Store Brands - Jan 2018 by ensembleiq

Fresh: The gateway to shopper loyalty

The customer experience: A vital store brand

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Volume 40 No. 1 January 2018

DEPARTMENTS 6

Editor’s Take

Viewpoint

Around the Industry

Getting Social

End Cap

CONTENTS

COVER STORY Ready for take off Private brands poised for growth in 2018 and beyond

CATEGORY INTELLIGENCE 38

Coffee and tea

Oils and vinegars

Nuts and trail mixes

Sauces, marinades, salsas Paper products

27 FEATURES 24 TRENDING

31 TOTAL STORE

The smell of success

At your service

Fragrance has become an essential characteristic for a wide range of private-branded consumer products

The customer experience is an intangible store brand that can do wonders for a retailer’s image. Just ask Publix and Wegmans

27 FOCUS ON FRESH

34 PACKAGING

Fresh starts

Stand out from the crowd

From produce and bakery to meat and dairy to innovative engagement opportunities with customers that transcend specific departments, the store perimeter serves as a ‘gateway to shopper loyalty’

Retailers are differentiating their private brand beverages with unique labels, inventive container shapes and sustainable packaging materials

Store Brands (ISSN-0190-9851; USPS # 0488-370) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631. Subscriptions: One year, $95; two years, $146. One year, Canada $112; two years, Canada $150, One year, foreign $175; two years, foreign $285. Payable in advance with a bank draft drawn on a US bank in US funds.Single copies $10, except foreign, where postage will be added. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or(877) 652-5295. Canada Post: Canada returns to be sent to IDS, P.O. Box 456, Niagara Falls, ON, L2E6V2. Periodicals postage rates paid at Deerfield, IL and additional mailing offices. Printed in USA. POSTMASTER: send all address changes to Store Brands PO Box 1842 Lowell MA 01853. Copyright 2018 by EnsembleIQ. All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI, 48106. The contents of this publication can not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for claims and representations. 4

Store Brands / January 2018 / www.storebrands.com

EDITOR’S TAKE Business Intelligence for an Evolving Market

8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631 (773) 992-4450

Senior Vice President/Group Brand Director 917-859-3619

SEEKING OUT STORE BRANDS

Katie Brennan

kbrennan@ensembleIQ.com

EDITORIAL Editor-in-Chief

Lawrence Aylward

(330) 635-2586

laylward@ensembleIQ.com

Managing Editor

Carolyn Schierhorn

(224) 231-6359

cschierhorn@ensembleIQ.com

Contributing Writers

Here’s an eye-popping statistic from Acosta’s recent “Trip Drivers: Top Influencers Driving Shopper Traffic” report: Fifty-three percent of grocery shoppers said they shop retailers based on the retailers’ private brands, an increase from 34 percent when Acosta asked the same question in 2011. The statistic tells us a few things about the state of store brands these days: • Retailers are definitely increasing their development of innovative, on-trend and exclusive products to differentiate from their competition. Interestingly, Acosta also reported in the study that 67 percent of shoppers visit more two to three retailers weekly for groceries, a statistic that reaffirms shoppers are going to retailers for certain products, including store brands. • The 19 percent increase in consumers who shop retailers for their private brands occurred during a six-year period when the economy performed pretty darn well. This says that these shoppers don’t view the private brands they are going from store to store to purchase as low-quality, cheap and dare I say “generic.” • Innovative store brands will absolutely lead to loyal and trusting shoppers. Even if shoppers are going to a retailer for two or three private-branded products, chances are they will try the retailer’s other store brands based on the trust they have for the products they have already tried. • Clearly, even though overall sales of store brands have been relatively flat the last two years at grocery, the innovative and exclusive store brands are literally getting consumers to come back for more, which bodes well for the overall future of private brands.

Rich Mitchell, Dana Cvetan

ADVERTISING & SALES Associate Brand Director Suzanne Caputo (201) 855-7628

scaputo@ensembleIQ.com

Regional Sales Manager

Lisa Adams

(224) 265-5486

ladams@ensembleIQ.com

CUSTOM MEDIA Director of Client Services, Enterprise Solutions Kaeli Elisco (224) 632-8221

kelisco@ensembleIQ.com

AUDIENCE DEVELOPMENT Director of Audience Development

Gail Reboletti

greboletti@ensembleIQ.com

Audience Development Manager (215) 301-0593

Shelly Patton spatton@ensembleIQ.com

List Rental

The Information Refinery

(800) 529-9020

Brian Clotworthy

Subscriber Services/Single-copy Purchases 978-671-0449

EnsembleIQ.com@e-circ.net

ART/PRODUCTION Director of Production Kathryn Homenick (973) 358-4875

khomenick@ensembleIQ.com

Advertising/Production Manager (973) 607-1322

Pat Wisser pwisser@ensembleIQ.com

Creative Director

Colette Magliaro cmagliaro@ensembleIQ.com

REPRINTS, PERMISSIONS AND LICENSING Please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295.

NEW YEAR BRINGS NEW CONTENT This month, Store Brands magazine debuts two new monthly departments: “Focus on Fresh” and “Total Store.” Just like you must introduce innovative and on-trend private-branded products, we must do our part to keep up with industry happenings. Retailers are making headway with store brands in the fresh department and our “Focus on Fresh” monthly feature story will zero in on various segments of the category and what retailers are doing with private brands (meal kits, anyone?) to strengthen their store brand programs and attract even more shoppers for the items they can’t find anywhere else. “Total Store” will focus on the intangibles, from customer service to convenience to product education, to help retailers define their overall private-branded programs. After all, it’s arguable that a retailer’s image is perhaps its most important store brand of all. Staying with that thought, I’d like to invite all of you to contact me 24/7 to offer your ideas on how we can better serve you. To put it succinctly, we are in the useful content business. Our aim is to address and satisfy your needs, much like you do with your customers. So don’t hesitate to contact me at 330-635-2586 or laylward@ensembleiq.com. Here’s to a prosperous new year.

EVENTS • MARKETING • DIGITAL • RESEARCH • CIRCULATION CORPORATE OFFICERS Executive Chairman

Alan Glass

Chief Brand/Operating Officer

Richard Rivera

Chief Business Development Officer & President, Ensemble IQ Canada

Korry Stagnito

President and Executive Director Path to Purchase Institute

Mike McMahon

President of Enterprise Solutions/ Chief Customer Officer Chief Digital Officer

Ned Bardic Joel Hughes

Chief Human Resources Officer

Jennifer Turner

Lawrence Aylward, Editor-in-Chief laylward@ensembleIQ.com

2015

Store Brands / January 2018 / www.storebrands.com

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VIEWPOINT

By Jordan Rost

Store brand produce accounts for only

11 percent of produce sales, leaving plenty of room to grow

Consumer preferences will continue to be key driver for store brands in 2018 As we kick off a new year, it’s a great time to evaluate strategies that worked and those that didn’t in 2017 and determine where there is continued opportunity for private brands growth across the retail and fast-moving consumer goods (FMCG) landscape. Last year, consumers paid more attention to how they spend their money, particularly when it comes to store brand products. Almost half of Americans (47.97 percent) said they would “buy more store brands if more products were available,” exhibiting significant demand for private brand products. This sentiment is apparent in the sales data from the past few years. Private brands have posted a compound annual growth rate of 1.7 percent over the past four years, ahead of the 1.4 percent posted by branded products. The difference is even greater over the past year: Private brands gained 0.7 percent in sales, while branded products decreased 0.3 percent. But it’s worth digging deeper into what, and who, are driving the growth behind private brands. Despite the strength of the private brands market, usage varies across consumer groups. Surprisingly, however, purchasing trends contradict the common perception that lower-income households are most likely to gravitate toward store brands. In fact, only 10.8 percent of U.S. consumers in households that earn more than $100,000 per year believe that private brands are “really meant for people who are on tight budgets and can’t afford the best brands.” Comparatively, almost 21 percent of consumers in the under $20,000 per year bracket agree with this statement. Familiarity and comfort with store brands also varies by ethnicity. Compared with the overall U.S. population, for example, African-Americans, AsianAmericans and Hispanics are more

