Drug channel overview

Confidential & Proprietary • Copyright © 2009 The Nielsen Company

Nielsen Drug Channel OverviewAugust, 2009

Tom PirovanoJim Mansfield

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

Questions Addressed

•How big is the drug channel in the US?

•Which demographic segments shop drug stores?

•How do drug store purchase dynamics compare to other channels?

•Which categories are strongest in drug stores?

•How are drug store categories trending?

•How are store brands performing in the drug channel?

•How well does Walmart compete in HBC categories?


How big is the drug channel in the US?


Reported Dollar Volume By ChannelOther Channels

13.3%

Electronic Stores2.2%

Mass w/o Supers

7.8%

Supercenters16.2%

Grocery33.1%

Drug Stores3.8% Department

Stores5.2%

On-line Shopping2.2%

Warehouse Clubs7.8%

Home Improvement

3.6%

Conv/Gas1.4%

Dollar Stores1.5%

Apparel Stores1.8%

Total Purchases (Including Non-UPC) Reported by Homescan Panelists Source: Homescan® Channel Facts, CY’08


Drug Store Dollars vs. Other Channels

$43.4 Billion

$297.4 Billion

$135.1 Billion$111.6 Billion

$0 Billion

$50 Billion

$100 Billion

$150 Billion

$200 Billion

$250 Billion

$300 Billion

$350 Billion

Drug Stores Supermarkets Walmart ConvenienceSource: Nielsen Strategic Planner and Scantrack Convenience ExpressReflects only categories reported by Nielsen52 Weeks Ending 6/13/09, Total US

Excludes Rx


144,875

37,700

32,304

6,594

19,974

3,253

1,187

124,516

39,660

30,682

6,421

13,151

1,583

907

Convenience

Drug

Supermarkets

Mass Merch

Dollar Stores

Supercenters

Warehouse Clubs

20082001

Fewer Drug Stores – More PharmaciesU.S. Store Counts

Source: Trade Dimensions® & TDLinx®,services of The Nielsen Company

Fewer Drug Stores Due to a Closings of Independent Pharmacies


QUIZ Question

The top 3 U.S. drug chains now represent what percent of total drug channels sales?

Answer: Walgreens, CVS & Rite Aid generate 82% drug channel ACV

Source: TDLinx, December, 2008


Largest U.S. Drug Chains

$ Share of U.S. # ofDrug Chain Drug Channel StoresWalgreens 35.7% 6,796CVS/Caremark 31.5% 6,995Rite Aid 14.8% 4,829Duane Reade 1.1% 256Marc Glassman 0.4% 44Discount Drug Mart 0.3% 68United Drug Co-Op 0.3% 313Kinney Drugs 0.2% 88

Source: TDLinx

The top 3 drug chains generate 82% of Drug Channel ACV.


Retailer Profile - Walgreens

2009 Focus• Customer-Centric Retailing (CCR) format with fewer SKUs• CCR pilot now in 35 stores, 400 in Fall, 2009Private Brands• www.wbrand.com – Walgreens Private Brand Site• Plans to reduce the # of PB Brands• Currently >100 Walgreens Brands Take Care Clinics (in stores)• >330 Take Care Clinics – and growing• www.takecarehealthsystem.comRecent News:• Now in all 50 states with new Alaska Store• In early stages of bringing liquor back to its stores


Walgreens site dedicated to their private label: www.WBrand.com


Retailer Profile - CVSCVS Growth• 2004 – Acquired 1,200+ Eckerd stores• 2006 – Acquired 700 freestanding Osco & Savon stores• 2007 – Merged with Caremark (prescription benefits management)

• 2009 – Acquired 541 Longs Drugs stores• Stores in 44 states• Claims to be #1 in prescriptions filled• Loyalty Card: >50 million ExtraCare membersMinute Clinics• Acquired Minute Clinic in 2006• 500 In-Store ClinicsBeauty 360• High-end beauty format launched in November, 2008• 4 stores in California, Connecticut, and Washington, DC

www.CVS.comwww.MinuteClinic.com

www.Beauty360.com


www.Beauty360.com from CVS


Retailer Profile – Rite Aid

• #1 drug chain on the East Coast, and third in the U.S.

