The 2009 flu season is fast approaching (or has already arrived) and this year, swine flu is expected to figure prominently, but online consumers aren’t yet paying attention.

In fact, online discussions about the swine flu have held relatively steady since a spike in April, when federal and world health officials first warned of the spread of H1N1 or “swine flu.” Even now, amid news that 97% of early September’s flu cases were related to the H1N1 virus and as recommendations roll out about swine flu vaccines, Internet buzz a about the phenomenon remains at less than .5% of all online discussions, down from a peak of 2.5% of all buzz in April, according to Nielsen’s BuzzMetrics service.

The U.S Centers for Disease Control’s weekly FluView report (http://www.cdc.gov/flu/weekly/) notes that more than 90% of flu cases currently being reported are H1N1 cases, though the total H1N1 diagnoses per week has dropped over the past two months. The 2009-10 flu season officially begins Oct. 4.

Slight increases in Internet discussion occurred in late August and early September, fueled by flu outbreaks on college campuses and in schools, warnings about possible business absenteeism this flu season, and ongoing news about the swine flu vaccine – including continued tests of the vaccine, news about vaccine availability and production rate, and even by skepticism about safety of the vaccine and confusion about vaccine recommendations for children.

“We saw really significant volume of discussion about H1N1 after the first alerts were issued in April, and although buzz is relatively low now, I expect that we will continue to see the discussion pick up over the next several weeks,” says Melissa Davies, research director of Nielsen’s healthcare practice. “We may see a convergence of events driving this – with school back in session, the start of traditional flu season, and the H1N1 vaccine becoming available later this fall, people will be hungry for good information about swine flu and how to keep themselves and their families safe.”

Most consumers said that they would continue to purchase non-prescription medications, although they may switch to cheaper products or use them less frequently. Americans, Germans and Scandinavians all indicated that they would be looking for less expensive products.

Overall, the survey highlights the importance of understanding local consumer needs, as regulatory, distribution and marketing framework vary greatly by country, and cultures have different approaches to what products they use and how they buy them.  Manufacturers that understand these nuances are better positioned to successfully ride out the recession and maintain some level of growth.

Read the full article about Nielsen’s landmark study of the global non-prescription medication market in the current edition of Consumer Insight.

For those of you who attended our 2009 Consumer 360 client conference, you heard the opening remarks from John Lewis, President & CEO, Nielsen Consumer North America, on the impact of the economy on our industry.  His message was about how our company is “investing considerable resources in the area of thought leadership to mine Nielsen content to understand what will happen tomorrow; where (our economy) will settle; and what will the new paradigm look like?”

When John looks at the economy he sees “consumers under profound pressure in every way and there are so many changes going on” and asked the audience “what is changing versus what isn’t changing so we don’t overlook or miss some obvious opportunities”?

I wanted to share some of John’s messaging and embellish it with some of my own observations.  As John mentioned, Nielsen research shows that only 5% of U.S. households are in “panic mode” and doing just about everything they can to modify where they shop, what they buy, and how they consume products to make it through these tough times.  The remaining 95% of consumers have modified some of their behaviors too, but these folks have been “very much in the game” for marketers to pursue.

In terms of what isn’t changing, John called out three areas:

• Health & Wellness: U.S. consumers are still looking to lead healthier lives, but economic pressures have led some consumers to alter their prior habits and practices. So sales of many “better-for-you” foods are soft or down and sales of prescription drugs took a hit this past year, but opportunities for growth still exist today and in the future. However, it will take new learning and a lot more marketing muscle than required before this recession, to win or compete in this space. John stated how “it may be less about premium price and more about big innovation, not incremental plays, that puts you into a health & wellness category.” John cited how drug retailers have brought health care solutions to their stores as “big and bold” examples of innovation. Check out Walgreens’ web site and see how their communications on the topic of health and wellness reach well beyond traditional health messaging used in years past.
• Convenience: convenient and easily accessible store locations; convenient and easy-to-find in-store or on-shelf product location; food and non-food solutions that save time from our busy lives “aren’t going to get less important”. John discussed the example of retailers in the Dollar channel who have been expanding their stores in localized areas to bring their value proposition to more consumers. Convenient heat-and-eat food products are more prevalent that ever in our stores and have you seen the 3-in-1 laundry detergent, fabric softener and anti-static sheets recently launched by Purex?
• Demographic Trends: aging population and multi-cultural consumers were target consumer groups for many retailers and manufacturers prior to this recession. With declining population growth in the U.S., future growth will be harder to achieve than in years past. Are you investing more resources and focus against these consumer segments? Shifts in the spending power or wealth in our population has and will likely continue to create a large group of consumers whose ability to spend freely will be challenged for many years to come. This group of consumers will also provide opportunities for those companies who understand them best and respond accordingly.