Store Brands / January 2018 / www.storebrands.com

likely to avoid store brands (24 percent, 82 percent and 25 percent more, respectively) simply because they’re not familiar with them. However, the data pertaining to ethnic preferences highlights an opportunity to educate certain consumers groups about the quality and availability of store brands. At the same time, this data highlights key cohorts of consumers that are comfortable and loyal to the branded products they know and love. In an increasingly multicultural society, the market is full of opportunity to provide new and innovative products to consumers. On top of that, 32 percent of Americans said they would pay more for a brand that understands multicultural needs, and nearly half of American adults said they would shop more at a retailer that offers a wider selection of multicultural products, something for private brand manufacturers to keep in mind as they look to 2018 and beyond. While name brands may not be top of mind when it comes to specific categories such as produce, in reality, brands monopolize the $61.8 billion produce category. Store brand produce accounts for only 11.6 percent of produce sales, leaving plenty of room to grow. In fact, according to Nielsen’s latest Category Shopping Fundamentals report, 55 percent of consumers don’t have a specific brand in mind before they purchase fresh produce. For private brand manufacturers, managing product portfolios to achieve growth and profitability must appeal to their retail partners. Make it a standard practice to have facts supporting why your brands are important in driving sales, conversion, shopping trips, shopping baskets and/or in connecting with shoppers. For store brand retailers, make sure you’re connected with categories that can drive sales and growth. Regardless of channel, store brands need to keep consumers at the center of every strategic initiative throughout the year. Focus on both short- and longterm shoppers and the purchase decisions most important to them in order to remain engaged and provide store brand products that provide value and long-term resonance after consumers leave the store — throughout the rest of the year and beyond. SB Jordan Rost is vice president of consumer insights for New York-based Nielsen.

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AroundtheIndustry

Webinar explores trends boding well for breakout growth of private brands Store Brands’ presentation looks at fastest-growing categories, organic and free-from products, and e-commerce By Carolyn Schierhorn

What product categories show surprising growth potential for private brands? Can organic and free-from products invigorate the center store? How can retailers better leverage e-commerce to promote their store brands? These were among the topics addressed during Store Brands’ Dec. 6 webinar, “Private Brands and Breakout Growth: Five Trends to Watch.” The webinar panelists included Mark McKeown, client insights principal for IRI, a Chicago-based market research firm; Todd Maute, a partner with New York-based brand agency CBX; and Heidi Dethloff, vice president of marketing for Beaverton, Ore.-headquartered technology solutions developer Digimarc. The event was sponsored by Digimarc and moderated by Lawrence Aylward, Store Brands’ editor-in-chief. Though grocery retailers traditionally have concentrated more on food and beverage categories with their store brands, the nine fastest-growing subcategories for private brands in terms of dollar sales percentage increases are non-food segments, according to IRI. McKeown was struck by the fact that auto fluids ranked fourth on IRI’s store brand top growth 100 list, a $77.3 million segment that climbed 80.2 percent over the past year, and that automobile waxes/ polishes ranked 17th, reflecting a 37.9 percent increase over the previous year for the $17 million segment. And ranking 86th, the $111.8 million segment of automotive treatment increased 10.1 percent in sales over the previous year. “When you look at the rollup of a few 10

of the key categories for your automobile, that’s over $200 million in private label sales,” McKeown pointed out during the webinar. “I wouldn’t have normally thought consumers would be going to [the retail channels surveyed by IRI] for automobile supplies,” he acknowledged. Those retailers include grocery stores, drugstores, mass merchants, military commissaries and, to a lesser extent, club and dollar stores. On the food and beverage front, retailers are focusing on fresh and freshprepared food, but the center store is not dead. “One of the biggest ways to wake up the center store may be organic and freefrom,” Aylward observed, asking McKeown to comment on this topic. “Right now, private label has a higher share of organic purchases from consumers than in mainstream,” McKeown said. “That’s been consistent in the last three years [for which] we looked at the data.” What’s more, retailers have maintained a “40 percent price premium” for their store brand organic products over the past few years, whereas the price premium for national brand organic products has decreased from 61 percent to 40 percent, McKeown said. “We can’t ignore the consumer trends that people are trying to eat healthy and eat better,” added Maute, noting that this includes selecting “clean label” or natural products that have fewer ingredients, less added sugar and lower sodium. “I think that organic products are becoming more and more mainstream,” he continued. “And there are categories

Store Brands / January 2018 / www.storebrands.com

SHORT TAKES Ahold Delhaize USA officially begins Ahold Delhaize USA officially began operation on Jan. 1. Ahold Delhaize USA is the parent company for all of Ahold Delhaize’s U.S. companies, including its local brands Stop & Shop, Food Lion, Giant, Hannaford, Giant/Martin’s and Peapod, as well as Retail Business Services (RBS), a U.S. shared services company providing support to the brands. Ahold Delhaize USA is led by CEO Kevin Holt, who will report to Dick Boer, CEO of Zaandam, the Netherlands-based Ahold Delhaize. “Combining the parent companies of the U.S. brands and RBS is the natural next step in our brand-centric strategy in the U.S,” Boer said. “Kevin is an outstanding leader with extensive food retail experience and a great choice to guide our U.S. businesses through this time of continuing change and evolving customer expectations.”

7-Eleven launches cosmetics line Irving, Texas-based 7-Eleven is targeting on-the-go millennial women with its new private brand cosmetics line, Simply Me Beauty, which the retailer describes as “affordable” and “fashion-forward.” The assortment consists of 40 items, each priced between $3 and $5. The collection of cosmetics and cosmetic accessories for the face, eyes and lips includes offerings for day or night use, different complexion types and skin tones.

Dollar General to open 900 new stores Goodlettsville, Tenn.-based Dollar General Corp. said it plans to execute about 2,000 real estate projects in 2018 comprised of 900 new stores, 1,000 store remodels and 100 store relocations. “We continue to believe that investing in the business through our high-return new store growth is the best use of our capital to help drive long-term shareholder value,” said Dollar General CEO Todd Vasos. “Our new store growth is complemented with a significant increase in our store remodel program

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AroundtheIndustry where [organic is] becoming an expectation because consumers do not want all of the bad farming practices or pesticides or GMOs going into products.” Digimarc’s Dethloff said that as retailing moves into an omnichannel commerce model, what consumers want is “a unified experience.” As she noted, 75 percent of consumers want a consistent experience regardless of what channel [they’re using], whether a website, an in-store or in-person experience, or social media or a mobile device. Dethloff stressed that store brands have the potential to connect with modern tech-savvy, data-driven shoppers “front and center.” These consumers “do not have that linear shopping experience that we used to have,” she said. “They have infinite choices in the marketplace. But they are also time-challenged.” How can retailers connect with consumers across all channels and promote their private brands? “Make it personal,” Dethloff emphasized. “Make it relevant. Make it engaging.” SB8”

Poll: Consumers ‘fiercely loyal’ to shopping food stores While brick-and-mortar stores aren’t going anywhere, retailers still need to watch online grocery closely By Lawrence Aylward

I used to wonder why the U.S. mail truck cruised down our street and others on Sunday morning. Perhaps you did too. But we figured it out — Amazon. The U.S. Postal Service has a contract to deliver Amazon packages seven days a week. When I drive down my street on other days, I see boxes and boxes stacked on doorsteps. My assumption is my neighbors have embraced online shopping — even getting groceries delivered to their homes through Amazon, Walmart and other retailers offering the service. But that might not be the case, according to a new poll from Reuters/Ipsos that quashes the notion that online grocery and delivery has taken off like coconut water. The survey said that most U.S. 16” shoppers are “fiercely loyal” to shopping

at food stores, calling them better than online options. According to a poll of 8,600 adults taken last summer, 75 percent of online shoppers said they rarely or never buy groceries online. Even among online shoppers who make recurring purchases at least weekly, nearly 60 percent said they never buy groceries online or do so just a few times a year. The poll also found that about 60 percent of all adults said their local food markets win on price, selection, quality and convenience — compared to only 3 percent for online sellers winning in those categories. The takeaway: Brick-and-mortar grocery stores aren’t going the way of fax machines.

