PLMA TRADE SHOW 2000-11-27

LYNNE MILLER

ROSEMONT, Ill. -- Following a profitable first year for its crop of private-label salad mixes, Save Mart Supermarkets, Modesto, Calif., plans to expand the line, a company official said at the Private Label Manufacturers Association's annual trade show here.

The 100-store retailer plans to introduce a Fresh Favorites baby spinach salad mix this year, said Steve Junqueiro, Save Mart's director of produce/floral, who spoke at a seminar highlighting successful private-label partnerships in the fast-growing perishables categories.

According to food industry consultants and panel moderators Gerald Lyons and John Waters of MarCom Communications, Greer, S.C., private label is becoming one of the preferred strategies for retailers seeking to stand out among rivals, especially now as they fend off increasing competition from alternative formats such as warehouse clubs and discount department stores.

These days the goal is less about distribution and more about marketing, and developing their own brands in fresh foods can give retailers a competitive edge, the consultants said.

"They have to build their own brands," Waters said.

In a little over a year, Save Mart has done that. Based on their initial success with the Fresh Favorites line, officials have talked about bringing other products to the table, such as an arugula salad mix, bagged carrots, croutons and apples, Junqueiro said.

Expansion comes after a first year that saw sales and gross profits on Fresh Favorites outpace national and regional brands in the value-added salad mix category by up to 4% on average for the year, Junqueiro said. The retailer achieved what it set out to do when it launched the line -- boost sales in a maturing category, capture new business and make the chain stand out among its rivals.

"Fresh Favorites are recognized by our consumers, suppliers and the competition," Junqueiro said. "We're very happy with the launch. We'll continue to promote private label."

Fresh Favorites made its debut in August 1999. Six salad mixes were introduced at prices 10% lower than national brands. Save Mart worked closely with produce supplier Tanimura & Antle, Salinas, Calif., to develop the brand, promoting it with a series of ads that ran over eight weeks.

The retailer and supplier established a good working relationship, Junqueiro said. One of the nation's leading processors of ready-to-eat salad mixes. Tanimura & Antle helped the retailer in many steps in the process -- from checking trademarks to working on the graphic design.

The retailer wanted the word "fresh" in the name, Junqueiro said, and sought a name that could be used on a variety of produce items.

For its part, Tanimura & Antle sees the private-label business as "a growth opportunity for us," said Don Sieling, the company's national accounts manager for retail. "Private labeling is about 40% of our value-added business."

Tanimura & Antle has also worked with Publix Super Markets, Lakeland, Fla., and Schnuck Markets, St. Louis, among others, to create store brands in the produce departments. "We have a few in the works right now," Sieling said, declining to identify the companies. In addition to produce, private-label brands are helping business in deli departments. Topco Associates, a Skokie, Ill., member-owned food cooperative, joined forces with Patrick Cudahy, a Cudahy, Wis.-based meat processor and subsidiary of Smithfield Foods, to develop deli meat programs for Topco's members. Several members have private-label brands of deli meats from Patrick Cudahy in their stores, said Rick Findlay, vice president for meat operations at Topco, whose members include 28 grocery retailers and two food-service vendors.

Private-label growth in the deli area is "skyrocketing," said Findlay, who noted that deli department increases are outpacing growth in the cooperative's other departments. He thinks retailers would do well to offer a combination of national and store brands in their delis.

Supermarket delis represent a primary growth opportunity for the meat processor as well, said Bud Matthews, Cudahy's vice president of sales and marketing, retail division.

"The percentage of consumers who shopped at in-store delis has increased drastically in past years," he said, citing statistics indicating that 1999 processed-meat sales contributed more than 44% of service deli sales.

In the meat department, the cooperative buys beef products from Denver-based Mountain City Meat Co., which was represented on the panel by company sales representative Jim Bernat.

To boost beef purchases, retailers must remember to promote the category in year-round advertising, rather than just in summer ads with barbecue themes, said Dave Mueller, a processed meat buyer for Topco. In-store product demonstrations are another way to push sales, he said.