In terms of what did change, John discussed the near-term trades-offs which have been numerous and different over the past year or more in the areas of:

• Reordering shopping lists or actually going back to using shopping lists and a huge shift back to basics – food and value really matters
• Changes in where and how consumers shop with trip growth in value retail channels and coupon redemptions seeing a renaissance as consumers seek more deals and take advantage of the explosion of online coupon offers
• Consumers opting out of certain categories entirely
• Redefining of discretionary versus essential spending
• Trading across categories
• Trading down on brands

John concluded this discussion with the need to understand the “micro versus the macro-changes” occurring in our industry.  He described a “micro-war versus a macro-war” and the need to understand and respond to both.  The micro-war is what John referred to as “the typical or traditional competitive set” as defined by a retailer trading area or category where a manufacturer or retailer competes.  Today’s successful manufacturers and retailers leverage pricing, assortment, promotion, advertising and analytic insights to collaborate and drive marketplace success.  But John talked about how companies can “win the micro-war, but lose the battle” because of the larger macro-wars that transcend category or retailer choices or decisions made by consumers.  Examples of these huge macro-trend busters include:

• Away-from-home consumption took a big hit in this recession breaking a 25-year trend where in-home consumption was on the decline. Consumers are now seeing the home as a safe nesting place where success will come to those who understand this shift and seize the opportunity.
• Pampering shift from spas and beauty salons to at-home solutions – most consumers want to look and feel good, but they are looking for better value.
• Savings rates go to black – will this be a short-term or long-term shift and how will this impact your business?
• Store brands are now a viable choice for more consumers as retailers have shifted greater focus and offer brand-quality assortment at a better price or even at a premium price.

John challenged the audience to think about what they are doing to build a sustainable business model by going on the offensive or defensive “to exploit what has changed or what hasn’t changed”.  I found John’s presentation to be very insightful and he served up numerous examples of how our clients can win the micro and macro wars and come out of this recession in a strong position – I trust that you did or will too!

Watch presentations from Consumer 360 here and for more information on consumer shopping patterns, contact me: todd.hale@nielsen.com

1. Health Claims – “Now with More Calcium”, “Good Source of Antioxidants”, “Natural”, “Made with Real Sugar”.  First look for claims you can make without reformulations.  Then consider adding nutrients to add perceived value. 
2. Unique Packaging – Consider Dean Milk Chugs in a category dominated by private label.  Older shoppers may appreciate packaging that easier to open, easier to re-seal, and easier to read without glasses.
3. Line Extensions – Look at the soda category with only 6.1% private label share.  Every year we see many new soda flavors, but very few really “new” brands.   In most stores, private label is left with limited SKUs and shelf space.
4. Promote a Cause – Don’t just offer a percent your profits.  Build awareness.  Educate the consumer about a cause you can really embrace.  Let them know how they can get involved.   
5. Odd Ounces – It’s easy for store brands to copy products sold with the same package size year after year.  Shifting a 12 oz. package to 15 oz. makes it difficult to compare prices to store brands.  Going metric makes the price comparison even harder.
6. Offer Your Own Value Brand – Look at the hair care category with only 2.2% private label share.  National value brands make it difficult for store brands to get a foothold.   
7. Local Ties – Each year have your sales force apply labels to packages in the store, reminding shoppers when a product is grown locally, processed locally, or warehoused locally.  In today’s environment, shoppers are likely to support the local economy.
8. Differentiate Yourself – Compete with private label like you compete with any other brand.  Set your brand apart with a clear case for why it’s worth more than the store brand.
9. “Green” Sizes - We used to call them “value sizes” or “club packs”.  Most large pack sizes use less packaging by nature.  Combine the value message with the green message.  Give shoppers a way to help the planet while saving money.
10. Keep Innovating – Be a moving target.  Make your brand difficult to copy.  Give shoppers a reason to spend a little more on your brand.  Whether it’s packaging, labeling, health claims, or new flavors, use your brand equity and category expertise to push the category forward.

For the flip side… check out Five Ways To Build Store Brands in the latest issue of Consumer Insight.

Last week, my colleague Tom Pirovano wrote about how the economic downturn has slowed the growth of organic products to almost a standstill.   Looking at the broader health and wellness category, we are seeing similar patterns.  Grouping health and wellness claims Nielsen tracks through its LabelTrends service into three tiers based on annual growth rates, retailers and manufacturers will notice some interesting developments.

Tier 1 (15% to 26% annual sales growth): Just one claim – omega – showed any dollar growth in the last four weeks, racking up a more than 30 percent increase.  On a unit basis, products with flax or hemp seed, plant sterol, less sugar claims and probiotic claims showed poor performance in the last four- and thirteen week periods.

Tier 2 (8% to12%): There were less severe declines in this group, and with the exception of antioxidants, all of the categories continued to show growth, albeit more slowly, with “No MSG” leading the way with dollar growth of 12 percent in the last four weeks.

Tier 3 (-4% to 8%): Versus the other tiers and average food department growth rates, Tier 3 generally made up the worse performers.  Only products with reduced calorie claims performed better than average on dollar and unit terms, while cholesterol, soy and GMO-free products showed the sharpest declines.

With continued disturbing news about obesity in the U.S., as well as an aging population, health and wellness products should not be viewed by consumers as a luxury affordable only during strong economies.  The challenge for manufacturers and retailers is to drive sales and value messaging in addition to health claims to at the very least retain existing consumers and hopefully win new converts as well.