Fueled by strong sales of its Nike+ and Converse lines, Nike reported a 10% increase in sales for its second quarter to $3.8 billion, compared to $3.5 billion for the same period last year. Net income for the period rose 8% to $325.6 million. In the U.S., footwear sales gained 8% for the quarter, while apparel sales in the U.S. grew 10%. "Nike+ is turning out to be huge," the company said in its conference call. "In less than 6 months Nike+ users have logged more than 3 million miles . . . and there are over 3 million Plus-ready shoes in the global marketplace and we expect to double by year end. Clearly, our confidence in this concept is proving to be accurate." Nike+ shoes feature a built-in pocket under the insole specially engineered for the Nike+ iPod sensor. Converse was also a bright spot, with "revenue up nearly 50 percent. Dwyane Wade was named Sports Illustrated's Sportsman of the Year. And Footwear News named Converse "'Brand of the Year' for 2006," the company said. Cole Haan revenues gained 9% over the prior year, driven by sales of its Dress Air product. The company also said it increased "'demand creation' spending 27% versus relatively low spending levels last year, driven by advertising campaigns behind Nike Air, LeBron, Nike Pro and Nike+." Separately, the company announced that it would celebrate the 25th-year anniversary of the Air Force 1 performance basketball shoe with the launch of the new Air Force 25 (AF25), available Dec. 26. Retailing for $175, the shoe can already be seen on such players as Indiana Pacers' Jermaine O'Neal and the Phoenix Suns' Shawn Marion.
Relatively unheard of just a few years ago, low-glycemic foods and beverages are establishing themselves as a viable niche in the mainstream U.S. market--with expected year-end sales reaching $350 million, according to Low Glycemic Index Food and Beverages in the U.S., the latest market research from Packaged Facts. Low glycemic foods include whole wheat breads and pasta, brown rice, and sorghum--the ingredient Anheuser-Busch is using to market a new non-wheat-based lager. Packaged Facts projects that sales will continue to soar at a compound annual growth rate of more than 45% during the 2007-11 period, with sales touching $1.8 billion in 2011. Effectively cross-marketed to the nation's more than 20 million diabetics as well as consumers interested in other wellness areas such as energy and weight loss, low glycemic fare is making its mark with products that go one step beyond no- and low-sugar. "Low-glycemic foods and beverages have made it out of their corners in health food stores to become a widely accepted addition to supermarkets, mass merchandisers and drug stores where they are often double marketed with like foods as well as in the diabetic supplies aisle," said Don Montuori, the publisher of Packaged Facts. "This exposure, positive press, and a wealth of new product offerings have helped create a remarkable growth market much akin to what low-carb was."
Cadbury Schweppes Americas Beverages (CSAB) will equip some 5,000 vending machines, and the Ohio Turnpike will be the first toll road in America to begin testing acceptance of major credit cards' contactless payment systems, including MasterCard Worldwide's PayPass. Since consumers no longer need to sign for purchases of less than $25, the use of contactless payment options has surged in just about every venue where cash is now the most frequent form of payment, including fast food restaurants, drug stores, taxis, some mass transit systems, movie theaters, parking garages--and yes, even vending machines and certain toll booths in Ohio. Like Visa's comparable Contactless Cards, MasterCard's PayPass is easy to use and speeds up transactions for both consumers and merchants. As many as 5,000 vending machines in markets including Dallas, New York and Chicago will be enabled to accept credit card payments. Consumers are willing to use cards for smaller purchases if the cashless option is available. A survey by Visa last spring found that 45% of consumers said they use their payment cards for small-ticket purchases more frequently than they did three years ago, citing convenience (73%), efficiency (44%) and speed (39%) as key factors in their payment choice. Moreover, the fourth annual survey on small payments issued by Ipsos Insight in November, found that more than 67 million Americans had used a credit or debit card for a purchase of less than $5 in the past 30 days. MasterCard said yesterday it is testing its contactless "Tap & Go" payments on the Ohio Turnpike, the first toll road in the U.S. to accept payment cards for self-service, toll transactions and the first to test general purpose contactless payment cards in a highway environment. "Contactless payments present a unique value position around transaction speed," said Mike Friedman, director of Mercator Advisory Group's Emerging Technologies Practice. "This makes them an ideal solution for environments where throughput is paramount." Visa USA launched its first contactless prepaid cards via MetaBank earlier this month and also bowed a new TV spot in its "Life Takes Visa" campaign that emphasizes the ease of making everyday purchases with its No Signature Required program.