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AroundtheIndustry SHORT TAKES Continued Amazon’s acquisition of Whole Foods Market and subsequent selling of Whole Foods products online is supposed to shake up the grocery industry. Amazon’s acquisition did help sink the stocks of several grocery retailers as many pundits hailed the acquisition as the beginning of a revolution of sorts in the business. The pundits warned Amazon’s grocery competitors to sell their products online to keep pace with Amazon — or else. According to GlobalData Retail, Amazon’s purchase of Whole Foods took its grocery market share in the U.S. from 0.19 percent to 1.4 percent. Walmart owns 14.46 percent and Kroger 7.17 percent, according to GlobalData Retail. Amazon is not a major player in the segment. But it’s early, and don’t think for a moment that Amazon will go back on its grand plan to become a major player in grocery by utilizing brick and mortar and ecommerce. Other retails are also investing in ecommerce. Walmart, the nation’s largest grocer, is adding 1,000 online grocery locations next year and expects total ecommerce sales to grow 40 percent in 2018. Also, online sales are growing overall as consumers get more comfortable with ecommerce. And with Amazon and Walmart pushing the issue, all grocery retailers need to watch the segment closely. So do the folks at the U.S. Postal Service. If online grocery does 8”bigger trucks. SB take off, they just might need some

from fiscal 2017 that we view as an investment to enhance and consistently deliver on our brand promise to help our customers save time and money every day.”

Wal-Mart Stores to be known as Walmart Wal-Mart Stores has changed its name to Walmart Inc. to reflect its growing status as an omnichannel retailer. The Bentonville, Ark.-based said the change, which becomes effective Feb. 1, chiefly demonstrates the company’s growing emphasis on serving customers seamlessly however they want to shop: in stores, online, on their mobile device, or through pickup and delivery. “While our legal name is used in a limited number of places, we felt it was best to have a name that was consistent with the idea that you can shop us however you like as a customer,” said Doug McMillon, Walmart president and CEO.

Target to buy online delivery provider Shipt Minneapolis, based Target Corp. is buying grocery delivery provider Shipt for $550 million. Amping up its delivery capabilities to better compete against Amazon, Target said it expects to offer same-day delivery at roughly half of its stores by early this year and at nearly all of its locations by the end of 2018.

Supervalu expands free-from ingredient list Supervalu increased its list of free-from ingredients by about 40 percent in its Wild Harvest private brand of food and household products. The Eden Prairie, Minn.-based retailer said Wild Harvest food products are now free from more than 140 undesirable ingredients. SB

A LATTE.

/ January 2018 / Store Brands For more informationwww.storebrands.com visit: bernerfoodandbeverage.com

GETTING SOCIAL

Q A with Jim Holbrook CEO of Daymon

How did you come to the world of private brands? I started working in private label a long time ago — on the manufacturing side via Ralston Purina and Ralcorp. Describe the private brands industry in one word. Dynamic. What do you like most about the industry? What I like most is that it is now becoming the center for innovation. What do you dislike most about the industry? There is inconsistency of commitment by some retailers and manufacturers. What one great thing does the industry have going for it? Growth!

Jim Holbrook says he’s stubborn, but that’s not a bad thing.

What is the industry’s biggest challenge? Shelf space. Who is your hero and why? Roberto Clemente. He was a great baseball player as well as social activist back in the day. What trait in yourself do you attribute most to your success? Stubbornness.

Store Brands / January 2018 / www.storebrands.com

What is the biggest obstacle you have ever overcome? Putting a company into and then back out of Chapter 11. What’s the best advice someone ever gave you? “There are no answers, only choices.” It’s 5 o’clock (or later), what do you do for fun? I would be golfing, fishing, hunting, running, paddle boarding, hiking or drinking. You have a week off. Where do you go and why? Sea Island, Ga. — for all of the above reasons. If you were born 100 years ago, what would you do for a living? I’d be one of Teddy Roosevelt’s Rough Riders. What song do you love to crank up in the car? I’m a Bruno Mars’ fan. What’s the best book you’ve ever read? Tony Robbins’ “Awaken The Giant Within.” SB

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COVERCOVER STORYSTORY

Private brands poised for growth in 2018 and beyond onsumers might be loading their shopping carts with more store brands this year. Several private brand prognosticators predict that private brands sales will surge among consumer packaged goods in 2018 and beyond. “You are going to see private label sales increase at a faster rate in the next five years than in the past five years,” Diana Sheehan, director of Kantar Retail’s grocery channel research team, said in a recent interview with Store Brands. The past year saw several retailers investing in their private brands, including Southeastern Grocers, The Kroger Co., Aldi, Sam’s Club, Costco Wholesale, Walmart, Target, Ahold Delhaize USA, Albertsons, ShopRite and others. Jim Wisner, a private brands consultant and president of Libertyville, Ill.-based Wisner Marketing Group, says store brands are now more popular than national brands. “We’re starting to get into a ramp-up phase, and I think it’s going to be really exciting,” he notes.

Store Brands / January 2018 / www.storebrands.com

Diana Sheehan, director of grocery channel research team, Kantar Retail

Don Stuart, co-founder of Wilton, Conn.based Cadent Consulting Group, which specializes in private brands strategies, says the time is ripe for “significant private brands acceleration” in grocery. “Since 1980, private label has been through peaks and troughs. Its share rises when there’s a recession and falls when there’s a recovery,” Stuart says. “Time and time again this has proven to be the case. Up until now.” Stuart believes a number of factors will contribute to the growth of store brands, even in a strong economy and with consumer confidence at a 17-year high. Todd Maute, a partner at New York-based brand agency CBX and a consultant for private brands, believes larger grocery retailers will soon begin devoting 25 percent to 30 percent of their business to private brands. “I think the level of commitment is in its infancy and will build pretty quickly,” he adds. Retailers’ commitment to private brands can be surmised in the quarterly conference calls between earningsreporting retailers and their industry analysts, Sheehan says. “If you look at the quarterly calls [with some of the] top retailers that sell groceries in the U.S., every single one of them are focusing on private brands [in the calls],” she adds. “It’s fascinating. They are putting as much focus on private brands as they are on e-commerce.” No doubt. In a recent conference call with investors, Mike Schlotman, Kroger’s chief financial officer, noted the “amazing potential” of Kroger’s store brands, called Our Brands, which grew more than national brands in the grocer’s second quarter. “Identical sales for Our Brands also outpaced identical supermarket sales,” Schlotman said. “The second quarter

brought strong sales and unit growth, with Our Brands representing 27.7 percent of total units sold and 25.4 percent of sales dollars, excluding fuel and pharmacy.” If there is a canary in the coal mine as to how store brands will perform this year, it could be Chep, an Atlanta-based provider of supply chain solutions and packaging materials, including pallets and containers. Vishal Patell, Chep’s vice president of retail supply chain solutions, says the company is seeing increased business opportunity with private brands. “Store brands are gaining a huge presence in the grocery sector,” he says. “We see store brands catching on more and more.”

Why they are bullish A recent study from Chicago-based market research firm IRI reveals that although total store brand sales are healthy overall, gaining sales of 2.5 percent in 2017, the grocery channel has seen momentum slide during the past few years. The IRI Consumer Connect study states that private brand dollar sales fell 1.6 percent in 2017 after dropping 3.2 percent in 2016 in the grocery channel. However, IRI’s research shows that the future appears favorable for private brands. Two-thirds of consumers plan to purchase private brands more frequently in the next several months. Among millennials and lower-earning shoppers, three-quarters expect to buy more store brands during that time frame. IRI reports that the market is transforming quickly, as assortment becomes broader and more targeted and new players enter the marketplace. “The transforming marketplace certainly warrants close monitoring,” Susan Viamari, vice president of Thought Leadership for IRI, said in the report. “As the players in the game change, existing players will

Kroger and Aldi are two retailers that continue to invest in different tiers of store brands.

