AMERICAN INTRODUCING A THIRD-TIER PRIVATE LABEL

RICHARD TURCSIK

SALT LAKE CITY -- American Stores Co. here is introducing a new line to its family of private labels.

The third-tier Value Wise brand is replacing American's generic Econo Buy brand and contains items across most grocery categories, including canned goods, pasta, dried fruits and household cleaners.

Value Wise complements American's upscale President's Choice premium private label that is marketed under license from Loblaw Cos., Toronto, and its store brands, mid-priced private labels designed to be of equivalent quality to most national brands.

Officials at American Stores did not return phone calls about the label, but Ed Spragg, vice president of sales at American's Acme Markets division in Malvern, Pa., said the Value Wise label is being introduced corporatewide.

"Value Wise is a new private label that is replacing the Econo Buy brand. It is a very new label and we just broke it in Feb. 14," he said.

The Value Wise brand is distributed by National Procurement & Logistics Co., a holding company here.

"American Stores is a company that has moved in the direction of centralized buying in Salt Lake City," said Jonathan Ziegler, a securities analyst with Salomon Bros., New York.

Ziegler said the new label segments American's private label into three tiers and has potential to fill a niche in the grocery aisle.

"This is something where they can probably make a nice piece of change on it and also

keep the customer happy with lower prices," he said.

"Value Wise could be a great defensive move to cushion any sign of trading down or recession that may arise. Most of the industry had moved away from generic labels years ago. Maybe because almost everyone had moved away from generics American sees it as being a real opportunity for being exclusive. That gives the customer another reason to shop at Acme or their other stores," Ziegler said.

On the shelves, the mostly white background with red and forest green print of the Value Wise label stands out dramatically from the glossy President's Choice label and the photo-enhanced labels of the stores' private brands.

In American's Acme Markets division, Value Wise is gradually being phased in as the Econo Buy brand is depleted. In a northern New Jersey Acme store visited by SN last week, approximately 15 stockkeeping units of Value Wise were on the shelves, in addition to another five or six SKUs of Econo Buy products. Value Wise items were placed on the shelf with no fanfare, such as different color shelf tags or shelf talkers that often alert shoppers to new products.

Items incorporated under Value Wise included 25-pound bags of wild bird seed; 24-ounce bags of California raisins and prunes; mayonnaise; canned peas, corn, green beans and apple sauce; elbow macaroni and spaghetti; plastic cups; aluminum foil; bleach, and tagless tea bags. The Econo Buy brand was still found on keg ketchup, vinegar, chunk light tuna, dry roasted peanuts and iced tea mix canisters.

In most instances, Value Wise was priced about 20 cents below or equal to the Acme brand, and offered substantial savings over the national brands.

For example, Value Wise mayonnaise was priced at $1.19 a quart, while Acme mayonnaise was $1.39 and Hellmann's was $2.79. A 2-pound box of Value Wise macaroni was $1.09, compared with 89 cents for a 1-pound box of Mueller's. Value Wise and Acme aluminum foil were both 69 cents for a 25-square-foot box, while Reynolds Wrap was 99 cents. Value Wise and Acme bleach were 99 cents a gallon, while Clorox was regularly priced at $1.29, but was on sale for 69 cents a gallon.