during the past year, according to IRI.
Skip the Trip?
Pandia Health got its start as a birth control delivery service, and is branching out into acne treatment. Company Co-Founder and CEO Sophia Yen, MD, MPH, explained that adolescent medicine is all about sex, drugs, rock’n roll, acne and sports medicine.
“My favorite parts were sex, preventing unplanned pregnancies and sexually transmitted infections, and acne, which is so easy to treat with prescription-grade medication,” she said.
Yen maintains that Pandia Health is bringing doctor-level, prescription-grade acne treatment to people anywhere in the US who have internet and a mailbox. She met one of the founders of Proactiv who served as a dermatology resident at Stanford, and she said told Yen that prescription acne treatment is better than anything you can get over the counter.
“People are spending crazy amounts of money on over-the-counter-level retinoids. Pandia Health can provide prescription-level retinoids and often it’s covered by insurance, but even if not, it’ll still be cheaper than some retinoid over-the-counter creams I’ve seen on the market,” insisted Yen, who added that for those who already have a prescription and want to skip the trip to the pharmacy each month for their acne medication, Pandia offers just the delivery as well.
While OTC formulas offer solutions for many acne sufferers, Yen noted that there are effective ingredients that consumers won’t get in an OTC formulation.
“Tretinoin is the best treatment for acne because it hits many different aspects; it decreases oil production, decreases pore size, and, most importantly, it is comedolytic which means it makes zits go away. The only aspects of acne it doesn’t address are inflammation and bacteria,” she explained.
According to Yen, topical and oral antibiotics are also good choices. These address the bacteria that can cause/exacerbate acne and decrease the resultant inflammation (redness). Oral antibiotics are recommended if acne is severe and found on the back or chest. Progesterone decreases the circulating testosterone by bumping up the Sex Hormone Binding Globulin (SHBG). The SHBG then binds the testosterone, resulting in less circulating testosterone and less acne.
“We provide this via ‘birth control’ pills, but in this case, it’s not for contraception but for acne. If your periods affect your acne, then you should consider adding this treatment. This treatment is not enough for most acne by itself,” Yen insisted.
Pandia Health recently launched prescription services in Colorado, Georgia, Nevada and Washington. The company can deliver to all 50 states and can prescribe in Arizona, California, Colorado, Florida, Georgia, Nevada, Texas, Washington and Wyoming. Yen told Happi that prescription services will soon be in Michigan and other states, too. At the end of February, Pandia Health launched acne treatments for its current customers; beginning March 25, all customers will be able to order products.
Even when the maskne trend subsides, brands still have time to enter the acne treatments space. Data published in Kline’s Cosmetics & Toiletries USA industry report points to the health of the acne treatments product segment pre-pandemic, which saw a 2% increase in sales in 2019.
“Despite an elimination of mask-wearing in the future, consumers with acne-prone and sensitive skin will still be turning to these products,” insisted Kreutzer.
Acne isn’t the only malady caused by stress. Kline Analyst Alyssa Behrendt noted that throughout 2020, consumers faced increased levels of stress, due to a variety of reasons, although most were related to the coronavirus pandemic and stay-at-home orders. She said that in recent years, younger consumers have turned to hair thinning products as a preventative measure.
“This trend may have increased due to the rise of Zoom calls, but also because consumers were able to spend more time on beauty and self-care,” explained Behrendt. “With increased time spent at home, the pandemic has resulted in more extensive beauty routines.”
While not necessarily an issue, Behrendt said the “skinification of hair” has been accelerated as a result. This does include masking products, but it also encompasses scalp care and scrubs. Marketers use social media to educate the importance of scalp care, not just as an aspect of self-care, but health, aiding in protecting against hair loss, dandruff and other issues that arise from poor scalp health.
For the record, IRI noted that sales of dandruff shampoos rose just 1% during the past year. Interestingly, sales of private label formulas fell 9.1% during the period. With so much to worry about these days, there’s no reason to stress over a flake or three!
New Ingredients for OTC Formulas
Here's a list of new ingredients for over-the-counter formulas introduced by suppliers during the past 12 months. For more information on any of the materials listed below, contact the supplier directly using the information provided.
VERSASTIQUE LOW MELT ME 5T
INCI: Hydrogenated polyisobutene, butyl stearate, isostearyl alcohol, hydrogenated styrene/butadiene copolymer, dibutyl ethylhexanoyl glutamide, dibutyl lauroyl glutamide, pentaerythrityl tetra-di-t-butyl hydroxyhydrocinnamate
Applications: Scar treatment, wound care, topical pain relief, and acne treatment.
Attributes: Versastique Low Melt ME 5T is a solid stick form of hydrogenated polyisobutene providing a light, non-greasy feel with good spreading properties and serves as a great mineral oil-free alternative. It is easily emulsified and has a wide range of chemical compatibility while stabilizing and protects active ingredients in a self-preserving formulation base. The low melt point allows for incorporation of heat sensitive actives and volatile ingredients while also providing a safer processing temperature. It additionally reduces the amount of structural material required to create a stick product simplifying the creation of OTC stick products.
Applications: Scar treatment, wound care, topical pain relief, and acne treatment
RETINOL GS 50
Applications: Skin care, makeup and sunscreen
Attributes: A highly potent and multifunctional anti-aging ingredient. Retinol GS 50 works across all major skin needs including anti-aging, epidermal (Corneocare) and skin tone and it works with DSM’s Beauactive® to synergistically boost collagen and deliver effective and visible anti-wrinkle results.
TEGO RENEWHA CAP
INCI: Hydroxycapric acid
Use levels: Up to 5.0%
Comments: Tego Renewha Cap is an alpha-hydroxy acid (AHA) with a ten carbon chain length. Because of its longer carbon chain relative to other AHAs, the material enables skin exfoliation with a reduced overall irritation potential, making it a good complement to harsher OTC ingredients used to address skin blemishes.
Comments: Tego RenewHA Lacto is an aldonic acid that is very hygroscopic and forms gels containing about 14% water with atmospheric moisture. Besides its moisturization benefits, the material promotes a gentle skin exfoliation that can improve skin clarity and overall skin condition.
Micro Powders, Inc.
INCI: Oryza Sativa (rice) Bran Wax, Cameillia Sinensis (Green Tea) Leaf Extract
Applications: Acne, Wound Care, Topical Pain Relief, Other
Comments: Naturesoft 880GT is an ultrafine powder derived from rice bran wax and green tea leaf extract. Green tea is rich in polyphenols and catechins well known for anti-inflammation and anti-irritation so well suited for calming and soothing properties in many OTC skin care treatment applications. Use level is 1-5%.
INCI: Ophiopogon japonicus root extract & maltodextrin
Applications: Atopic dermatitis
Use levels: 0.05-1%
Comments: Ad-Resyl is a purified natural active ingredient available in preservative-free powder that prevents the appearance of clinical signs of atopic dermatitis and prolongs periods of remission, as a relay to corticosteroid treatments. Tested under dermatological control, it significantly decreases the SCORAD (SCORing Atopic Dermatitis) and improves patients’ quality of life.