Lupin 2024

Blurring channels: Natural wellness and chain drug

Print Friendly, PDF & Email

Natural channel wellness and drug chain consumer health care have long been on a converging road. Dr. Seuss once famously said, “It’s not about what it is, it’s about what it can become.”

Ed Rowland

There are no better examples of the natural channel blur than wholesale giant UNFI’s stand-alone Consumer Healthcare division topping $1 billion in revenue in the last year while CVS Pharmacy launched the Live Better line in June 2020. Wellness, natural and O-T-Cs have blurred. Overall UNFI has over 17,000 unique SKUs within Consumer Healthcare and goes beyond more traditional O-T-C to include wipes/cleaners and even pet food. Some CVS offerings seem more suited to a Whole Foods aisle with significant upside. Categories such as herbs, homeopathy and Indian and/or TCMs (traditional Chinese medicines) have not achieved broad consumer acceptance. It’s a safe bet to add the caveat “yet” to those categories for UNFI, CVS and other major players.

In fact, in May of this year UNFI, in a nod to the critical mass within the stand-alone health care group, started the consolidation process of forming one integrated and dedicated GM/HBC/wellness/candy/baby/pet department across both conventional and natural product lines. Combining both groups will allow UNFI to provide consistent subject matter expertise on new-item recommendations, ad programming, TPRs, displays and seasonal merchandising.

CVS, meanwhile, is moving towards natural with the 2020 launch of Live Better by CVS Health brand. In addition to the wellness point of difference, CVS targets 80% recyclable packaging for the line and now markets products with elderberry, ashwagandha, turmeric, kelp, maca, ginseng and charcoal. Similar to UNFI’s broader consumer health care portfolio, CVS has also expanded under its other store brand, Gold Emblem, by offering sesame tahini cashews, organic chili lime dried mango and probiotic apricots. CVS meets Whole Foods while Whole Foods via UNFI meets CVS.

UNFI’s health care journey could be dated from its 2004 Select Nutrition acquisition. With Select, UNFI gained $50 million in revenue but, more importantly, wellness expertise and a greater assortment beyond a basic safe portfolio. Fast forward 15-plus years, and UNFI has grown to a separate division operating two dedicated warehouses on both coasts, a team of 15 including a sales team supported by category insights, seven supplier relationship managers and two category managers. They coach brand owners in how to speak to wellness buyers and provide product training to complex trend analysis.

UNFI has methodically expanded its wellness-to-health-care portfolio. Driven by need states, COVID impacted consumers, as with other channels, focused on immunity and energy. Herbs that address stress and sleep also gained. Earlier category building featured on-trend brands such as Tom’s of Maine in the dental category. UNFI has, of course, expanded beyond the natural channel trade and experienced COVID-related trends: Independent stores were down while chains broadly defined were up. One big winning category was soap, up 22% to 25% even with ­out-of-stocks.

UNFI’s two coastal consumer health care distribution points — Philadelphia and Gilroy, Calif. — ship via UPS or LTL, less-than-container-load. UNFI describes it as “wellness your way on a pallet.” Unlike the normal UNFI logistics framework, the natural portfolio is designed for trial. The unique system allows for testing and includes minimum order threshold for no-charge delivery at $150, receipt within two to three days and “on call” ordering, not automatic preset reorders.

Both UNFI and CVS bounce against the e-commerce Amazon pricing wall. UNFI sells to primary and secondary resellers, making peaceful pricing coexistence a challenge. UNFI’s customer did suffer some losses to Vendor Central, but volume quickly stabilized. Brand owners with CVS listings suffer the same conundrum. Pricing discipline is no longer optional.

The blurring and change will continue between the “traditional” channels or, as Dr. Seuss also famously said, “Oh, the things you can find if you don’t stay behind!” UNFI and CVS aren’t staying behind.


Ed Rowland is the principal of Rowland Global LLC (rowland-global.com) and supports companies in their strategy, tactics and execution of international growth initiatives.


ECRM_06-01-22


Comments are closed.

PP_1170x120_10-25-21