PRIVATE-LABEL SODA SALES CONTINUE TO POP

STEPHANIE FAGNANI

NEW YORK -- While overall cola sales have been relatively flat the past couple of years, private-label performance in the soft-drink category has been popping.

Market research firm Beverage Marketing Corp. here reported that volume sales of private-label soft drinks in the United States were healthy in 2003, despite sluggish overall volume sales in the category. In fact, Cott Corp., Toronto, a leading private-label beverage manufacturer, saw volume increase by 12.6% in 2003, buoyed by increases to its distribution channels. Conversely, Coca-Cola Co., the leader in terms of millions of cases sold last year, saw its share of volume drop by 0.2%.

The increased quality of private-label sodas and their price value compared to national brands keep sales hot at K-VA-T Food Stores, Abingdon, Va., according to Rick Kelly, category manager of beverages.

"Private label is a major, major part of our soft-drink category portfolio and is increasing in penetration almost on a weekly basis. The quality is just as good as the national brand, and the price difference for the consumer and the value are incredible, especially on the cans," Kelly told SN. "In most cases, our can packages of private-label soft drinks are half the retail on an everyday basis as that of the national-brand guys."

The overall soda category is promoted every week at K-VA-T stores, and promotions feature two national brands and a private-label soda in varying package sizes.

"We try to allocate almost as much merchandising [to private label] as we do the national brands. That's a big part of our category strategy," Kelly added.

Les Gyerman, direct-store-delivery buyer at Heinen's Fine Foods, Warrensville Heights, Ohio, was anxious to bring in a private-label soft-drink line when he took over the department about a year ago because he had witnessed the growth in that area and thought there was room for additional gains. Instead, with only 16 stores under the Heinen's banner, he decided to try some other lesser-known brands, ultimately choosing to take on Cotton Club as his store's "private" label.

"I use Cotton Club. That's my version of a private label," Gyerman told SN. "Cotton Club is an old, old Cleveland brand, which not too many people carry here. It's done very well for us so far. The growth of my private label has increased a lot because we used to get it through a distributor, but I brought it in-house. I warehouse this product now and you get a better cost, you can put a better retail [on it], and I can promote it as much as I want. We're doing very well with it. We already surpassed last year's numbers in the first four months."

The Private Label Manufacturers Association, also based here, reported in its 2004 Private Label Yearbook that sales of store brands in U.S. supermarkets are on the rise, jumping 2.2% last year, vs. the 1.4% sales growth witnessed in the national-brand segment. PLMA figures are based on statistics from Information Resources Inc., Chicago. Retail sales of store-brand foods alone grew by 5.8% in the supermarket channel from 2002 to 2003, according to the PLMA report.