www.storebrands.com / January 2018 / Store Brands

COVER STORY

Jim Wisner, president, Wisner Marketing Group

continue to evolve their private label strategies to protect and grow share. Private label is anyone’s game to win, and the winners will be those that stay in lockstep with the rapidly evolving needs, wants and behaviors of today’s CPG shoppers.” Aldi’s continued growth (the Batavia, Ill.-based deep-discount retailer will expand from 1,600 to 2,500 stores nationwide by the end of 2022) and Lidl’s continued expansion (the Arlington, Va.-based retailer plans to open hundreds of stores in the next few years) will not only heighten competition among grocery retailers, it will also increase awareness of private brands considering that Aldi and Lidl both offer a 90 percent assortment of private brands. “Any retailer that puts that much emphasis on its private-branded program lends itself to driving stronger consumer awareness,” says Doug Baker, vice president of industry relations, private brands and technology for the Food Marketing Institute. The retailers that have made strides by offering private brands that focus on quality products at a low price, including Aldi and Monrovia, Calif-based Trader Joe’s, have already impacted the popularity of store brands and will continue to do so, Baker adds. “As these retailers continue to grow their private-branded programs and deliver quality goods and a good experience with products, they continue to improve the consumer trust in those products and therefore have created a halo effect,” Baker says. “If I’m a strong private brand user from one retailer and I go to another retailer, I’m more willing to try that retailer’s private brands because I have had a good experience with the private brands I’ve purchased.” But retailers will have to continue “to sharpen their focus” on private brands,” Baker adds. “If the competition is heavy in private brands, you better make sure that your private brands can compete,” he says. Brian Sharoff, the longtime president of the Private Label Manufacturers Association (PLMA), says Amazon’s acquisition of Whole Foods Market and Lidl’s entry into the U.S. last summer were two of the most dramatic events in the private brands industry in the last 10 years. Both are strongly committed to store brands, he adds. “[Amazon/Whole Foods and Lidl] are two very powerful entities, and they are already challenging established retail leaders across every channel to increase their commitment to private label as well, so there is plenty of reason for optimism among private label manufacturers,” Sharoff notes. Stuart says Seattle-based Amazon’s acquisition of Austin, Texas-based Whole Foods will “lead the charge” in advancing store brands, but other factors will also play a role. Like Baker and Sharoff, Stuart believes other grocery retailers will amp up their private brands programs to better compete and differentiate. Stuart also says more grocers will utilize fresh products on a store’s perimeter as their own brands. One

Buying into private brands A majority of consumers anticipate purchasing store brands more frequently in the coming months. By income — expect to purchase more store brands during the next six months

$100K> $55K - $99K $35K - $54K <$35K

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Store Brands / January 2018 / www.storebrands.com

By generation — expect to purchase more store brands during the next months

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COVER STORY

Lidl’s 90 percent assortment of private brands and the retailer’s continuing expansion will expose more consumers to private brands in general. needs to look no further than the cult following that Publix has achieved for its fried chicken and sub sandwiches as proof that store brands can succeed on the fresh level. “The growth in the perimeter has been dramatic over the last five years, up four times the rate of center store or roughly 16 percent in aggregate versus 4 percent for center store,” Stuart says. Cadent Consulting Group conducted an assessment of the top 20 food categories between perimeter and center store, which indicated there was a 20-point share advantage for private brands in the perimeter with about a 35-point share versus the center store at a 15-point share. “If we extrapolate these perimeter growth trends at four times the rate of center store and the private label share advantage, this could yield an additional $18 billion in private label over the next 10 years,” Stuart says. Stuart, Baker and others also stress that millennials will continue to impact private brand sales. Studies indicate that roughly half of millennials have no real preference between private brands and national brands, which is about 30 percent higher than baby boomers, says Stuart, noting that millennials could have a tremendous impact on private brand sales in the fresh category. “The perimeter and millennial behaviors are very much aligned, which is great for private label growth,” Stuart adds. Mark McKeown, client insights principal at IRI, says IRI data of private brands sales at supermarkets, drug stores, mass market retailers, military commissaries, club stores and dollar chains reveals new non-food categories that are gaining growth in private brands. Consider the auto product segment. For the 52 weeks ending July 9, 2017, private-branded

Store Brands / January 2018 / www.storebrands.com

auto fluids had dollar sales of $77.3 million, an increase of 80 percent from the prior year. Automobile waxes and polishes had $17 million in sales, an increase of 38 percent from the prior year. Store brand nasal spray, drops and inhalers had $280 million in sales, nearly an increase of 62 percent from the previous year, in the health and wellness category. “Retailers are expanding beyond traditional food and beverage and the center of the store with their brands,” McKeown says. Maute says barriers have been lifted on “traditional no-go categories for store brands.” “There is a significant opportunity for retailers to creep into areas of the store that are differentiators for private brands,” he adds. “Those categories tend to be in the beauty departments, and health and wellness spaces.”

What it takes While the outlook for private brands is positive, store brands aren’t just going to start flying off store shelves. It’s going to take some doing. “If you take a look at the categories across the store, some of them are commodities and they will always be commodities. There’s just not much innovation in certain categories,” Baker says. “But other categories where there is an opportunity to innovate is where retailers need to go.” Baker says overall dollar sales of private brands at grocery retailers were up about 1.6 percent in 2017, with much of the growth coming at mass merchandisers and club stores. He says private brands are experiencing growth in premium, organic and value tiers. The mainstream tier is not growing significantly. “When you see growth in premium and organic, that requires innovation,” Baker says. To innovate in those categories, retailers may have to secure new relationships with suppliers in areas where they have not looked before, Baker adds. Such relationships will require a different strategy and a commitment to collaborate longer with a supplier, he adds. “Because if any of this innovation requires capital investment [by the supplier], then that [supplier] needs to know that it will not find itself in a bidding war with another supplier 12 months down the road [for a retailer’s business],” Baker says. “Really strong innovation comes when a retailer and a manufacturer get together and make a decision to do something together.” McKeown stresses that retailers will only succeed in offering innovative and exclusive store brands if their

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COVER STORY current own brands are already trusted by consumers. “But if the consumer doesn’t [trust your store brands], then you won’t succeed at innovation and exclusivity,” he adds. “There won’t be enough volume for the retailer to make money and suppliers to invest in it.” Retailers that offer several tiers of store brands also need to decide the tiers of which they want to introduce innovative and exclusive items, McKeown stresses. “You don’t want to be innovative and exclusive in each tier because they have different value propositions,” he states. There is also the paying-attention-to-store-brands-to-helpthem-succeed factor. “Retailers that tend to win with tiers of store brands tend to support them with much greater intensity and frequency than the retailers that just put the products on the shelf,” McKeown says. “They need to create awareness for them.” Packaging can also impact success, Maute states. “Hands down, store brand packaging has significantly improved over the years and continues to improve,” he says. “And the packaging is getting category specific. Retailers are starting to understand that consumers behave differently in one aisle compared to another aisle, and that the strategy for creating a design brand across 2,000 SKUs is making it difficult to tell a comprehensive story [in packaging] within any given category.”

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There’s also the online component. If store brands are going to take off, then retailers need to better engage consumers online with their own brands. McKeown says retailers need to find the right balance for selling private brands through brick-and-mortar stores and online. He expects online sales of private brands to accelerate for retailers if they can capture and capitalize on the allimportant data needed that reveals consumers’ buying habits. McKeown says retailers need to “test and learn and test and learn” their online strategies to improve private brand sales. “That’s the new normal — using technology and what they are capturing through the online experience and figuring out how to bring that back in the store,” he adds, noting that IRI forecasts online sales of CPGs will comprise about 5 percent of retailer’s sales by 2020 and 10 percent of sales by 2022. Maute stresses the importance of retailers “connecting the dots” from in-store to online experiences. “Retailers need to understand consumer behavior online and couple that with how consumers shop in their stores to create a comprehensive brand experience to move store brands forward,” he notes. Online shoppers are more likely to consider a wider range of brands online as compared to in-store shoppers, points out Jordan Rost, vice president of consumer insights for the market research company Nielsen. “So there’s a level playing field online for any branded or private label product that can deliver on an individual consumer’s needs,” he adds. But online retailers need to give consumers the right information to help them make their own choices and that will also vary by individual needs, Rost says. Some consumers are more likely to use reviews to give them the confidence to pick a new brand, as is the case with millennials. Older consumers are more likely to be more motivated by a promotion, Rost adds. Amazon is the nation’s largest online grocery, even though e-commerce grocery sales currently account for less than 3 percent of grocery and consumable sales. But other grocery retailers, including Walmart and Kroger — are escalating their online strategies. Walmart is adding 1,000 online grocery locations this year. In October, Walmart-owned Jet.com introduced its Uniquely J online private brand geared toward millennials. The line’s products, including organic sauces and coffee and plant-based cleaning cleaning items, embrace several elements that private brand experts say are needed to differentiate and succeed. “It’s about the message you provide when you put a product online,” Baker says. “The more information you can provide online about your products to consumers, the more opportunity you have to create relationships with those consumers and those products. It’s not just about slamming the product online and putting a price on it.” SB Aylward, editor-in-chief of Store Brands, can be reached at laylward@ensembleiq.com.

