Already, the OTC market accounted for $604 million in sales for 2008, a 9% increase over the previous year's $533 million. A major contributor to the growth: the aging baby boom population. "Whether they want to admit it or not, boomers are on the verge of actually being old," Cara Morrison, who wrote the report, tells Marketing Daily. "The aging population faces a number of potential sleep problems and challenges. Whether it's not being able to fall asleep, waking up frequently throughout the night or waking up too early in the morning, the elderly often are the victims of one type of insomnia or another."
While the growth will move quickly over the long term, near-term growth may slow as many in the U.S. cut back on spending, even as increased anxiety may contribute to more sleepless nights, Morrison says. "OTC sleep aids may be viewed by many users as an unnecessary expense," she says. "At the very least, branded products will suffer as consumers switch to private-label. But many consumers may be opting out of their nightly sleeping pill altogether and switching over to a cup of warm milk."
The OTC sleep aid sales growth will be fueled, in part, by so-called natural sleep aids, according to Morrison. According to the report, natural sleep aids will grow at a compound annual rate of 10% (compared with 7% for the entire category). The faster growth rate can be attributed to a movement into a wider consumer space, Morrison says. "This market will no longer be restricted to health food channels--sales and volume penetration will likely increase in mainstream retail channels," she says.
With a market expected to grow, and many companies being smaller, niche players, marketing will likely take more "non-traditional" approaches, led by heavy Internet marketing. "There are so many exciting alternative options in an age of evolving media consumption, where new consumer touchpoints are being developed constantly," Morrison says. "This is particularly important for a product's market that actively sells through e-tail."