HEY, GOOD-LOOKIN'

Kelly Gates

Gone are the days when consumers viewed private-label poultry as their last choice. Today, supermarkets are giving national poultry manufacturers a run for their money, with upgraded private-label options that boast quality as good as, if not better than, the national brands.

"In recent years, we have added many new varieties of boneless breast and thigh meats such as fillets, cutlets, tenderloins and stir-fry chicken, to name a few," said Maria Brous, spokeswoman for Publix Super Markets, Lakeland, Fla. "In addition, we are currently in the process of developing new private-label packaging that will be designed to better identify [and] unify Publix's private-label branding efforts throughout the store."

Publix isn't alone in its strategy. In the past few years, new lines, new products and line extensions have all propelled private-label poultry's high growth rate. Among all U.S. food stores with sales of more than $2 million, excluding supercenters, sales of private-label chicken products increased 24% during the 52 weeks ending in May 2005 compared to the 17.6% increase in branded fresh chicken, according to ACNielsen Strategy Planner data.

This upsurge reflects growing interest in private-label perishables in general -- a final frontier of sorts in an industry that has already seen "gourmet" status applied to many grocery items. Fresh foods, however, remain an area of growth for the development of signature store brands, industry observers say.

"It looks like more supermarkets are expanding into private-label chicken; it's becoming a lot more commonplace," said Bill Bishop, president of Willard Bishop Consulting, Barrington, Ill. "Retailers are getting into private-label chicken because they want to give their customers something different in terms of choice beyond the national brand, with a lot greater variety in non-marinated product. They're also looking for margin."

Growth in private label doesn't have anything to do with rising protein prices, Bishop said; rather, it's a matter of supermarkets desiring to improve retail differentiation.

Fortunately, the poultry category is wide open for competition. For most consumers, chicken is chicken, and it doesn't really matter what brand they buy, as long as the quality is there, Bishop said.

"As a result, the competition between private-label and national brands is very direct, and national brands lose share every time a new supermarket chain adds a private-label line of poultry."

Giant Eagle, Pittsburgh, is re-evaluating its total poultry offering in response to various trends in the category, said company spokesman Brian Frey.

Salisbury, N.C.-based Food Lion, a division of Delhaize America, installed a private-label program some time ago.

"We have offered poultry sold under the Food Lion brand for about two years," said Jeff Lowrance, spokesman for the chain. "Within the line is a full variety of poultry products, including whole and parts. When we introduced Food Lion poultry, we started out with a full variety, so we haven't had to make changes to the program thus far."

The chain's private-label chicken joins approximately 2,900 Food Lion store brand stockkeeping units, a line of products that has been offered since the early 1980s.

The retailer features its Food Lion brand of poultry products in weekly circulars, often tying price promotions into the chain's frequent-shopper card. The chain has found a niche by offering better-than-average poultry cuts, but at prices seen as more reasonable than national brands. The value proposition has been enticing to customers, Lowrance said.

"We feel that our private-label products, including our new line of poultry, enable us to differentiate Food Lion from other retailers while rewarding our customers for their loyalty," he said.

In stores, the Food Lion brand is positioned in refrigerated cases alongside products from Tyson and Perdue, inviting price and quality comparisons right at the point of purchase.

At Publix, Brous told SN the retailer carries a full line of private-label poultry, including bone-in and boneless parts, whole chickens, leg quarters, cut-ups and roasting chickens, all under the Publix brand name. While Publix-brand poultry has been around for about 15 years, the retailer has continually upgraded its offerings.

The retailer continues to upgrade its private-label poultry to make it convenient for customers to prepare meals, Brous said. Consumer trends and preferences directed the chain to make the changes, she said. Lately, Publix has increased its focus on boneless, skinless breast and thigh meat by more frequently including the items in ads.

"Publix-brand poultry also receives additional exposure with our 'Focused Selling Events,' in which various chicken cuts are promoted as healthy and convenient meal alternatives," Brous said. "And we aggressively promote chicken in all of our weekly ads, either as a feature or a line item."

The retailer's Aprons fresh meals program might include poultry in its "Meal Idea of the Week." Additionally, in-store sampling events may include new poultry products featured in promotions, she said.

Such well-run private-label programs make it difficult for consumers to pass up a chain's own-branded poultry, particularly when the supermarket offers a comprehensive selection, said Mark Kurkiewicz, vice president of meat programs, Topco Associates, the Skokie, Ill., private-label supplier.

"It's about providing a price-value relationship and exclusivity first and foremost," Kurkiewicz said. "Many of the nation's top retail chains have fully developed private-label poultry programs that run the gamut from moisture-enhanced and all-natural to air-chilled and Amish, just to name a few.

"Regardless of the type of product, they all serve the purpose of bringing the consumer back to their store to purchase their private-label brand," he said.

Packaging has also been improved, and marketing campaigns are being revamped to rival promotions presented by the national brands. These changes, coupled with the promise of lower prices, are hard for consumers to resist. Packaging and product innovation are largely responsible for the significant growth in the private-label poultry category, Kurkiewicz said.

Heavier film with seamed sealing has made packages nearly leak-proof, eliminating the unpleasant experience of handling wet poultry packs.

The success of private-label programs has been noticed. Some national-brand manufacturers are beginning to take defensive measures to stay in the game, Kurkiewicz said.

"In some instances, major manufacturers are co-branding in order to maintain a stake in the retailer's poultry case," he said. "In my opinion, the future holds a national brand that may or may not be predominantly featured, a primary position for a private label or perhaps even an economy-tier brand."

How to Play Chicken

While private-label poultry is gaining popularity, retailers are warned not to shift the balance of the case too much in favor of their own line.

"Many consumers are unhappy about the fact that brand choices are slipping," said Mona Doyle, president of The Consumer Network, Philadelphia. "The increasing presence of store brands may be related to decreasing trust in food stores."

Just last month, a survey for the grass-roots shoppers' group revealed that consumers trust food brands more than food stores. This gap is a direct result of consumers associating brands -- and brand choice -- with added value, Doyle said.

"Reducing or eliminating brand choice in any category is associated with loss of value," she said. "Food retailers can get away with private-label items like poultry because, with the exception of a few major brands, few consumers are really loyal to or emotional about any brand of basic poultry."

That may be true for primal cuts, but not with value-added items. Ready-to-heat and ready-to-eat products are two examples of consumer favorites that draw a loyal following, and supermarkets should be cautious when removing a national brand in lieu of their own branded items, Doyle said.

"Safeway banner stores lost customers when they dropped Boar's Head and introduced their own brand in its place, some out of anger rather than real loyalty to Boar's Head," she said, referring to the line of deli meats.

The Consumer Network's ongoing research shows that consumer acceptance of store brands is growing overall, along with their perception of quality, she said. Introducing new private-label products can be a smart move as long as each chain consistently focuses on what the consumer wants, Doyle said.

KELLY GATES