ORLANDO, Fla. — The top trends that will affect food retailers and private-label manufacturers in the near future include the growth of more healthful foods, the expansion of fresh foods and consumers' decreasing interest in the food-service channel, said Mark Husson, a New York-based analyst with HSBC Securities, at the Private Label Manufacturers Association Leadership Conference here last month.
“People are really examining the kinds of foods they put in their bodies,” Husson said.
Consumers are eating much more fresh produce and meat than in the past, and fewer dry grocery products.
“People are replacing dry, salty foods in the middle of the store with fresh stuff on the outside of the store,” Husson said.
Husson predicts that Center Store products will make up about 33% of supermarkets' product mix in the next five years, down from about 40% now. “Entire categories, like cake mix, will disappear,” he said.
In addition to the current successful fresh food formats — including Safeway's lifestyle stores and Delhaize Group's Bloom and Sweetbay stores — Tesco is entering the U.S. market with its Fresh & Easy format.
Tesco, known for its private labels in the United Kingdom, is relying on U.K.-based suppliers to produce fresh private-label products in the U.S.
“It is a bit of a slap in the face [to U.S. manufacturers] since Tesco brought two private-label manufacturers with them,” Husson said, referring to Nature's Way Foods and 2 Sisters Food Group.
Retailers and private-label manufacturers must also be progressive with organic foods.
While organics is only a subset of the healthier foods that consumers are interested in, it is a fast-growing category.
“For retailers, [organic] is a much better margin,” Husson said. One example of success is Safeway's “O” organic private-label line, which is now a $200 million brand, according to Husson, after launching only about a year ago.
As consumers eat more healthful foods and eat more at home, they are also less interested in eating at restaurants.
“Food service has stalled. The Olive Garden [type of] meal is losing its luster,” Husson said.
Food service is likely to continue to struggle in the near future, and grocery chains will focus their private-label selection more on “fresh, good stuff,” he said.