J&J's latest headache caused by its o.b. tampons

CHICAGO Wed Jan 19, 2011 4:57pm EST

A price tag for o.b. tampons is seen below a shelf where they are normally sold at a store in New York, January 19, 2011. REUTERS/Brendan McDermid

A price tag for o.b. tampons is seen below a shelf where they are normally sold at a store in New York, January 19, 2011.

Credit: Reuters/Brendan McDermid

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CHICAGO (Reuters) - Johnson & Johnson, already under fire for a string of product recalls, has another public relations issue on its hands after its o.b. tampons temporarily disappeared from stores and little was said about what happened.

O.b. users, many of whom have a cult-like loyalty to the product, said they were outraged when they could not find the brand in stores late last year. They asked clerks why shelves were empty and demanded answers from J&J's McNeil Consumer Healthcare unit, already under fire for recalling over 200 million bottles of Tylenol and other medicines.

J&J has not said much about why o.b., its line of applicator-free tampons, went missing. Meanwhile, users of the Ultra version in particular, which J&J has discontinued, have complained online in blogs and through social media such as Facebook.

"I know to some this issue may seem trivial but to me this is like taking my right to breathe," said Dawn Allyn, a 44-year-old sign language interpreter from College Station, Texas, who used to use Ultra o.b. tampons.

The company said that dropping Ultra tampons, the most absorbent version, was a business decision. There were no health issues, such as reports of toxic shock syndrome, that led to the decision, which was made last September.

"To discontinue a product with huge loyalty is a surprising move when you're already getting negative press for other issues," said Tim Calkins, Clinical Professor of Marketing at Northwestern University's Kellogg School of Management.

LATEST SNAFU

J&J admitted that it had experienced a temporary supply interruption with o.b., apologized to women inconvenienced by it and has started shipping the goods again. It has not said exactly what happened.

This is just the latest product glitch at J&J. In 2010, it recalled millions of bottles of medications such as infant Tylenol. Earlier this month, it recalled nearly 50 million more packages of medicines, blaming cleaning procedures and other problems at a manufacturing plant.

"J&J has had an astonishing series of snafus; there's been one problem after the next," said Calkins. "So far it seems like the J&J brand is still holding up okay. But at some point you do begin to think that there's going to be a long term impact."

Store shelves sit empty where J&J's recalled products and missing tampons had stood, or they are filled with other goods.

In the 52 weeks ended on December 25, 2010, U.S. shoppers spent $830.1 million on tampons and more than 90 percent of those sales came from branded goods, according to Nielsen Co.

While o.b. is a small brand in the overall U.S. tampon category and accounts for a tiny fraction of J&J's $61.9 billion in annual revenue, J&J has already seen McNeil's recalls hurt its bottom line. U.S. sales of J&J's consumer brands plunged 25 percent in the third quarter of 2009.

"OHNE BINDE"

O.b. has a loyal customer base among women who find the tampons fit them best or who want an environmentally-friendly option without a plastic or cardboard applicator.

The product was first made in the 1940s. Gynecologist Dr. Judith Esser is credited with creating o.b. and naming it to stand for "ohne binde," or "without napkins" in German.

Now much of its loyal following is looking elsewhere.

"You force customers to buy your competitor's products and that's always a dangerous approach," Calkins said.

Allyn, who had used only o.b. since her teens, tried to find creative ways to source the product after she could not find her beloved brand. Even her ex-husband went from store to store and made phone calls trying to find them.

Allyn was going to buy them online, where individuals are capitalizing on the supply shortage, but she balked at paying high prices for a product that usually retails for less than $7 a box.

On eBay, a dozen people have already submitted bids for one of several boxes of Ultra o.b. tampons up for sale, with the price currently at $28.75. Third-party sellers who advertise their wares on Amazon.com have priced boxes of o.b. tampons as high as $79.99.

In the United States, o.b. ranks behind Procter & Gamble Co's Tampax, Energizer Holdings Inc's Playtex, Kimberly-Clark Corp's Kotex and even private label, or store branded, tampons, according to data from SymphonyIRI Group, a Chicago-based market research firm.

J&J's o.b. rang up about $38.7 million in sales in the 52 weeks ended December 26, 2010, excluding sales at Wal-Mart Stores Inc, club stores such as Costco Wholesale Corp, gas stations and convenience stores, according to SymphonyIRI. Tampax Pearl, the top-selling brand, posted $178.6 million in sales.

With Ultra o.b. gone for good, Allyn switched to Playtex tampons, which she said do not work as well for her.

"I loved o.b. and their design," she said. "I am peeved big time. This was a huge marketing mistake and should be set right."

(Reporting by Jessica Wohl, editing by Gerald E. McCormick)

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