Adcock Ingram Integrated Report 2018

MARKET TRENDS 2 u u South African retailers and manufacturers will continue to face a significant shift in the way consumers behave, mainly due to the economic conditions tightening, the drop in consumer confidence and online shopping on the increase. u u Consumers are focusing on deals within a store and increasing the range of stores they visit, consciously shopping for promotions. u u The average consumer has dropped three categories from their shopping basket and is spending less per store visit. u u Private labels are gaining share of the consumers’ wallets. u u Branded retail outlets contribute 78% of the total basket followed by Independent retail outlets at 19%. u u Consumers of skin care products are seeking additional functions and benefits when purchasing skin care, with sun protection being one such benefit. CONSUMER TRENDS 3 Energy Consumers are looking for more convenient and/or healthier product offerings. Consumers have become more price and promotion sensitive. Consumers are more format loyal (for example, an effervescent user will rather switch to another effervescent brand than a syrup of the same brand). Feminine Hygiene Consumers are seeking more information about their feminine hygiene. Consumershaveremovedthe“taboo”element.Theyare free to talk about feminine hygienewith their family and friends. Pain Consumers remain very loyal to specific formats, with limited influence to switch to another format at the point of purchase. Personal Care Beauty and personal care are showing resilience in a challenging economic environment despite consumers reducing their expenditure on non-essential items. Economy brands are experiencing increased demand due to cost-conscious consumers. Sun care Increasing awareness among target audience and sophistication of consumer as they are now more “sun-smart”. Sun care faces growing competition fromSkin care brands containing higher SPF. Premium Sun care brands are declining in popularity as consumers trade down. BUSINESS FOCUS u u Protect and grow the core business through investment in innovation and marketing. u u Entry into new categories of less regulated products via acquisitions and innovation. u u Expanding markets via exports. u u Improve access and availability of product to the consumer. REVIEW OF 2018 u u New leadership has been appointed in the last quarter of the financial year. u u A review of the business was done and certain structural and operational changes will be implemented. u u The business is focusing its efforts on processes, people, customers, products and financial performance in the coming financial year. OVERVIEW The division provides products through the independent wholesale, pharmaceutical wholesale, corporate pharmacy and retail channels. Brands fall into the following categories: PERFORMANCE Feminine hygiene Gyna Guard remains the market leader within this category with a market share of almost 50%, and growing ahead of the category growth. Gyna Guards’comprehensive range of products have been specially formulated by a Gynaecologist – to cleanse, relieve and take care of intimate areas, keeping women healthy and fresh. The brand’s growth has been driven by extensive marketing campaigns on television and social media, focussing on awareness, education on general feminine health, as well as the new innovation of Gyna Guard Vaginal Capsules. Sun Care Our new brand, Island Tribe, boasts a comprehensive range of sprays, lotions and gels, and was supported with strong digital as well as instore marketing campaigns over the summer period. Island Tribe will continue to grow off a small base with the imminent launch of an exciting Kids range. Analgesics The iconic Panado brand, which has been trusted by South Africans for decades, is the second biggest brand within the analgesics category in South Africa with a 22% market share. Panado continues to be supported with extensive marketing campaigns that defend the brand’s equity and heritage. The rising star within the pain portfolio is Compral, which has grown at 14% this year, well ahead of the category growth. Compral launched the“I Don’t Do Pain” campaign on various platforms during the year. 2 Source: AC Nielsen 2018 3 Source: Internal qualitative research, Euromonitor May 2018 Personal care Gyna Guard Island Tribe Pain management Panado Compral Cough, colds and flu Cepacol L.C.C Vitamins, Minerals and Supplements (VMS) Gummy Vites, Bestum, Natrodale, Viral Guard, Pro-Oxidin, Arthro Guard, ADDvance Nutrition Suganon Shape Energy Bioplus Regmakers Gut health ProbiFlora Freshen Laxatives Energy supplements Bioplus is the market leader within this category. The single dosage sachet continues to be the top seller in the range. On-the- go product offerings lead consumption trends in energy, affirming the launch of the energy drink to be in the right direction for the brand. Extensive brand building investment has ensured that Bioplus remains the market leader and continues to create demand for the category and brand. Gut health ProbiFlora has a range of clinically proven probiotic strains formulated to normalise bowel flora and general intestinal health. ProbiFlora continues to perform well in the face of increased competition from house brands. ADCOCK INGRAM  Integrated Report 2018 29