General Mills will launch several new products next year as it rides a wave of good second-quarter news. In addition to three new cereals that meet Disney's new nutritional guidelines, General Mills will come out early next year with Nature Valley cereal, an extension of its grain snack and granola bars. In a conference call with investors on Thursday, the company hinted that it will also introduce a probiotic yogurt to go up against Group Danone's successful Activa. Company executives noted that probiotics is an emerging segment in the yogurt industry, and that General Mills remains committed to bringing innovation to the marketplace. Probiotics contain bacteria that convert carbohydrates into lactic acid, improving the sour taste of fermented dairy products such as yogurt and aiding in digestion. Sales of Danone's Activa yogurt with probiotics were up 36% in 2005. Harry Balzer, vice president of market research firm NPD Group, said that over the last several months the number of people who say they would like more probiotics in their diets is "slowly moving up." However, he noted, the same percentage of people surveyed, 13%, say they want to get rid of probiotics in their diets, suggesting there is room for education. General Mills, the No. 2 maker of breakfast cereal, posted better-than-expected second-quarter earnings and raised its profit forecast for the year on strong sales of new, higher-priced products such as Fruity Cheerios cereal and Caribou Coffee granola bars. The company said growth would be moderated in the second half of its fiscal year by higher grain and marketing costs. The Nature Valley cereal line comes on the heels of double-digit compounded growth in the grain snack and granola bar segments. "Customers think it's a natural extension," one executive said. The Disney cereals will be followed by more in 2007. They are the first cereals that meet Disney's new guidelines, established in October. They have kid-sized portions and related calorie counts and lower percentages of total fat, saturated fat and sugar. "They're opening at a nice price point," said the cereal maker, referring to the cereals' $1.99 cost for boxes that range from 9.9 to 11.6 ounces. General Mills also saw strong sales of its Yoplait yogurt, Chex Mix and its organic food business. Net sales for the U.S. snacks business grew 7%, driven by Caribou Coffee Bars and new varieties of Nature Valley Sweet & Salty Nut bars and Chex Mix. Yoplait net sales grew 6%, the company said. Both the meals division and Pillsbury USA reported net sales increases of 4%, on the strength of Progresso soup, Old El Paso Mexican foods and Hamburger Helper. Net sales for baking products fell 4% from a year earlier, while net sales for the company's Small Planet Foods organic business grew 19%. Despite a forecast of continued raw materials cost inflation, increases in marketing expenditures and new product activity in the second half of the year, General Mills raised its forecast for fiscal 2007.
The Food & Drug Administration wants the makers of over-the-counter painkillers to put stronger warnings on product labels about the potential risks for using the products. Johnson & Johnson/McNeil's Tylenol stands to come out the biggest loser because its sales got a 10% lift in 2005 when the FDA first pointed safety fingers at ibuprofen-based competitors such as Advil, but did not require any label warnings for Tylenol, whose active ingredient is acetaminophen. Although it could take up to a year for the new FDA recommendations to become law, the agency recommended that manufacturers begin making the labeling changes now. J&J said this week it has already made several of the agency's recommended changes to Tylenol labeling. The new warnings on packaging are due to concerns that consumers are not informed about the potential risks and complications of misusing OTC painkillers. The actual ingredients of concern are acetaminophen (which is the active ingredient in Tylenol and generic versions), and non-steroidal anti-inflammatory drugs, which are commonly known as Nsaids. These include ibuprofen (the active ingredient in Wyeth's Advil and J&J's Motrin) and naproxen, which is in Bayer's Aleve. The proposed warnings are based on a real--albeit rare--risk of liver failure with acetaminophen and stomach bleeding in the case of Nsaids and common aspirin. The FDA's proposed warnings stem from complications that can arise from overuse, overdose and/or mixing with other drugs in the same chemical category--a risk that is greater among people over age 60 who are more likely to have arthritis or take these medications regularly. In the case of acetaminophen, the risk of acute liver failure is greater among people who consume three or more alcoholic drinks a day. Ralph Nader's consumer watchdog group Public Citizen this week questioned why the FDA didn't require this labeling back in 1977, when the FDA Advisory Review Panel first recommended warning consumers that exceeding the acetaminophen dosage could cause liver damage. Nader's group is also pushing for limiting the number of pills per package of all medications containing acetaminophen in addition to reducing the actual milligrams per pill. This is something that has been done in Great Britain. More than 200 million Americans a year take Tylenol and other acetaminophen-containing products.