• In 31 States – East Coast & West Coast

• 2007 – acquired 1,854 Brooks & Eckerd stores

• Partnership with GNC – in select stores

•Closing “under-performing” stores

•Opening new stores on smaller scale

• Loyalty Program: Rx Savings Card

•No Premium Store Brands

• Focused on SKU Optimization

www.Riteaid.com


Rite Aid’s “Living More” Card for Seniors

• 20% off purchases on first Tuesday of month

• 10% off purchase all other Tuesdays

• 10% off Rite Aid Brand products every day

• 10% off cash prescriptions every day


QUIZ Question

Which major U.S. market (city) generates the most drug store sales relative to other channels?

Answer: Cleveland – The drug represents 8.6% of sales in Cleveland vs. 3.8% for Total U.S.

Source: Homescan Channel-Facts, 2008


Drug Store Share of All-Outlet Sales

3.8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Denver

Salt Lk-Boise

Portland

Grand R

apidsM

inneapolisR

ichmond

Birm

inghamA

tlantaS

eattleS

an Antonio

Raleigh-D

rhmD

allasS

an Diego

Washington

Mem

phisC

olumbus

Nashville

Pittsburgh

Kansas C

ityB

altimore

Charlotte

Oklahom

aLouisvilleC

incinnatiLos A

ngelesTotal U

.S.

IndianapolisB

uffaloD

etroitS

t. LouisH

oustonN

ew O

rleansH

rtfrd-Nw

Hvn

Phoenix

Orlando

Philadelphia

Chicago

Milw

aukeeS

an FranciscoTam

paS

acramento

New

YorkB

ostonM

iami

Cleveland

Source: Homescan® Channel Facts, CY’08

The drug channel is much stronger in Cleveland than in other markets.


Which demographic segments shop drug stores?


Household Ethnicity• Drug stores, dollar stores and C-stores all skew to

African Americans

Distribution of Dollar SalesMass w/o Super

HH Ethnicity Drug Grocery Supers Centers Club Dollar Conv

Caucasians 76% 80% 75% 82% 75% 70% 73%

Non-Cauc 24% 20% 25% 18% 25% 30% 27%

African Amer 13% 9% 11% 10% 9% 20% 16%

Asian* 3% 3% 3% 1% 5% 1% 1%

Other Race 8% 8% 11% 7% 12% 8% 10%

Hispanic* 11% 11% 15% 9% 16% 11% 11%*Acculturated Hispanics & Asian Americans

Source: Homescan® Account Shopper Profiler, CY’08


Kids & Household Size

• Drug stores and C-stores and skew to smaller households without kidsDistribution of Dollar SalesMass w/o Super

Kids/HH Size Drug Grocery Supers Centers Club Dollar ConvNo Kids < 18 71% 59% 52% 53% 58% 59% 67%Any Kids < 18 29% 41% 48% 47% 42% 41% 33% Any Kids < 6 10% 15% 20% 18% 17% 13% 10% Any Kids 6-12 15% 22% 27% 27% 22% 23% 18% Any Kids 13-17 14% 19% 21% 22% 20% 21% 7%

1 Member 24% 17% 15% 14% 11% 20% 23%2 Members 38% 33% 29% 32% 35% 32% 37%3-4 Members 29% 36% 39% 38% 37% 33% 29%5+ Members 9% 14% 17% 16% 17% 15% 11%



Household Income• Lower income households are more likely to shop drug

stores, dollar stores, C-stores and SupercentersDistribution of Dollar SalesMass w/o Super

HH Income Drug Grocery Supers Centers Club Dollar Conv

$100K+ 18% 23% 23% 15% 36% 8% 10%

$70K-99K 16% 18% 18% 16% 22% 10% 13%

$50K-69K 16% 17% 17% 18% 16% 13% 14%

$40K-49K 10% 9% 10% 11% 8% 10% 11%

$30K-39K 11% 10% 11% 12% 7% 13% 13%

$20K-29K 13% 11% 10% 13% 6% 18% 16%

<$20K 16% 12% 11% 15% 5% 27% 24%



Age of Female Household Head

• Drug stores skew to much older households

Age of Distribution of Dollar SalesFemale Mass w/o SuperHH Head Drug Grocery Super Centers Club Dollar

