SEATTLE (FNS) -- As "ground zero" in the evolution of private-label fresh products, the dairy case has provided a long history of wealth and opportunity for retailers. While consumers have traditionally viewed items such as milk, cheese, juice and eggs as commodities, retailers are using these day-to-day items to strengthen the freshness image of the stores, operators say.
Image is not the only benefit being reaped. The dairy department is proving itself as the darling of private label, offering up stellar sales in addition to its availability as a strong messenger of freshness for operators. Dairy's combined categories enjoy the leading role in both unit share and dollar share for private label in all departments, according to Information Resources Inc., Chicago. Milk, cheese, eggs and juice are strong supporters of the category, contributing mightily to the strength of private label in the dairy department.
"There is a lot of consumer loyalty attached to retailers' private-label programs in the dairy categories," said dairy industry consultant Allen Hendricks, AMH Resources, Inc., Madison, Wisc. "Retailers have developed entire private-label programs in dairy and consumers see the quality and value."
"Private label has a tremendous role in the dairy segment," noted Joli Cooper, president, Pasco Brands, a Tampa, Fla.-based orange juice processor. "Retailers today are more and more focused on developing their brand and recognize that it is a critical segment to the store. Retailers are focusing on top-quality products, not necessarily price, and effective marketing."
Private label itself has close to 100% household penetration, with three-quarters of all market baskets containing some private-label products, according to Cooper.
A lot of the credit goes to fluid milk, which has long represented the primary store-brand in dairy. Greg Rotunno, director of milk marketing for Dairy Management, Inc., also headquartered in Chicago, describes private-label milk as the "category captain" of the dairy case.
"It commands more than a two-thirds share of the fluid-milk category, and is one of the top-selling brands in the store," he said, citing ACNielsen Supermarket & Supercenter Scantrack data for the latest 12-week period ending 2/19/00.
Related numbers from ACNielsen's Super Scantrack activity for 2000 (through 3/18) paint an optimistic picture, indeed:
70% of all fluid milk sales are private label; and
37% of all cheese sales (including cream cheese) are private label.
How to best harness this strength is a strategic issue for operators. Chain to chain, strategies differ as retailers seek ways to carve out their own identity and create their own brands. While some prefer the continuity of a singular brand across all categories -- from milk to mayonnaise, and bathroom tissue to butter -- other operators break out categories to emphasize quality or other attributes in their private-label dairy-case programs.
Jacksonville, Fla.-based Winn-Dixie offers up their Superbrand on a wide variety of items in the dairy case ranging from milk to eggs to packaged cheeses, yogurt and cottage cheese.
Haggen Food & Pharmacy, Bellingham, Wash., also prefers continuity across departments using their own store name on products in the dairy case. Processed meats, including bacon, hot dogs, franks and luncheon meats; and refrigerated dough items, such as pie crusts, biscuits and rolls; and brick cheeses all have the Haggen label.
Albertson's, Boise, Idaho, is another chain that employs their trading name as their store's own brand across categories. The dairy case contains the customary milk, eggs and butter, along with a full complement of other offerings. This move is more than likely made to establish continuity and consistency not only across the store, but also across the many marketing areas Albertson's operates in, experts said.
"Albertson's offers their customers a clean presentation," said Hendricks. "There is a good offering of product, without a lot of exotics. They present the right products at the right price."
Industry observers also note that Albertson's packaging of dairy items is well thought out. For example, in the cheese category, Albertson's-branded items sport preferred packaging. While the utility of protecting the contained product is paramount, the chain offers a glimpse of the cheese through a good window.
In the units visited by SN, variety within categories was the norm. Orange juice was offered in calcium fortified, country-style and from-concentrate versions; yogurt had a crowd pleasing 13 varieties, ranging from black cherry and strawberry to peach to lemon; sour cream was presented in regular, nonfat and light versions. Cheeses were available in a plethora of varieties with styles ranging from brick to sliced to shredded to handy snack sizes.