Store Brands / January 2018 / www.storebrands.com

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TRENDING INNOVATION

THE

OF SUCCESS Fragrance has become an essential characteristic for a wide range of privatebranded consumer products By Dana Cvetan

ragrance is glamorous in and of itself and adds glamor to products that are anything but. As an attribute that stimulates the senses and lifts the mood, it heavily influences purchase decisions not just of personal scents =but of everything from laundry detergent to hand soap to household cleaning and personal grooming products. Once regarded as “frivolous and non-essential commodities,” fragrances have “seamlessly transformed themselves into essential day-to-day products” according to Albany, N.Y.-based Transparency Market Research’s report “Fragrance Market — Global Industry Size, Share, Trends, Analysis, and Forecasts 2012-2018.” With that in mind, it’s important to ask how fragrance can make a meaningful impact in private brands. 24

Store Brands /January 2018 / www.storebrands.com

In fragrance, there are a number of concepts gaining popularity, says Deidre Dimock, brand manager of fragrances for Rouses Point, N.Y.-based Belcam Inc., an employee-owned maker of bath and body products founded in 1954. Consumer desire for a personalized experience has fueled growth in “mix-andmatch,” where one fragrance is layered over another to create a unique scent, Dimock says. “We are (also) seeing the blurring of lines between men’s and women’s fragrance, with non-gender-specific scents by some of the leading prestige fragrance houses,” she observes. Store brand mists are becoming popular in chain drug and mass retailer specialty bath collections, Dimock notes. “Mists have seen better growth over the last few years due to price point and consumer desire for a ‘wardrobe’ of fragrances. Adding mists as part of a private brand specialty bath program allows retailers that are not ‘fashion’ oriented to offer a fragrance option,” Dimock says. Men’s grooming is another area with significant growth potential as well, Dimock states. “This includes fragrance, either as part of a grooming collection or in the fragrance department,” she says, adding that “men’s is a growth opportunity that not all retailers have taken advantage of.”

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TRENDING “We see more [movement toward] boutique fragrances. Instead of regular orange, blood orange … or kaffir lime rather than regular lime,” Neale explains. Natural fragrances are also becoming more prevalent but are still a small part of the market, Dimock says. Indeed, the demand for natural fragrance ingredients has begun to outpace the supply, Neale says. In the immediate short term, ingredient costs could rise, but that could change as new crops come in by summer, Neale says. In addition, some retailers are introducing exclusive brands that are linked to makeup artists or emerging designers as a way to create a fashion image, Dimock points out.

TRANSPARENCY

The clamor for organic and natural ingredients is heavily influencing the fragrance market, Neale observes. “With the push for transparency and the rush to have clean labels, more companies than ever are looking to

remove synthetics from their formulations,” he says. This can pose a challenge since it involves reformulating existing products and possibly incurring higher production costs, Neale adds. However, some fragrance blends can offer desired profiles while keeping costs at a reasonable level, which is especially important for everyday household products, he notes. Environmental regulations could also affect the market, Neale says, noting that those regulations are tightening in China. Domestically, California Gov. Jerry Brown signed the Cleaning Product Right to Know Act in October. As reported by “Mother Jones” magazine recently, beginning in 2020, manufacturers of cleaning solutions, air fresheners and automotive cleaning products will be required to disclose some of the chemicals used, first online and the following year, on product labels, if those chemicals are known allergens or on the California Department of Toxic Substances Control’s list of harmful chemicals. SB Cvetan is a freelance writer from Barrington, Ill.

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FOCUS ON FRESH This is the first article in Store Brands’ new monthly “Focus on Fresh” feature department, inspired by health-conscious consumers’ penchant for less-processed food and a fun, dynamic shopping experience.

STARTS

From produce and bakery to meat and dairy to innovative engagement opportunities with customers that transcend specific departments, the store perimeter serves as a ‘gateway to shopper loyalty’ By Carolyn Schierhorn

hether in a rural area or an urban hub, grocery retailers today are leveraging their fresh departments to differentiate their overall brands and their individual private brands from the competition. Across all generations of consumers, but especially among millennials, fresh food has an aura of healthfulness and excitement that far surpasses the packaged food products in the center store. But “fresh” today doesn’t just refer to the produce, deli, “grocerant,” meat, seafood, bakery and dairy departments, according to Nicole Peranick, Stamford, Conn.-based Daymon’s director of thought leadership/culinary, who shared her insights during Store Brands’ “Power of Private Brands” webinar series in 2017. “Fresh has taken on an expanded meaning, and solving for this new interpretation is really imperative to capture and retain customers,” she says. As the Daymon white paper “From Shopper to Advocate: The Power of Participation” makes clear, fresh has become “the gateway to shopper loyalty.” To win consumers’ trust, grocery retailers must succeed

in engaging customers at multiple touchpoints on the store perimeter and even before they walk into a store — delighting shoppers with delicious samples; a cornucopia of colors and fragrances; high-energy food prep and cooking demonstrations; access to community resources such as representatives from local businesses or nonprofits; opportunities for “co-creation” and “personalization,” and more. Under this broader definition, fresh could apply to a health and beauty section that allows shoppers to sample various botanical skincare products and aromatherapy oils; a wellness department coordinated by a registered dietitian nutritionist (RDN) who can help customers navigate the store and shop for their unique dietary needs; an in-store exhibition showcasing the work of local artists and craftspeople; or even a 3-D printer that lets shoppers scan photos and create ceramic figurines of themselves and loved ones (available at several Asda stores in the United Kingdom). As West Des Moines, Iowa-based Hy-Vee demonstrates, fresh can also be a portal to a company’s values. For example, customers who shop at the Midwestern chain’s more than 245 stores are assured that the sushi www.storebrands.com /January 2018 / Store Brands

FOCUS ON FRESH in the retailer’s Nori Sushi bars is 100 percent responsibly sourced as are the many species of fish, mollusks and crustaceans sold in the fresh seafood department, from barramundi to Alaskan king crab legs to oysters. Indeed, Greenpeace ranks Hy-Vee among the top grocery retailers for seafood sustainability. Hy-Vee’s produce department also reflects the company’s commitment to environmental sustainability, specifically food waste reduction. The retailer has earned recognition, including a 2017 award from Store Brands for “Best Store Brand Merchandising Idea” for the way it champions The Misfits, cosmetically challenged produce supplied by Eden Prairie, Minn.-based Robinson Fresh, which brought the Misfits concept and brand to the United States. Hy-Vee, which has sold nearly 2 million pounds of the misshapen, off-size or slightly discolored but otherwise delicious fruits and vegetables, “is a good example of a company that has embraced the program holistically, from sustainability to a consistent eating experience,” says Craig Arneson, general manager of Robinson Fresh. “It is paramount to the success of the Misfits program to have collaboration at all levels of the organization.”

MEETING CONSUMER DEMAND

Winning over shoppers in the fresh realm requires meeting consumer demand for both healthful products and on-the-go convenience, notes Jeff Oberman, vice president of trade relations for the Washington, D.C.-based United Fresh Produce Association. One

Store Brands /January 2018 / www.storebrands.com

retailer that excels in this domain is Lowes Foods in Winston-Salem, N.C. The retailer’s stores have a “Pick & Prep” station, allowing shoppers to select their own fresh fruits and vegetables and then drop them off for customized cutting. “So if you want to purchase a mango but don’t know how to cut it, you can bring it to the Pick & Prep station, and a trained produce professional will cut it for you,” Oberman says. Consumers can even order this service for produce purchased online from Lowes via Instacart. Besides convenience, contemporary consumers are demanding transparency and, when feasible depending on the season and type of product, local sourcing, Oberman points out. “Consumers want to know how these products are produced and how they’re grown. They want to know that the people who harvest the crops are ethically treated,” he says. “And it’s not just with produce; it’s with everything in the store.” Consumers, moreover, increasingly expect to find organic offerings, but the demand for organic varies widely, depending on the region and shoppers’ income levels. In southwestern Indiana, for example, where Baesler’s Market operates three stores — in Terre Haute, Linton and Sullivan — shoppers do ask for organic items but demand is not robust, says Bob Baesler, the company’s president. Nevertheless, he maintains a 12foot section of organic produce in the less-rural Terre Haute store, which is in a small city of approximately 61,000 people.