Conv

Under 35 12% 17% 21% 22% 16% 13%11%

35-44 13% 17% 20% 19% 18% 17%15%

45-54 21% 23% 23% 22% 23% 23%24%

55+ 37% 27% 25% 26% 29% 34%26%

55-64 17% 14% 14% 15% 17% 19%16%

65+ 20% 13% 11% 11% 12% 15%10%



Reference = United States; Base = Households;See Appendix for BehaviorStage/Lifestyle Descriptions

Spectra BehaviorScape Segmentation:Drug dollars skew to older households in urban areas

DRUG STORES Shoppers - Total $ per 100 HHsBehaviorScape Segmentation & Targeting Framework

LifeStyleMid to Upscale Neighborhoods Less Affluent Neighborhoods

Cosmopolitan Centers

Affluent Suburban Spreads

Comfortable Country

Struggling Urban Cores

Modest Working Towns

Plain Rural Living

Urban Suburban Rural Urban Suburban RuralStart-Up FamiliesHHs with Young Children Only <6 108 78 59 89 86 47 75 6%Small-Scale FamiliesSmall HHs with Older Children 6+ 131 103 85 141 92 71 97 9%Younger Bustling FamiliesLarge HHs with Children (6+), HOH <40 89 73 58 120 80 41 72 5%Older Bustling FamiliesLarge HHs with Children (6+), HOH 40+ 131 95 84 131 99 70 97 11%Young TransitionalsAny size HHs, No Children, <35 97 63 69 79 69 53 73 8%Independent Singles1 person HHs, No Children, 35-64 109 91 74 123 88 66 91 11%Senior Singles1 person HHs, No Children, 65+ 145 115 90 136 114 73 106 10%Established Couples2+ person HHs, No Children, 35-54 147 118 93 165 115 77 113 13%Empty Nest Couples2+ person HHs, No Children, 55-64 145 131 107 162 135 91 121 12%Senior Couples2+ person HHs, No Children, 65+ 184 167 122 191 146 112 144 16%

128 107 87 127 102 72 100% Total $ 17% 19% 16% 15% 18% 16%

Dollars Index

% Total

$BehaviorStage

Total $ per 100 HHs

With C

hildrenN

o Children

Dollars Index 120 - 149 = Dollars Index 150+ =Source: Spectra June 2009 Release/Nielsen Homescan Shopper Library (11/08)


Where you live plays a huge role in the channels where you shop

Shoppers - Total $ per 100 HHs Index

% U.S. HHs DRUG GROCERY MASS

MERCH W/ SUPERS

WAREHOUSE CLUB CONV/GAS

Lifestyles (i.e. Neighborhoods)

Cosmopolitan Centers 13% 128 107 64 117 74Affluent Suburban Spreads 17% 107 120 81 166 52Comfortable Country 18% 87 106 118 111 93Struggling Urban Cores 12% 127 95 72 75 118Modest Working Towns 18% 102 94 96 80 108Plain Rural Living 22% 72 83 141 58 143

Reference = United States; Base = Households;See Appendix for Lifestyle Descriptions

Dollars Index 120 - 149 = Dollars Index 150+ =

Source: Spectra June 2009 Release/Nielsen Homescan Shopper Library (11/08)


How do drug store purchase dynamics compare to other channels?


Using Purchase Dynamics to Drive Sales

3 Key Components of All Sales Growth/Decline

• Penetration–Are fewer households buying?–How can I get more households to buy?

• Purchase Frequency–Are consumer buying less often?–How can I drive more frequent trips/purchases?

• Purchase Size–Are shoppers spending less per trip?–How can I drive multiple units, larger pack sizes, or premium

pricing?