Safeway, Pleasanton, Calif., departs from the store name application in its private-label dairy program. In keeping with its time-honored Lucerne brand, the operator positions traditional dairy items such as milk and cheese under this label. Safeway Select is the brand used to distinguish private-label items with a flair. S-Brand is the label consumers seeking value gravitate to. Bel-Air distinguishes the chain's refrigerated juices.
Within the cheese category, the Lucerne brand is emblazoned on bricks, shredded items and American slices. One progressive item spotted by SN is the operator's offerings of shredded blends. These peg board-packaged items include combinations of colby with monterey jack; a melange of three sharp cheddars; and south of the border-inspired blends of medium cheddar with monterey jack, as well asadero with queso quesadilla.
A pizza blend of mozzarella and cheddar was on Safeway Club Card special offered at two for $5. Packaging colors are well contrasted with the product inside.
Kevin Burkum, DMI's director of cheese marketing, said that for most retailers, and the industry in general, 1999 was a very good year for store-brand cheese sales, increasing nearly 5% versus 1998. This growth outpaced branded cheese, which increased 3.1%. And, while branded cheese still dominates the cheese category -- comprising 63% of pound sales -- store brands are a strong second, with a 37% share, and closing the gap.
"Retailers have done a good job of responding to cheese consumers, who are demanding more variety in terms of form, flavor and price," he said. "There are some wonderful store-brand cheese items now available, which complement the branded cheese offerings, and are helping to create a very powerful category overall."
At Safeway, Lucerne is also the preferred brand name used in the retailer's yogurt set, with the chain's upscale Select name inching its way onto the shelf. Fourteen facings of prestirred, fat-free Lucerne yogurts sat alongside a seven-item compliment of Select Twice the Fruit extra creamy varieties. Both versions of yogurt were offered up in traditional fruit and berry flavors.
The Lucerne brand was also emblazoned on two yogurt lines offering customers additional benefits and creative flavors. Lucerne Low Fat was presented with 16 facings. Cinnamon Bun, Lemon Cheesecake and Coffee and Cream were just some of the tempting tastes available. Lucerne Light offered customers prestirred convenience in eight flavors including Tropical fruit, Mud Slide and Toasted Almond. Two-pound yogurt offerings carry the Lucerne brand in eight flavors with both low-fat and fat-free attributes.
Safeway's Select label is used in other categories where product attributes upscale the items. Select branded bacon is offered in naturally smoked, 40% less sodium, extra thick and regular versions. Sausages come in beef smoked and Polish versions. S-Brand items point out value-oriented sandwich meats and franks.
As in the yogurt category, in the orange juice section, Safeway employs a two-brand approach. S-Brand is used on the chain's from-concentrate, calcium-fortified product, while Bel-Air positions the not-from-concentrate homestyle versions.
Another operator taking a two-tier approach in the dairy case is Fred Meyer, Portland, Ore. Here, F G Meyer and Fred Meyer are the names used on a variety of items.
Most operators have one common thread with their private-label dairy programs, according to observers They have taken the top movers in the dairy categories and tagged them with their own name or brand. The next step is case placement.
Price Chopper, Schenectady, N.Y., is one chain that industry watchers point to as having a case layout much like that of a restaurant menu. Items the operator wants to sell the most of have the most predominant location, with private-label product variety and selection all bolstering the image of the store. Additionally, there is great attention placed on department sanitation, both in the case and on the floor.
Other operators are looking at different methods to get the most bang for the private-label buck when it comes to dairy items.
"The classics are always going to sell," said Hendricks. "Those operators that bring value to products will have a leg up."
Some chains are taking a second look at their dairy items presentation through packaging and realigning it to meet the customers' need for information. Recipes, Web site addresses and corporate phone numbers are just some of the basic steps retailers are taking. Another operator is looking at including the number of days items will remain fresh after opening. Still another is considering the inclusion of equivalent weight information as it relates to volume to inform consumers cooking with convenience-oriented shredded cheese.
The juice category is another private-label dairy category that is offering value-added attributes. Large sized containers, fortification and juice blends are just some of the areas private-label marketers are delving into.
