Paul,
<I look at Zicam's market share as being close to being at it's peak>
Well, I guess that's what this discussion boils down to. I do not think that Zicam is even close to reaching the peak of its market share. Sales of existing Zicam products, all seven of which can be lumped into the cough and cold category, totaled about $23.5 million in 2002. The entire cough and cold category is estimated to be worth $3 billion and the narrower nasal category is estimated to be worth $300 million. Zicam's share of those markets is only 0.78% and 7.8% respectively. The company said that they expect sales to grow 30% this year. If they do, 2003 sales would total about $30 million, which is 1% of the cough and cold market and 10% of the nasal market. Even at those shares, I don't think that they would be at their peak.
It is my belief that more consumers will shift from the 90% of the market for non-nasal products to the 10% of the market for nasal products. Let's say that in 5 years the breakdown is 80%/20%. In that case, and even if the total size of the cough and cold category stays the same, nasal products would account for $600 million in sales and non-nasal products would account for $2.4 billion in sales. How much of that market would Zicam products get even if Quigley sells their nasal spray? Of course you might disagree that consumers will shift from non-nasal to nasal products, but that market has grown in recent years, and since the total size of the cough and cold category hasn't changed much, the gains in nasal products have had to come at the expense of non-nasal products. As more OTC and prescription nasal products come to market, consumers become more accepting of them, and consider them more mainstream. Shifts such as this often begin slowly and pick up steam once sales get over a certain level. I think that we are close to that point.
In a nutshell, I think that Matrixx will benefit from taking market share within the nasal category AND from a shift in consumer's preferences towards nasal products, which will grow that market.
I'm sorry that you have a cold, but Matrixx thanks your neice. lol I hope that you feel better soon.
Dan |