Channel Penetration Trends Vs. 1997

Percent of U.S. Households Shopping

U.S. Channel 2008 1997 ChangeDrug Stores 81% 89% -8 Pts Grocery 99% 100% -1 Point Mass Merch w/Supers 95% 97% -2 Pts Supercenters 68% 52% +16 Pts Mass w/o Supers 79% 94% -15 Pts Warehouse Clubs 50% 48% +2 Pts Convenience Stores 40% 52% -12 Pts Dollar Stores 64% 45% +19 Pts

Source: Homescan® Channel Facts, CY’08 Vs. CY’97


Purchase Frequency Trends Vs. 1997

Avg Number of Shopping Trips Per Shopper Per Year

U.S. Channel 2008 1997 ChangeAll Outlets 159 198 -39 TripsDrug Stores 14 16 -2 TripsGrocery 59 87 -28 TripsMass Merch w/Supers 31 33 -2 Trips Supercenters 26 13 +13 Trips Mass w/o Supers 14 27 -13 TripsWarehouse Clubs 11 9 +2 TripsConvenience Stores 14 13 +1 TripDollar Stores 13 8 +5 Trips



Purchase Size Trends Vs. 1997

Average Dollars Spent Per Trip (UPC-Coded)

U.S. Channel 2008 1997 ChangeTotal Outlets $38 $25 +$13 Drug Stores $20 $15 +$5 Grocery $31 $22 +$9 Mass Merch w/Supers $52 $29 +$23 Supercenters $58 $36 +$22 Mass w/o Supers $43 $28 +$15 Warehouse Clubs $89 $66 +$23 Convenience Stores $15 $7 +$8 Dollar Stores $12 $9 +$3



How are drug store categories performing?

•Cross-Category Analysis Using Nielsen’s Strategic Planner Database•52-Week Periods Ending 6/13/09•Total U.S. Drug Channel (stores with annual sales >$1MM)•Compared with FDM (Food/Drug/Mass Channels Including Walmart)•Product Sub-Categories Exclude Some Smaller or “All Other” Groups


The drug channel shows healthy growth across most departments

52-Week ChangeShare ofNielsen-Defined Departments Drug $ SalesVs YgoFDM+WM

All Departments $43.4 Billion+5%8.5%Health & Beauty Aids $21.5 Billion+4%34.6%Dry Grocery $7.9 Billion+8%4.1%Non-Food Grocery $6.7 Billion+13%11.3%General Merchandise $3.6 Billion-5%9.5%Alcoholic Beverages $2.4 Billion+5%11.1%Dairy $0.6 Billion-7%1.2%Frozen Foods $0.4 Billion+12%1.0%Other Perishable $0.08 Billion+17%0.2%Source: Nielsen Strategic Planner, 52 Weeks Ending 6/13/09, Total U.S.


QUIZ Question

Do drug channel shoppers spend more on cold/allergy remedies or on cigarettes?

Answer: They spend nearly twice as much on cigarettes than on cold/allergy remedies.

Source: Nielsen Strategic Planner


Top Categories in the Drug Channel

52-Week ChangeShare ofNielsen Category Drug $ SalesVs YgoFDM+WMCigarettes $2,963 MM+18%36%Cold/Allergy Remedies $1,599 MM+9% 46%Nutritional Supplements $1,260 MM+8% 34%Headache Remedies $965 MM+3% 36%Chocolate Candy $894 MM+6% 22%Office/School Supplies $699 MM+1% 15%Face Cream & Lotions $692 MM+9% 37%Non-Chocolate Candy $640 MM+11%24%Antacids $625 MM+0% 37%Batteries $619 MM+2% 24%Light Beer $599 MM+10%10%

Source: Nielsen Strategic Planner, 52 Weeks Ending 6/13/09, Total U.S.

6 of the top 11 drug store categories are non-HBC


Top HBC Categories in the Drug Channel52-Week ChangeShare of

Nielsen Category Drug $ SalesVs YgoFDM+WMCold/Allergy Remedies $1,599 MM+9%46%Nutritional Supplements $1,260 MM+8%34%Headache Remedies $965 MM+3%36%Face Cream & Lotions $692 MM+9%37%Antacids $625 MM+0%37%Cosmetics - Eye Makeup $549 MM+8%38%Hair Coloring Products $549 MM+1%36%Cosmetics - Facial Makeup $504 MM+5%39%Laxatives $493 MM+5%44%Tooth Cleaners/Whiteners $433 MM+1%21%Shampoo $429 MM+1%20%



