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Private Programs
Retailers must make sure their private label products fit consumers’ busy lifestyles and appeal to their desire for sustainability.
11 Min Read
Store brands are no longer a compromise for consumers. Today’s retailers are keeping up with the times by promising the same, or superior, quality and convenience that shoppers will find in national brands—at a lower cost.
These promises include private label products that are better-for-you, free of artificial ingredients and more sustainable than the store brand products of the past. A strong private program may also go a long way toward long-term success.
Brian Sharoff, president of the New York-based Private Label Manufacturers Association (PLMA) says retailers that rely on the earnings they get from promoting national brands are on a “short survival course.”
“If you believe that your private label is as good as or better than the national brand, if you believe that offering it to consumers in your store will be well received, if you believe that your image as a retailer depends on what people think of your products, then you can enjoy a longer life as a retailer,” he says.
One way for retailers to boost their private label success is to stay up-to-date with consumer trends and tailor the program to offer in-demand products that sit in the most highly frequented aisles of the store.
“As the eating habits of families change, retailers need to adjust what they’re doing with their store brands to this new way of eating,” says Sharoff.
That includes how they market them. Making sure consumers are aware of the desirable qualities in a private label item could mean the difference between a consumer reaching for a store brand instead of a national name, say industry observers.
With that in mind, Tops Friendly Markets recently rolled out newly designed packages on more than 1,200 private label items. The new packaging highlights the quality of the products in their program. Dave Damrath, director of private brands for Tops, says Tops is also pursuing more partners that they believe will help deliver on their commitment to the highest quality products in all categories, as well as cleaner, simpler ingredients at a desirable value.
“Private label continues to grow across all departments in the store thanks to our renewed commitment to deliver the highest quality products from best-in-class partners,” he says. “We deliver these products to our consumers at a tremendous value and in packaging that clearly conveys this quality and our commitment to our customers. Consumers want cleaner, simpler ingredients and we continue to offer more products free from ingredients such as high fructose corn syrup, artificial flavors, colors and sweeteners, and partially hydrogenated oils.”
To date, Tops has redesigned more than 75 percent of its packaging and labels and launched almost 250 new products that boast cleaner, simpler ingredients at a value to the national brands
H-E-B is also jumping on better-for-you bandwagon and is introducing H-E-B Select Ingredients, a line consisting of H-E-B brand products that eliminate more than 200 synthetic ingredients, high fructose corn syrup and artificial flavors. The new line includes Greek yogurt, ice cream, milk, cereals, snack items, breads, nuts, hummus and many other on-trend items. H-E-B officials say despite the cleaner labels, the quality, flavor profiles and prices of the products will not change.
In order for the new line to be easily recognizable to consumers, H-E-B designed eye-catching new packaging featuring a large green check mark. Sharoff says that packaging is an important factor that retailers need to focus on in order to push their private label programs.
“Packaging is changing,” he says. “There was a time when packaging’s sole purpose was to make sure that the ‘liquid didn’t drip out.’ That isn’t the role of packaging anymore, now the packaging is intended to show off the inside product or to find a new way to cook the product without having to take it out of the package.”
Today’s consumers are more health conscious than they have been in previous years, but they are still looking for big flavors. In fact, bold flavors are a huge trend among Millennial consumers, observers say. This includes unique and creative items as well as foreign culture-inspired offerings.
Observers say the products that are growing the best fill small niches. These include ethnic foods, foods for appetizers or hors d’oeuvres.
“You won’t see it in the statistics but where you see it is inside the stores,” says Sharoff. “When you walk down the aisles you see pasta, peanut butter and cold cereal but at the same time you see chicken Kiev or Chinese broccoli with bamboo shoots. To me, that’s what makes private label successful, not the fact that you can buy an excellent store brand cereal or peanut butter.”
Another way to get consumers excited about store brand products and attract them to trendy flavor profiles is to introduce limited edition items that will catch consumers’ eyes.
Ahold USA’s Limited Time Originals program started three years ago with Pumpkin and has since been expanded to include Bacon, Maple; Limoncello; Honeycrisp Apple; and Holiday with peppermint, gingerbread and other flavors.
“Our customers absolutely love it,” says Juan De Paoli, senior vice president, brand management and own brands at Ahold USA, based in Carlisle, Pa., a company of Ahold-Delhaize. “It has brought us incremental sales and consumer satisfaction. Shoppers are buying items they were not planning to buy.”
In most stores, Limited Time Original products are merchandised in a central display area. “The barbecue sauce doesn’t go into the barbecue sauce aisle; it sits with the Limited Time Original products,” De Paoli says.
Each program typically runs about eight weeks with four weeks of intense marketing, two of limited marketing and two of “cleanup” where items are sold down to make way for the next flavor wave, De Paoli says. Ahold USA works closely with its private label suppliers to develop proprietary products, he adds.
“Throughout the promotion consumption actually increases,” De Paoli says. “The average initial purchase is two items and then goes up. Sales are increasing from beginning to middle to end of the event, and from event to event.”
Sustainability in Private Label
In addition to seeking out products that are good for their bodies, consumers are becoming more concerned about the impact the items they purchase have on the environment. Retailers are starting to pick up on these concerns and are moving their private label programs toward a larger focus on sustainability. That includes featuring more locally-sourced products.
