H-E-B PROMOTES PRIVATE-LABEL MILK, GROCERIES

ROSEANNE HARPER

SAN ANTONIO - H.E. Butt Grocery Co. here recently promoted private-label milk and national brands of groceries in the retailer's first bottletopper coupon promotion.

With the purchase of three different national-brand products featured on a colorful, bottletop "ringer" coupon, customers were offered as much as $3 off the purchase of a gallon of H-E-B private-label milk.

While it's too early to calculate redemption results, a source close to the chain said activity generated by the promo was brisk enough to spur planning for similar promotions to be run in 2007.

The H-E-B effort, coordinated by Promopoint Marketing, Tampa, Fla., and ConnectCommunications, Minneapolis, featured $1 off a gallon of H-E-B milk with the purchases of specific Kraft products. Three varieties of Oreo cookies, Maxwell House coffee and all varieties of Grape Nuts cereal items were featured on the coupons. For each of those items purchased, a customer saved $1 on a gallon of H-E-B milk, so if all three couponed items were purchased, a shopper enjoyed total savings of $3 on a gallon of milk.

Cookies and milk are a natural combination, and the other two items fall into the breakfast category. Bottletopper promotions often focus on a breakfast theme, but earlier efforts offered a $1 or cents off a brand X product with the purchase of a gallon of milk, either branded or private label.

The new twist of taking the cents or $1 off the private-label milk itself was a strategy first used last year by Grand Rapids, Mich.-based Meijer. Even though the $1-off coupons were for Meijer milk, the effort was funded by the national-brand manufacturers who participated in the couponing.

"It's unusual, taking the cents off the private-label milk itself," marketing analyst and consultant Jerry Dryer, Del Ray Beach, Fla., told SN at the time. "I don't know if it'll work better that way, but anything that sells more milk is good."

Indeed, more retailers are thinking of conducting similar promotions, said Mike Klabunde, president of ConnectCommunications.

"By switching the offer to save on the purchase of milk, the opportunity exists to create new users and at the same time trial of the participating brand, [thereby] increasing sales," Klabunde said. "With the savings on milk, it may get consumers to pick up additional gallons on the shopping trip and/or create a shift in market share during the promotion."

Milk is a mature category. Increasing sales is particularly difficult because so many households already are buying lots of the product, especially private-label milk, Klabunde added.

A promotion this spring was particularly successful for Ralphs Grocery Co., Compton, Calif. That effort, in more than 200 of its stores in the Southern California division, bolstered the launch of Sara Lee whole-grain bread. The coupon surrounding 1.5 million gallons of milk in Ralphs dairy cases offered $1 off any package of Sara Lee Soft & Smooth whole grain, white bread with the purchase of a gallon of milk. Results were excellent, according to Sara Lee officials.

With 7% coupon redemption, sales of the bread during the promo rose four times over base unit sales, officials said. In some cases, there were out-of-stock situations that had consumers taking the coupons to a competing chain's stores to redeem them.

Ralph's plans to participate in more bottletopper promotions in the coming year, Klabunde said.