FOCUS ON FRESH “We don’t sell a lot of it, but there are people who want it, so we try to have it for them,” Baesler says, noting that Baesler’s Market’s commitment to delighting customers in the fresh arena is one way the retailer differentiates itself from Dollar General, which has several stores in the communities Baesler serves. In a rural locale with many farms, consumers are more apt to prioritize local sourcing because of the positive impact on the area’s economy; it’s not simply a trendy millennial-driven preference. Baesler’s Market carries local corn, carrots and watermelons. “We attempt to do as much local as we can, but there is a limit to what we can do,” Baesler says. Not only does Indiana have a limited growing season, but also local producers can’t meet the retailer’s need for many items during the warmer months. “Outside of the three mentioned items, [local farms] don’t have enough quantity to where we can just depend on them all summer for tomatoes or all summer for cucumbers,” he elaborates. Still, customers appreciate the retailer’s efforts to sell local produce, and Baesler diligently works with the area’s farmers to bring more locally grown items into the three stores. Local sourcing is a challenge everywhere, and some larger supermarket chains are helping to defray farmers’ production costs to ensure a supply of fresh products that can meet rising consumer demand, Oberman adds. Though still in the

experimental stage and not a solution to the local supply challenge, an emerging trend among grocery retailers is “hyperlocal” store-grown produce. Retailers are beginning to grow their own leafy greens and herbs in rooftop greenhouses, on the sides of stores in hydroponic vertical gardens and — as H-E-B-owned Central Market is doing — in a mobile container just outside of a store that could be moved from one location to another. Behind one of Central Market’s Dallas stores, a 53-foot custom-built Growtainer, made from a recycled shipping container, provides 480 square feet of climate-controlled vertical production space. The miniature farm features proprietary technology for ebb-and-flow irrigation, a water-monitoring system, and energy-efficient light-emitting diode (LED) production modules specifically designed for multilayer cultivation, according to Glenn Behrman, president of Dallas-based Controlled Environment Agriculture (CEA) Advisors, which developed the Growtainer specifically for Central Market. Behrman points out that the Growtainer has been a highly successful “innovation project” for the retailer. “They can’t keep up with the demand,” he says. The hydroponically grown leafy greens are merchandised in the store’s produce department on an attractive mobile “Store Grown Produce” display LEFT: Hy-Vee has garnered much customer enthusiasm for The Misfits, cosmetically challenged produce supplied by Robinson Fresh. RIGHT (including inset): A Dallas store of H-E-B-owned Central Market grows and sells its own produce in a controlled-environment Growtainer developed by Dallas-headquartered CEA Advisors.

www.storebrands.com /January 2018 / Store Brands

FOCUS ON FRESH

made of wood. The greens are wrapped in plastic with a label branding the product as “Central Market Store Grown Lettuces,” with 10 varieties of lettuce listed and the specific type of lettuce in the package indicated with a checkmark.

FORAYING INTO FRESH-PREPARED

Addressing customers’ need for convenience and their growing enthusiasm for ethnic foods, grocery retailers across the country are expanding their deli departments into “grocerants,” establishing hot bars, salad bars, signature dishes, made-to-order stations and even fast-casual and full-service restaurants. Hy-Vee has significantly ramped up its foodservice options at its new Minnesota stores. But smaller chains are also favorably impressing customers with expanded fresh-prepared offerings. For example, since KFC left the area, Baesler’s Market has developed a big fan base for its signature fried chicken, Baesler says. The Indiana retailer also emphasizes quality and consistency in its deli meats and salads. “Some retailers will switch suppliers, but customers get tired of things not tasting the same,” Baesler notes. “We’ve been selling the same slaw for 20-some years and the same potato salad.” The company does take risks, though it may tread more cautiously than urban and college town grocers with a younger population base. For example, when the retailer first added a hot bar in 2015, a number of customers complained because they didn’t like the change. But the hot bar has done “exceptionally well in sales,” according to Baesler, who notes that he has expanded the number of soup wells from three to six because soup is so popular with his customers, even during the summer. The hot bar offerings at Baesler’s include Mexican, Italian and Chinese dishes as well as American comfort foods such as meatloaf. Customized convenience seems to be the watchword of another supermarket chain, Skogen’s Festival Foods, which owns 31 stores in Wisconsin. In addition to a rotating hot bar menu featuring BBQ Monday, Taco Tuesday, Stir Fry Wednesday, Italian Thursday and Supper Club Friday, the De Pere, Wis.-based chain offers a “Daily Deli Deal.” “For instance, on Mondays we offer four large pieces of lasagna and a loaf of Italian bread for $10,” says Lars Batzel, fresh merchandising senior director at Festival 30

Store Brands /January 2018 / www.storebrands.com

Foods. “On Tuesday, we have $6 rotisserie chickens. On Wednesday, we have $5 sushi.” Festival Foods also provides heatand-eat prepared meals. Shoppers can choose a protein-based entrée and one or two side dishes at different price points. “These have done very well for us,” Batzel says. Additionally, the retailer is venturing into ownbrand meal kits, which are being rolled out to more than 75 percent of its stores. What’s more, Festival Foods is considering adding made-to-order stations at some locations, beyond the well-equipped deli service counters. “There are a lot of logistical and equipment challenges that go into this, so we’re trying to figure out the right approach for us,” Batzel says.

FIND A NICHE

In highly competitive markets, retailers need to find a niche in fresh where they can outshine rivals. This could be a bakery department that is the go-to place for birthday cakes, holiday pastries and even wedding cakes. Or perhaps the bakery is situated near the front of the store so shoppers can enjoy the aroma of freshbaked bread as they walk in. The often unsung dairy department also provides opportunities for differentiation, notes Julie Quick, Plano, Texas-based Shoptology’s senior vice president for insights and strategy. Retailers can use sampling to drive trial of flavored milks, newfangled non-dairy milks, new cheeses and yogurts. Supermarkets should also tell the stories of the farms that supply the store brand milk and other products in the dairy case, she suggests. “Dairy has to be actively managed and credentialed as a fresh department,” Quick emphasizes. “Retailers need to work harder to ensure freshness and share the origins of the product. The wholesomeness and goodness of the products needs to be merchandised.” Consumers are looking for products with protein, so buzz can be built around milk’s naturally high protein content, adds Susan Stege, senior director of category and shopper insights for Dallas-based Dean Foods. Milk is also a natural product, ideal for modern consumers who are gravitating toward less-processed foods, she says, noting that positive dairy messaging can be established through the retailer’s website and social media channels. As Stege puts it, “You can’t get any more ‘clean label’ than milk.” SB Schierhorn, the managing editor of Store Brands, can be reached at cschierhorn@ensembleiq.com.

At your

TOTAL STORE

SERVICE

The customer experience is an intangible store brand that can do wonders for a retailer’s image. Just ask Publix and Wegmans By Lawrence Aylward

ow’s this for providing a consumer with an extremely excellent customer experience? In November just before Thanksgiving, a cashier at a Publix Super Markets store in Fairburn, Ga., helped pay a customer’s bill for groceries. The cashier was working her normal shift when a customer didn’t have enough money to pay for groceries. The cashier then took out her debit card and helped pay the customer’s bill. No doubt the Publix employee went above and beyond the call for offering unmatched customer service and providing an extraordinary customer experience in the process, both for which Publix is well-known. In doing so, the employee’s selfless act only enhanced Publix’s reputation for treating its customers like gold. The Harvard Business Review defines the customer experience as the sum of all interactions a customer has with a company. In the grocery sector, that would include a customer’s initial discovery of a retailer, its products and services, and the purchase of those products and services. The Harvard Business Review defines customer service as a core value and strategic mandate of an organization and a vital part of the customer experience.

This is the first article in Store Brands’ new monthly “Total Store” feature, which addresses various approaches retailers can take to further develop their store brands.