Top Food Categories in the Drug Channel52-Week ChangeShare of

Nielsen Category Drug $ SalesVs YgoFDM+WMChocolate Candy $894 MM+6%22%Non-Chocolate Candy $640 MM+11%24%Light Beer $599 MM+10%10%Beer (Non-Light) $485 MM+1%11%Bottled Water $460 MM+3% 8%Fresh Milk $426 MM-12%3%Chewing Gum $328 MM+10%19%Wine - Domestic Table $317 MM+14%7%Cola Regular $310 MM+6% 6%Cola Diet $255 MM+6% 7%Vodka $248 MM+5%24%


8 of the top 11 food categories are beverages


Top Growth Categories in the Drug Channel52-Week ChangeShare of

Nielsen Category Drug $ SalesVs YgoFDM+WMPet Care $147 MM+67%6.7%Depilatories $84 MM+46%44.7%Peanut Butter $15 MM+43%1.2%Seasonal General Merch $21 MM+42%15.1%Dog & Cat Treats $39 MM+42%2.5%Natural Cheese $11 MM+39%0.2%Frozen Entrees - Italian $15 MM+37%0.6%Pizza - Frozen $47 MM+34%1.2%Desserts - Frozen $17 MM+30%2.9%Sliced Lunchmeat $13 MM+28%0.3%Tuna - Canned $19 MM+28%1.5%


8 of the top 11 growth categories are foods


QUIZ QuestionWhich category has the highest share of sales in the drug channel vs. supermarkets & mass merchandisers?

Answer: ContraceptivesDrug channel generates 64% of F/D/M $ sales



Categories With Strong Sales in the Drug Channel

52-Week ChangeShare ofNielsen Category Drug $ SalesVs YgoFDM+WMContraceptives $315 MM+17%64%Pregnancy/Infertility Tests $152 MM+1% 63%Hair Growth Products $54 MM+7% 61%First Aid Gauze & Tape $132 MM+0% 57%Breath Fresheners $4 MM+9% 57%Cough/Cold Throat Sprays $18 MM-4% 51%Nasal Products $298 MM+3% 50%Anti-Smoking Products $366 MM+1% 49%Manicure Needs $117 MM+3% 49%Cough Syrups/Tabs $332 MM+6% 48%Vitamins/Tonics (Liq/Pwdr) $21 MM+11%48%


As expected, categories with high drug share are almost all HBC.


HBC categories with strong sales OUTSIDE the drug channel

52-Week ChangeShare ofNielsen Category Drug $ SalesVs YgoFDM+WMBaby & Nursing Accs $37 MM+0%3.6%Baby Bottles & Nipples $20 MM-1%9.2%Diet Aids-Complete Nutr $41 MM-7%9.3%Baby Care Bathsoap $21 MM+9%16.1%Feminine Deodorant Sprays $6 MM-10%16.4%Personal Grooming Sponges $21 MM+9%18.3%Deodorant-Aerosol $25 MM-0%19.1%Deodorant-Stick/Solid $289 MM+8%19.4%Cotton/Cotton Swabs $76 MM+4%19.6%Vitamins - Children Chewable $32 MM+9%19.8%Shampoo $429 MM+1%20.2%


These categories may be opportunities for drug retailers


QUIZ Question

Which 2 categories show the most growth for drug store share of FDM?

Answer: Tobacco & Feminine Hygiene (drug channel is up 3.4 share points in both categories)



The drug channel has grown share across many high-volume categories.

Drug Dollar Share of ShareNielsen Category Food/Drug/Mass+WM Pt ChgTobacco & Accessories 34% +3.4 ptsFeminine Hygiene 44% +3.4 ptsGrooming Aids 36% +2.3 ptsFragrances - Women 41% +2.1 ptsFamily Planning 64% +2.1 ptsPet Care 5% +1.6 ptsShaving Needs 24% +1.3 ptsCosmetics 41% +1.1 ptsCough & Cold Remedies 46% +1.1 ptsPain Remedies 37% +1.1 ptsSkin Care Preparations 34% +1.1 ptsSource: Nielsen Strategic Planner, 52 Weeks Ending 6/13/09, Total US


Drug Channel Growth By Market

-2%

+0%

+2%

+4%

+6%

+8%

+10%

+12%

+14%

+16%

San Fran

Wash D

C

Detroit

Pittsburgh

Los Angeles

Philadelphia

Chicago

Total US

Atlanta

Boston

New

York

Houston

All Nielsen CategoriesHealth & Beauty Care

Source: Nielsen Strategic Planner, 52 Weeks Ending 6/13/09

US Drug ChannelTotal Store: +4.9%

HBC: +3.5%


How are store brands performing in the drug channel?


