Ineffective medicine (KVUE, PRGO, HLN, PBH)
An FDA advisory committee said phenylephrine was ineffective as an oral decongestant. Phenylephrine is the most popular oral decongestant used widely in cough syrups in the U.S. with sales of $1.8B last year. The ingredient is found in roughly 80% of cough/cold medications including Sudafed, Mucinex, Nyquil, Theraflu, etc. The ingredient has been in use since 1938 when the regulatory review process was less stringent. Recent studies showed that phenylephrine was no more effective than a placebo at relieving congestion. Phenylephrine is metabolized in the gut and liver before reaching the bloodstream making it ineffective.
The Consumer Healthcare Products Association, which represents OTC manufacturers, said it is against removing the product and that it was the only widely available OTC nasal decongestant. Phenylephrine is safe and has been used for decades, so it is not a matter of public safety. It was only found to be ineffective when taken orally because it is also found in creams. The FDA will review the advisory committee’s recommendation and announce its course of action in the future. Pseudoephedrine is the likely replacement ingredient going forward. Because it is used to make illicit methamphetamines it is behind the pharmacy counter which caused a share shift.
The FDA will likely take several months to make its recommendation due to the complication of pulling medication off the shelves just as the cough/cold season begins. Retailers will want to sell through their current inventories and replace them with medicines containing pseudoephedrine which would be the least disruptive. OTC manufacturers will need to reformulate their medications and ramp up production. A recall is unlikely because the safety of the product is not an issue.
Draft beer woes (BUD)
According to BeerBoard, on-premise draft beer consumption declined 8.3% YOY this past weekend, the opening weekend of the NFL season. Draft beer increased by 21% on the opening weekend of 2022 and increased by 19% for the same weekend in 2021. Thursday night’s 3.3% YOY decline outperformed Sunday's. The top three brands were Michelob Ultra (which gained 6.7 share points), Miller Lite (which gained 43 share points), and Coors Light (which was flat). Despite the decline in the first NFL weekend, draft beer trends improved relative to the preceding weeks. Elasticity is an issue in most consumer categories, but who attributed the volume declines to GLP-1 drugs? Bud Light’s challenges hurt draft beer as other share gainers like Corona and Modelo are primarily sold in bottles in the on-premise channel.
Crackerjack acquisition (LW)
Lamb Weston is acquiring Crackerjack Foods, an Australian potato manufacturer. The terms were not announced, but Crackerjack Foods has $13M in revenue. It is the third acquisition by Lamb Weston in Australia. In February Lamb Weston acquired the remaining interest in its European JV. It also acquired brought up its ownership in its JV in Argentina to 90%. Lamb Weston’s international acquisitions speak to the opportunities the company sees around the world. We recently added Lamb Weston to our Best Idea long list. For a replay of our Black Book CLICK HERE.