Hence, the customer experience is an intangible store brand that can do wonders for a retailer’s image. But it can also cause trepidation if not done right, and customers may simply shun a grocery retailer if they dread the in-store experience. But implementing a memorable customer experience is hard work and requires persistence. It also requires an investment in time and money. In its report, “The Four Customer Experience Core Competencies: A Blueprint for Customer-Centric Organizations,” the Temkin Group, a Waban, Mass.-based customer experience research, consulting and training firm, stresses that the customer experience is a journey not a project. “Building the capabilities to consistently delight customers doesn’t happen overnight. Companies need to plan for a multi-year organizational change program,” the firm states. According to the Temkin Group, an organization must first create a customer-centric culture by mastering four customer experience core competencies: • purposeful leadership, • compelling brand values, • employee engagement and • customer connectedness. Under “purposeful leadership,” customer experience metrics should be reviewed and treated as financial metrics, and a retailer’s managers should regularly communicate to employees that the customer experience is one of the company’s key strategies, according to the Temkin Group. Under “compelling brand values,” a retailer’s brand defines how customers are treated, and a retailer reguwww.storebrands.com /January 2018 / Store Brands

TOTAL STORE

Publix (left) and Wegmans are well-known for creating a positive customer experience, which has created loyal customers.

larly examines how customers are treated. Under “employee engagement,” a retailer should provide customer service training for employees and engage them with its goals for customer service. “Our research shows that, compared to their disengaged peers, engaged employees try harder, are more likely to do something good for the company (even if it’s not expected of them) and freely offer their services to help others,” the Temkin Group states in the report. Under “customer connectedness,” the Temkin Group advises that a retailer regularly collect customer feedback from all touch points — in store, online and the phone — and act upon it.

Happy employees, happy customers

In November, Fortune magazine and Great Places to Work ranked Rochester, N.Y.-based Wegmans Food Markets No. 1 for the second consecutive year in their annual Best Workplaces in Retail report. Ninety-two percent of Wegmans’ employees said the regional retailer is a “great” place to work. Clearly, Wegmans provides purposeful leadership and employee engagement, which translate into an excellent customer experience, of which the 95-store chain is also known. Jack DePeters, Wegmans’ senior vice president of store operations, says values such as caring, respect and making a difference permeate employees’ minds when dealing with customers. “These values are rooted in our 101-year history and are present in everything we do,” he adds. “We look for these characteristics in the people we hire, and we encourage our people to live by them every day.” The late Robert Wegman, who led the chain for more than 50 years, preached a positive customer 32

Store Brands /January 2018 / www.storebrands.com

experience to employees. “Never think about yourself; always help others,” he said. His saying has become Wegmans’ mantra. “Robert Wegman’s philosophy has been guiding our company for many years,” DePeters says. “He led by example, and we model our actions after his. Our people are empowered to do the right thing and to make decisions that will best serve the customer, our fellow employees and the communities where we have stores.” Wegmans’ foundation was built on the philosophy to first meet the needs of its employees, who in turn will then take care of its customers, DePeters says. “I am so proud of our employees and the incredible customer service they provide to our customers,” he adds. ‘We are committed to helping our customers and employees live healthier, better lives through food.”

The trust factor

Publix’s motto is, “Where shopping is a pleasure.” The chain realizes that the customer experience is parallel to customer loyalty, something the Temkin Group says comes shining through in its research. “We have conducted multiple large-scale studies demonstrating that the customer experience is highly correlated with loyalty across many different industries,” the Temkin Group states. “When customers have a good experience with a company, they are more likely to repurchase from the company, try its new offerings and recommend it to others.” Says Michael Roberson, Publix’s director of corporate quality assurance: “Trust. At the end of the day, that’s really what it’s about. And our trust is built on the foundation of the customer service.” Consumer trust is also gained through a retailer’s

TOTAL STORE reputation for transparency, such as making clear its mandates for food safety and animal welfare, which are also part of the customer experience. Last April, Publix became the first U.S. grocery retailer to begin publishing a list of all of the fisheries used to source its wild-caught seafood as part of a new alliance with the Sustainable Fisheries Partnership’s (SFP) Ocean Disclosure Project (ODP). In addition to disclosing data on the names of its source fisheries, Publix provides information on management, catch method and environmental impact of the various caught-inthe-wild species. “Publix’s seafood sustainability philosophy is to provide transparency for our customers while engaging with our suppliers to drive change in the seafood industry,” said Maria Brous, director of media and community relations for Publix.

‘My Publix’

Not surprisingly, Publix ranks fifth out of nearly 300 companies across 20 industries in the Temkin Group’s 2017 Customer Service Ratings, based on a study of 10,000 U.S. consumers. Publix was the highest-ranking grocery retailer.

SUPERMARKETS SCORE WELL IN CUSTOMER SERVICE STUDY Supermarket Chains Investment Firms Banks Insurance Carriers Retailers Auto Dealers Hotels & Rooms Fast Food Chains TV & Appliances Airlines Credit Card Issuers Rental Car & Transport Computer & Tablet Maker Streaming Media Utilities Parcel Delivery Services Software Firms Wireless Carriers Health Plans TV/Internet Service Providers LOW SCORE

INDUSTRY AVERAGE

HIGH SCORE

Base: 10,000 U.S. consumers rating customer service in various industries. Source: Temkin Group, 2017 Consumer Benchmark Survey

Recently, Meghan Splawn, the associate food editor for the online food magazine Kitchn, wrote about Publix in an article headlined, “10 Reasons Publix Is the Best Grocery Store Ever.” Splawn cites several examples related to the retailer’s private brands, noting that “having relied on the Publix store brand for everything from foil to frozen corn, I can attest to the awesomeness of their store brand products.” But No. 1 on Splawn’s list was Publix’s customer service. “Every employee is incredibly nice and helpful,” she writes. “Customer service is a key component of the Publix mission statement that actually comes through in their stores. My go-to location has managers and cashiers who know me by name. Ms. Tina, my favorite cashier, knows both [of] my children by name, and remembers the things I buy frequently and reminds me when they are on sale.” It’s Publix’s goal to get its customers to refer to its stores as “my Publix,” Brouse says. “It’s about the emotional connection,” she adds. “We are more than just a grocery store to our customers.” “Personalization” is a term being used frequently these days as a way for retailers to differentiate themselves from the competition with their food, beverage and non-food products. In Publix’ case, “personalization” extends to training employees to offer an experience that exceeds customers’ expectations. Dave Harvey, Daymon’s vice president for global thought leadership, stresses the importance of retailers looking beyond products to capitalize on its store brands. Harvey’s point is that a retailer’s services — from nutrition consulting to simply treating its customers with the utmost respect —are crucial in helping to define its own brands. “This is really a new frontier for private brands,” Harvey says. Back to the Publix cashier who helped out a customer. A man behind the woman in line who the cashier helped had this to say on his Facebook page. Today while I was getting groceries, this Publix employee pulled out her own debit card and paid for a customer’s groceries who didn’t have enough money. So, today at Walmart, I decided to pay for the customer’s groceries behind me. … Please share and give her recognition; she didn’t have to help out, but without hesitation she went in her purse and paid the bill. That simple gesture easily changed someone’s life. … We need more people like [her]. P.S. Pay it forward. #LoveWhatMatters Talk about the impact of extreme customer service. It has no boundaries. SB Aylward, editor-in-chief of Store Brands, can be reached at laylward@ensembleiq.com. www.storebrands.com /January 2018 / Store Brands

BEVERAGE PACKAGING

STAND OUT

FROM THE CROWD

Retailers are differentiating their private brand beverages with unique labels, inventive container shapes and sustainable packaging materials By Carolyn Schierhorn

For both alcoholic and non-alcoholic beverages, taste is the most important

factor influencing whether a consumer will buy the product again, according to two “Beverage Packaging Trends — US” studies by the Mintel Group, one published in January 2017 on the alcoholic beverage market and one published in June 2016 on the non-alcoholic drink market. But when it comes to the initial purchase of a beverage, packaging has a major effect on customer decision-making. Consumers rank “high quality” as the second most important variable affecting beverage selection, the Mintel reports point out. From the label to the shape and size of the container to the materials used in the container’s fabrication, beverage packaging conveys the quality of the product inside. Packaging today also reflects consumer priorities, including preferences for locally sourced, healthful, convenient,

Store Brands /January 2018 / www.storebrands.com

transparent, environmentally sustainable and personalized products. Recent product introductions in the sphere of private brand beverages attest to the importance of packaging and label design. For example, Batavia, Ill.-based Aldi U.S. engaged artist Timothy Goodman, well-known for his textbased murals, to design the labels for the retailer’s new limited-edition reserve wine collection. As Goodman explains in an Aldi press release, “I gravitate toward bottles with interesting designs, so I was excited to create a series of labels that would really pop on the shelf.” Innovations such as EasyTab — a label patented by Green Bay, Wis.-based WS Packaging Group that opens to reveal extended text underneath — allow wineries (and retailers of private brand wines) to share stories about the vineyard, vintage and farming practices as well as recipes for entrées that would pair well with the wine. With consumers turning away from sugary soda pop and toward more healthful choices, there has been an explosion of new lines in the non-alcoholic, ready-to-drink (RTD) beverage space. To make their products stand out from the ever-expanding field of competing SKUs, retailers and brand manufacturers are rolling out RTD beverages in unusually shaped and sized

BEVERAGE PACKAGING containers with eye-catching graphics as well as in containers that suggest the naturalness and simplicity of the products inside. Chicago-based vendor Limitless Coffee & Tea takes the latter approach with its line of cold-brew coffee and matcha green tea, which comes in simple transparent glass bottles with twist-off caps. The color-coded labels make it easy for consumers to distinguish the various flavors from one another.