Across channels, store brands continue to grow

•Private Label Performance through 6/13/09–Annual Sales: $85.7 Billion–PL $ Share of Store: 16.8% (Up 0.8 Pts)

–$ Sales Up $6.3 Billion (+8.0%) vs. Year Ago

–Up $13.9 Billion (+19%) vs. Two Years Ago

Source: Nielsen, Total U.S. Grocery/Drug/Mass Including Walmart


PL growth was driven at first by higher prices, but in 2008, unit growth indicates real shifting

-6%

-4%

-2%

+0%

+2%

+4%

+6%

+8%

+10%

+12%

+14%

4 W/E

07/16

/05

4 W/E

11/05

/05

4 W/E

02/25

/06

4 W/E

06/17

/06

4 W/E

10/07

/06

4 W/E

01/27

/07

4 W/E

05/19

/07

4 W/E

09/08

/07

4 W/E

12/29

/07

4 W/E

04/19

/08

4 W/E

08/09

/08

4 W/E

11/29

/08

4 W/E

03/21

/09

4 W/E

07/11

/09

Private Label $ Change Vs. Year AgoPrivate Label Unit Change Vs. Year Ago

Source: Nielsen Strategic Planner, Total U.S. FDMxWM

2007Higher Prices

Drive PL Growth

2008+Real Shifting from

Brands to PL


Drug private label is not as strong as store brands in grocery and mass channels

PL $ Share PL ShareChannel of StorePt Chg

Grocery Channel 18.7%+1.0 pts

Drug Channel 13.7% +1.0 pts

Wal-Mart 15.8%+0.5 pts

Convenience Channel 1.5% +0.1 pts

Source: Nielsen Strategic Planner & Scantrack Convenience, Total US, 52 Weeks Ending 6/13/09


Top-Selling Private Label Categories in the Drug Channel

52-Week Chg Vs Share ofPrivate Label Category Drug $ Sales Yr Ago CategoryPL Cold/Allergy Remedies $396 MM +20% 25%PL Nutritional Supplements $259 MM +14% 21%PL Headache Remedies $244 MM +10% 25%PL Batteries $169 MM +15% 27%PL Anti-Smoking Products $166 MM +7% 45%PL Laxatives $161 MM +7% 33%PL Antacids $150 MM +59% 24%PL Adult Incontinence $143 MM +11% 39%PL First Aid Treatments $138 MM +11% 34%PL Nuts - Cans $129 MM +18% 64%PL Office/School Supplies $119 MM +9% 17%

Source: Nielsen Strategic Planner, 52 Weeks Ending 6/13/09, Total US Drug Channel


Top Private Label Categories ForSales Growth in the Drug Channel

52-Week Chg Vs Share ofPrivate Label Category Drug $ Sales Yr Ago CategoryPL Pet Care $16 MM +170% 11%PL Laundry Detg – HD Liq $22 MM +121% 7%PL Antacids $150 MM +59% 24%PL Fabric Softeners $10 MM +45% 15%PL Face Cream & Lotions $36 MM +43% 5%PL Cookies $36 MM +38% 17%PL Garbage Bags $40 MM +30% 45%PL Hsehold Sponges/Cloths $12 MM +29% 24%PL Paper Towels $52 MM +29% 25%PL Sinus Remedies $20 MM +24% 32%PL Pretzels $12 MM +23% 28%

Strong growth in several categories



QUIZ QuestionWhich category has the highest private label share in the drug channel?

