FLU FURY: IRI PINPOINTS HOW FLU IS IMPACTING U.S. …

FLU FURY: IRI PINPOINTS HOW FLU IS IMPACTING U.S. MARKETS

February 2018

Headlines

? The flu is rapidly filtering through the United States. ? Impact is hard and fast, disrupting sales trends and making it difficult to keep

shelves stocked appropriately. ? Out-of-stock situations could have a hugely negative impact on sales. ? Flu prevalence and correlated purchase behaviors vary at the market level. ? Ensuring inventory is in lockstep with rapidly emerging trends can prevent out-

of-stock losses of 4 percent or more.

?2018 Information Resources Inc. (IRI). Confidential and Proprietary.

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The United States is being hit hard by one of the most severe flu seasons in recent history.

Flu Heat Map

% of U.S. Population with Flu

Total U.S. 5.5%

Source: IRI Illness TrackingTM 8 weeks ended 1/14/2018.

?2018 Information Resources Inc. (IRI). Confidential and Proprietary.

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Year-over-year sales trends have been heavily influenced by the intensity of the season, making it difficult to anticipate appropriate inventory levels.

CPG Category Growth

% Growth vs. Prior Year

70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0%

0.0% -10.0% -20.0% -30.0% -40.0%

Spike is earlier and sharper!

2017

Cold/Allergy/Sinus Liquids/Powders Cough/Sore Throat Drops

2018

Cold/Allergy/Sinus Tablets/Packets Humidifiers/Vaporizers/Air Filters

Cough Syrup Health Care Department

Source: IRI Illness TrackingTM 8 weeks ended 1/14/2018 and prior 17 periods.

?2018 Information Resources Inc. (IRI). Confidential and Proprietary.

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Getting it right is critical because stock-outs have a major negative impact on sales.

Consumer Reaction to Out-of-Stock Situation (Total CPG)

% of U.S. Population

Do not purchase item

9% Delay purchase

Buy item at another store

15%

31%

? One-third of consumers will make the purchase at a different store

? Fewer than half will make a substitute purchase

26% Substitute different brand

19% Substitute same brand

? Sales losses of about 4% for the typical retailer

? Translates to $40 million per year for a billion-dollar retailer

Source: Harvard Business Review.

?2018 Information Resources Inc. (IRI). Confidential and Proprietary.

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Though the flu is widespread, select areas of the country have been getting hit particularly hard in recent weeks.

Flu Prevalence

% of U.S. Population and By Market

Total United States Houston, TX

New Orleans, LA/ Mobile, AL San Diego, CA

Dallas/Ft. Worth, TX St. Louis, MO

Birmingham/Montgomery, AL Memphis, TN Louisville, KY

Sacramento, CA Little Rock, AR

5.5%

11.8% 11.7% 11.7% 11.1% 9.9% 9.3% 9.3% 8.8% 8.8% 8.7%

Source: IRI Illness TrackingTM 4 weeks ended 1/14/2018.

?2018 Information Resources Inc. (IRI). Confidential and Proprietary.

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In many of these markets, prevalence has escalated rapidly.

Share of Population Suffering Flu

Total U.S. and by Market

Total United States Houston, TX

New Orleans, LA/ Mobile, AL San Diego, CA

Dallas/Ft. Worth, TX St. Louis, MO

Birmingham/Montgomery, AL Memphis, TN Louisville, KY

Sacramento, CA Little Rock, AR

5.5% 1.1%

3.7% 1.5%

2.9% 2.1% 1.5% 1.3% 2.3% 1.2% 1.4%

3.2%

11.8% 11.7% 11.7% 11.1% 9.9% 9.3% 9.3% 8.8% 8.8% 8.7%

4 weeks ended 1/14/2018 4 weeks ended 12/17/2017

Source: IRI Illness TrackingTM 4 weeks ended 1/14/2018.

?2018 Information Resources Inc. (IRI). Confidential and Proprietary.

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The spread of the virus is supporting strong growth across many of the OTC categories that treat and manage symptoms.

OTC Health Care Categories Showing Outsized Growth During Flu Escalation

Dollar Sales Growth vs. Prior 4 Weeks: Total U.S.

OTC Health Care Department

Humidifiers/Vaporizers/Air Filters

Cough Syrup

Cold/Allergy/Sinus Liquids/Powder

Cold/Allergy/Sinus Tablets/Packets

Cough/Sore Throat Drops

7.8%

46.1% 39.9% 35.1% 26.8% 21.6%

Source: IRI Illness TrackingTM 4 weeks ended 1/14/2018.

?2018 Information Resources Inc. (IRI). Confidential and Proprietary.

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