PRIVATE LABEL AND BEYOND

AMITY K. MOORE

Wyeth Nutritionals, St. David, Pa., has expanded beyond private-label offerings to a "master control label" under the Babymil and Babysoy brand names.

As reported in SN, Wyeth Nutritionals began manufacturing private-label formula for chains like Kroger Co., Food Lion, Albertson's and Wal-Mart last year. In addition, the marketer of Wyeth's store-branded formulas -- PBM Products, Lakehurst, N.J. -- partnered with the Children's Miracle Network, Salt Lake City, by pledging 0.5% of its gross sales from retailers for one year to the CMN's affiliated children's hospitals. As of Nov. 2, 1998, formula sales had contributed $75,000 in donations, according to the CMN.

Now PBM has created Babymil and Babysoy brand names and is again working with the CMN to implement in-store programs to market these new items. For example, shelf-talkers will post information on Babymil and Babysoy and store-branded products, along with the CMN tie-in.

A booklet, titled "Your Baby's First Year," will provide tips on infant care in addition to coupons for related products. The pamphlet will be sold in retail outlets, with a percentage of the proceeds going to the CMN.

Of the retailers SN interviewed, only Copps Corp., Stevens Point, Wis., is carrying the Babymil and Babysoy products. Wade Bertram, category manager at the independent grocer, said PBM offered him his own label, which he declined.

"We'll just go with theirs [because PBM] would have to go through IGA in order to get the IGA label. At this point, I don't think IGA has a private label for [baby formula]," he said.

According to information released by the CMN, the Babymil and Babysoy products, as well as other store-branded formulas, "allow consumers up to 20% savings over leading brands, while generating three to five times the profit for the retail outlet."

Other chains that have added private-label brands from PBM are Shaw's Supermarkets, Finast Friendly Markets, Tops Markets, Certco and Spartan Stores. Although SN spoke with Spartan, the chain would not comment on its private-label program.

Retailers had mixed reviews on private-label formula products. John Churchill, frozens, grocery and dairy merchandiser and buyer at Russo's Stop & Shop, Chesterland, Ohio, said he thinks parents would be wary of a store-brand formula.

"You're going to make sure that you're buying the one that's recommended, the one that you know has a proven track record," he said.

Lynett McCoy, grocery buyer at Minyard Food Stores, Coppell, Texas, voiced similar concerns. "People are very conscious of what they're buying, formula-wise, for their babies. I don't see strong sales coming in on anything other than the items that the doctors recommend and [those being advertised] in pharmacies."

Ron Stahl, director of nonfood for Norristown, Pa.-based Genuardi's Family Markets, thought that people would buy a cheaper product. "Regardless of whether we sell that product under cost or not, it's still fairly expensive for somebody to feed a baby with baby formula. I think private label could buck some of that," he said.

Slow to earn shelf space, store-brand formula only accounts for 0.3% market share, according to Phil Smith, vice president of procurement at Certified Grocers of California, Los Angeles. But if Women, Infants and Children programs were to support private-label baby-formula products, that percentage would increase dramatically, Minyard's McCoy noted.

Some states already allow for private-label WIC purchases, but not all retailers favor that, according to a study prepared in November 1998 for the Food Marketing Institute, Washington, by Willard Bishop Consulting, Barrington, Ill.

"When the list of approved private-label manufacturers is limited, retailers who don't carry those manufacturers' products are disadvantaged," the study said.