Answer: Canned Nuts64% of drug channel sales are from store brands



Drug Channel Categories with the Highest Private Label Share

52-Week Chg Vs Share ofPrivate Label Category Drug $ Sales Yr Ago CategoryPL Nuts - Canned $129 MM +18% 64%PL Disposable Plates/Cups $50 MM +10% 63%PL Nuts - Cello Wrapped $55 MM +15% 56%PL Cotton & Swabs $42 MM +6% 56%PL Prsnl Grooming Sponges $11 MM +7% 51%PL Nuts - Jars $15 MM -5% 50%PL Anti-Smoking Products $166 MM +7% 45%PL Garbage Bags $40 MM +30% 45%PL Adult Incontinence $143 MM +11% 39%PL Fruit - Dried & Snacks $10 MM -4% 39%PL Light Bulbs $32 MM -2% 38%

Store brands dominate a wide variety of categories in the drug channel.



How well does Walmart compete in HBC categories?


Drug Channel Private Label Share Vs. WalmartDrug Walmart Share

Private Label Category PL Share PL Shr GapPL Anti-Smoking Products 45% 71% 26 ptsPL Hair Growth Products 32% 53% 21 ptsPL Mineral Supplements 34% 52% 18 ptsPL Oral Antiseptics/Rinses 14% 27% 13 ptsPL Vitamins/Tonics – Liq/Pwdr 10% 23% 13 ptsPL Talc & Dusting Powder 16% 26% 10 ptsPL Adult Multi-Vitamins 28% 36% 8 ptsPL Nutritional Supplements 21% 28% 7 ptsPL Headache Remedies 25% 32% 7 ptsPL Diet Aids-Complete Nutri 0% 6% 6 ptsPL Cosmetics - Nail Care 7% 12% 5 ptsPL Antacids 24% 29% 5 pts

Many store brands in the drug channel are under-developed relative to Walmart.



Top HBC Categories at Walmart52-Week ChangeShare of

Nielsen Category WM $ SalesVs YgoFDM+WMNutritional Supplements $1,252 MM+6%33%Cold/Allergy Remedies $803 MM+5%23%Shampoo $742 MM-6%35%Headache Remedies $724 MM-3%27%Tooth Cleaners & Whiteners $643 MM-1%31%Blade/Razors/Razor Blades $561 MM-4%37%Deodorant-stick/Solid $559 MM+3%38%Face Cream & Lotions $547 MM-3%29%Hair Coloring Products $511 MM-5%34%Hand Cream & Body Lotions $483 MM+6%35%Cosmetics - Eye Makeup $469 MM-1%32%

Source: Nielsen Walmart Channel, 52 Weeks Ending 6/13/09, Total U.S.


HBC Categories with the Highest Share at Walmart

52-Week ChangeShare ofNielsen Category WM $ SalesVs YgoFDM+WMFeminine Deodorant Sprays $22 MM-11%58%Men’s Gift Sets & Travel Kits $75 MM+43%53%Cologne/Lotion – Men’s $122 MM-15%51%Personal Grooming Sponges $56 MM+2%50%Ethnic Hair Preparations $76 MM+0%49%Appetite Suppressants $118 MM-25%48%Deodorant-Cologne Type $88 MM+5%48%Baby Care - Oils/Lotions $60 MM+3%42%Deodorant-Aerosol $54 MM-5%41%Denture Products $165 MM-1%40%Douches $19 MM-28%40%

Source: Nielsen Walmart Channel, 52 Weeks Ending 6/13/09, Total U.S.


400 Walmart In-Store Health Clinics by 2010

• “The Clinic at Walmart” brand• First clinics opened April-08 in Atlanta •Co-branded with local hospitals• Average visit: $50 - $65


In Beta Test: Online Groceries & HBC

•Now lists many HBC & food products at Walmart.com

•HBC & Food not yet available for sale online

• Product details include…–Package photos– Ingredients–Full Nutritional Facts–Usage Instructions–Allergy/Interaction Warnings–Customer Product Reviews

Customer product reviews may be a game-changer for CPG manufacturers


Summary•Drug stores generate $43.4 billion annually excluding Rx

• The top 3 chains generate 82% of drug channel ACV

•Walgreens & Rite Aid focusing on efficient assortment

•Drug dollars skew to older households in urban areas

•Consumers make fewer shopping trips across channels

•Cigarettes are the top category in the drug channel

•HBC growth has not kept up with total store growth in the drug channel

• FDM private label dollars are up 19% vs. 2 years ago

•Walmart is a major player in HBC categories


Thank you

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