BOISE, Idaho -- Albertson's here is looking at expanding its updated private label, A-Plus, into more grocery categories, according to a company spokesman.
In December, the chain unveiled A-Plus in soft drinks, supplied by Cott Corp., Toronto. "We had converted from what had been our Janet Lee label to what we're now calling A-Plus," said Michael Read, Albertson's director of public relations and government affairs.
The chain now is mulling plans to roll out A-Plus into other grocery segments, according to Read. "It will be a gradually phased-in process," he said.
However, at presstime, he was unable to provide details about the breadth of the program and if it would affect Albertson's other private labels, Janet Lee and Good Day.
"We've had private-label products for years under several brand names; Good Day, Master's Treat, Albertson's and Janet Lee have all been names we've used," Read explained. "What you're seeing now is a focus on what we're choosing to call Albertson's brands rather than calling them private label. The new packaging on the soft drinks is the first step in that direction."
A wider A-Plus line would consolidate Albertson's private-label program and boost the chain's identity, Read added. "It's certainly an upgrade in packaging and makes better use of Albertson's image and name," he said.
Industry analysts said a rollout of A-Plus would strengthen Albertson's private-label program.
"They're not doing much with it yet, but apparently it's going to break soon," said Gary Giblen, a managing director at Smith Barney, New York.
"It's an interesting strategy with the A-Plus label. It is kind of connected with Albertson's, but it's not actually the Albertson's name. I guess they're going to advertise it enough that people associate it with Albertson's, and it is a catchy name. And it creates some store loyalty," Giblen said.
"It will be a higher quality, better packaged and better merchandised line of products," said Edward Comeau, a senior vice president at Lehman Bros., New York. "Rather than just upgrading the quality, they're devoting resources toward the marketing and merchandising of the product, a whole coordinated program."
Competition and consumer demand are pushing Albertson's to fortify its private label, observers said.
"They are feeling some pressure to upgrade their label," said Brian Suher, a vice president at Piper Jaffray, Portland, Ore. He cited the sharp growth of rival private labels, such as Safeway Select and President's Choice. "All of those have been extremely successful private labels. A big part of Albertson's market area is being hit with some very successful private-label goods that they feel they need to stay competitive with."
But shoppers are an equal catalyst for upgrading the private label, said Chuck Cerankosky, a senior vice president at Hancock Institutional Equity Services, Cleveland.
"Albertson's is reacting as much to consumer demand as to competitors," he said. "It's a serious effort by the company to get additional contributions from [private-label] merchandise."
Expanding A-Plus would allow Albertson's to trim its private-label offerings, he noted. "What you want to do throughout a chain is have relatively few names, and those names should stand for certain quality levels," he said. "Brand consistency is very important so customers aren't confused by different brand names."
Albertson's development of A-Plus reflects an industry trend toward stronger private labels, Lehman's Comeau said.
"It's fairly consistent with what most supermarkets are doing," he said. "As most of these companies start to use category management more regularly and efficiently, they're finding that those categories where they have a good store-brand presence have shown very good returns and greater flexibility in pricing, margins and market share."