“Consumers are seeking more locally-sourced items in all departments delivered to them through means and in packaging that meets higher standards of sustainability,” Damrath says.
For example Kroger, as well as many other retailers, recently rolled out a line of cage-free eggs. The company also offers cage-free eggs under its popular Simple Truth and Simple Truth Organic brands. In 2015, 15 percent of the eggs Kroger sold were cage-free compared to the industry average of 9 percent, company officials say. In March, Kroger announced its goal is to transition to a 100 percent cage-free egg supply chain by 2025.
Wegmans is developing packaging that has its own sustainability claims, such as a new jar for their Wegmans “Food You Feel Good About” pasta sauce. The jars are made from lighter weight PET plastic, which is shatter resistant, lighter in weight than glass—and can therefore be shipped to stores with less fuel—and more widely recycled than glass.
—with contributions from Richard Turcsik
Paving the Way for Private Label
The Private Label Manufacturers Association’s (PLMA) 37th Private Label Trade Show will be held at the Rosemont Convention Center in Rosemont, Ill., from Nov. 13-15. Private label manufacturers from around the world will congregate to display their newest innovations.
Brian Sharoff, president of New York-based PLMA, says attendees can expect to see all types of food, health and beauty and household products at the show. Some trends to look out for are innovations in fresh products and items that are ready to heat or serve.
“The PLMA shows reflect the growth and the way in which private label has turned into store brands over what is nearly 40 years, and that’s exciting because when I look at the show and I see the history of the industry and I see that it has been a winning industry,” he says.
Below is a small sampling of what will be on display:
Berner Foods
Berner Foods specializes in dips, Alfredo sauces, aerosol cheese and beverages. The Dakota, Ill.-based company will be highlighting its dips and beverage capabilities.
Todd Mullane, vice president, private label sales, says Berner has been challenged by retailers to provide better-for-you dip solutions and has taken on that challenge. The company has created a lineup of product offerings that eliminate many ingredients that are perceived as harmful or unnecessary. As for beverages, Berner will present a vast array of coffee beverage offerings in multiple sizes of bottle and cans.
“In visiting in our booth, you will get a chance to meet an organization looking to partner with retailers all over the world to create great quality products that fit the needs of your private brands program,” Mullane says. “We are willing to work with you to create what you want when you want it.”
Cascades Tissues
Cascades Tissues will be showing off its full range of retail tissue products, from its 100 percent recycled to its virgin TADe highest quality. The Quebec, Canada-based company will present its paper towel offering and its new on-trend premium conventional paper in regular and mega rolls.
“Visitors will be able see and review our wide range of products and most importantly, will have the opportunity to meet with our very knowledgeable sales and marketing teams who will be available to share valuable information about Cascades, our latest innovations and investments and the key tissue trends in the market,” says Mylene Boucher, director
of marketing.
Distant Lands Coffee
Distant Lands Coffee, a Renton, Wash.-based farmer-first vertically integrated specialty coffee company that grows, mills, sources and roasts premium 100 percent Arabica coffee, will be presenting ground, whole bean and single-serve cup private label products. The offerings are sourced from company-owned farms in Costa Rica and Colombia, and select partner farms and mills around the world.
Ko Murase, senior vice president of sales and marketing, says Distant Lands’ three pillars of success (farming and milling, sustainability and social responsibly, and deep rooted global value chain), which are the cornerstones of its business, is what sets it apart from the rest.
“We will have highly seasoned sales personnel on sight at PLMA ready to introduce you to the Distant Lands experience,” he says.
Furlanis Food Corp.
Furlanis Food Corp. will be bringing the bread to the PLMA show. The company, which specializes in value-added bread, will be highlighting a wide variety of breads and biscuits. Classics like its garlic Texas toast and new innovations, like fire-roasted cornbread biscuits will be on display.
Marisa Dominutti, community and marketing associate for the Mississauga, Ont., Canada-based, company, says she thinks visitors to the Furlanis’ booth will be surprised by the wide selection of quality products they can produce for retailers’ private label programs.
Mother Parkers Tea & Coffee
For more than 100 years, Mother Parkers Tea & Coffee has been providing coffee and tea solutions to retailers across North America. At this year’s PLMA show the Mississauga, Ont. Canada-based company will be showing off its recyclable single-serve cup solution.
“Ecocup keeps blends fresh with its recyclable air-tight cup and lid and allows more flavor to flow into the cup with the patented flavor-max filter,” says Jerry Gilbert, vice president of retail sales. “We will also be featuring our tea blends including a variety of whole leaf herbal, black and green teas.”
Retailers that visit the booth will have the opportunity to see and sample some of the company’s best blends in both coffee and tea formats and review its extensive new formats including Ecocup.
Trilliant Food, Beverage & Nutrition
In addition to serving a variety of coffee beverages at its Café and providing live musical entertainment throughout the entire PLMA show, Trilliant Food, Beverage & Nutrition will be sharing more than 50 new product solutions including its new Nespresso compatible capsules in several profiles and flavors.
“Trilliant will be showcasing a wide variety of new, innovative products at this year’s show. That is what our customers and partners have come to expect and we plan to exceed their expectations again,” says Billie Rice, vice president of sales for the Little Chute, Wis.-based company.
Rice says the new Nespresso compatible capsules are a part of the coffee category that has seen enormous growth, mostly driven by Millennial consumption.
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