SHORTER, MORE PERSONALIZED RUNS

Like the ancient causality dilemma — “Which came first: the chicken or the egg?” — it’s difficult to determine whether consumer demand for personalization spurred the development of digital printing or whether the availability of digital printing has stimulated the growth of limited runs and more customized products. Be that as it may, the technology has opened up a wealth of possibilities for retailers with store brand beverages. Because of the speed, flexibility and affordability of digital printing, it’s now easier than ever before for chains to create local and regional beverage private brands, seasonal beverage products, and limited-edition lines that leverage scarcity and perhaps even a sense of the avant-garde to build excitement among shoppers. “Consumers want the products they are buying, including beverages, to reflect their lifestyle choices,” observes Katelyn Bohr, marketing manager for Brookfield, Wis.-headquartered Colordyne Industries, which sells digital printing equipment to manufacturers. Digital printing has been a great boon for the craft beer industry in particular, Bohr notes. “Because craft beers are [brewed] in a lot of different flavors and often there are seasonal varieties, you need much smaller runs of labels than you do for year-round major brands,” she says. Colordyne now offers an ultraviolet (UV) inkjet product, as well as traditional water-based inkjet printing technologies. “The reason for bringing on UV is that it can handle more durable applications,” Bohr says, noting that it’s better for refrigerated beverages and can be used on clear materials.

TRANSPARENCY INDICATES AUTHENTICITY

Shoppers today, especially millennials, insist on knowing everything about the products they purchase and consume and that includes beverages. Clearly, glass is an obvious packaging choice for conveying transparency, and it suggests other product attributes such as quality, value and clean-label healthfulness, says Mark Lutgens, vice president of new product development and innovation for Lincoln, Ill.-based Ardagh Group, Glass/North America.

“Mintel’s expert industry analysts suggest that trust, value and health are key trends that will shape consumer purchase decisions in 2018,” Lutgens notes. “These trends, which influence beverage packaging, present great opportunities for glass containers.” Ardagh Group manufactures glass containers in a variety of shapes and sizes in more than 16 colors — with decorative features that provide “strong family identity” to private brand beverage lines, Lutgens says. “We offer a complete portfolio of glass packaging options for non-alcoholic beverages, including water, tea, milk, coffee, carbonated beverages and juices, as well as glass packaging for alcoholic beverages such as beer, cider, wine and spirits,” he points out. In its June 2016 report on non-alcoholic beverage packaging, Mintel notes that consumers rated “glass container” second only to “sold chilled” as the strongest indicator of high quality. Regarding alcoholic beverage packaging, consumers named “glass container” as the top quality indicator, according to Mintel’s January 2017 report.

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PRIORITIZING SUSTAINABILITY

Consumers rank glass highly for its environmental properties as well, Lutgens says, noting that a 2017 EcoFocus survey found that 51 percent of consumers rate glass as “extremely or very eco-friendly.” Although not all shoppers are aware of this, certain plastics are also environmentally sustainable options. St. Louis-based Alpha Packaging, for one, manufactures a wide variety of high-quality plastic bottles made of polyethylene terephthalate (PET), which can be recycled and can incorporate post-consumer PET in the fabrication process. Among its many offerings, Alpha Packaging makes 32-ounce and 64-ounce plastic www.storebrands.com /January 2018 / Store Brands

BEVERAGE PACKAGING Glass indicates transparency, quality and sustainability, emphasizes Ardagh Group, Glass/North America.

locations,” Tetra Pak states on its website. After a successful European launch, Tetra Pak recently introduced to U.S. beverage producers Tetra Evero, an ergonomically designed aseptic carton bottle made primarily from FSC-certified paperboard. “With its 360-degree printable surface and environmental profile, Tetra Evero is the ideal package for beverage brands that want to stand out and capture consumer attention, whether on the shelf or in the chilled case,” the company states in a press release. “Tetra Evero is a great way for brands to reinforce their sustainability commitment while meeting consumers’ nutritional and lifestyle needs,” adds Carmen Becker, president and CEO of Tetra Pak U.S. and Canada.

CONVENIENCE PLUS VALUE

growlers for the craft beer industry. The plastic growlers “allow consumers to take fresh draught beer directly from the tap to places where glass is not allowed,” including some beaches, public swimming pools, parks and other outdoor venues, Alpha Packaging’s website states. This could be of interest to the growing number of grocery chains that serve craft beer on tap or even have their own microbreweries as Austin, Texas-based Whole Foods Market has at one of its Houston stores. Pully, Switzerland-headquartered Tetra Pak also provides many sustainable packaging solutions for beverage producers that foster the creation of minimally processed shelf-stable products. Tetra Pak aseptic processes allow liquids to retain their texture, natural taste and nutritional value for up to 12 months without the need for preservatives or refrigeration, the company says. “The combination of aseptic processing and packaging reduces waste, makes distribution extremely cost-efficient and converts your product into a consumer-ready format as well as making it possible for you to reach consumers in remote

When consumers think of convenience, which is much in demand these days, single-serve packaging often springs to mind. In this respect, the beverage world has long been convenience-focused, given the proliferation of single-serve containers such as aluminum cans, glass bottles, 8-ounce cartons, rigid plastic bottles, flexible pouches and so on. But for a product that is consumed frequently but not all at once, a larger container with easy-to-use dispensing technology may be the best bet for busy, health-conscious consumers. That’s where bag-in-a-box packaging solutions come in. “Say I don’t want to drink a whole 750 ml bottle of wine,” notes Lani Craddock, vice president of marketing and business development for Northlake, Ill.-based Scholle IPN, a manufacturer of bag-in-a-box packaging. “After a couple of days, it has lost its flavor and its value.” For women who seek the health benefits and enjoy the flavor of wine but want to avoid overconsumption, the bag-in-a-box format provides the ability to have a glass a day without compromising the product’s quality, Craddock says. Bag-in-a-box wine lasts four to six weeks, she points out. “The bag-in-a-box format has many convenience factors for consumers: portability and maintenance of freshness as well as value and ease of use,” Craddock notes. The Scholle IPN dispensing taps are “very intuitive” and can be managed with one hand, she says. In addition, the packaging format minimizes spills and has a desirable environmental footprint, Craddock maintains. Besides wine, bag-in-a-box containers are commonly used for water and coffee. “Cold brew in particular has seen a really fast-moving expansion in the area of bag-in-a-box,” Craddock says. SB Schierhorn, the managing editor of Store Brands, can be reached at cschierhorn@ensembleiq.com.

Store Brands /January 2018 / www.storebrands.com

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Tetra Evero® Aseptic, the world’s first aseptic carton bottle, is now available in the U.S. market. With the functionality of a bottle and the environmental advantages of a carton, it’s the perfect package to grab consumers’ attention—on the shelf or in the chilled case. See what Tetra Evero can do for your store brand at www.tetrapak.com/us/packaging/tetra-evero-aseptic

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and PROTECTS WHAT’S GOOD are trademarks belonging to the Tetra Pak Group. www.tetrapak.com

CATEGORY INTELLIGENCE COFFEE AND TEA

A CHANCE TO DIFFERENTIATE

DO continue to educate consumers about cold-brew coffee’s attributes.

The coffee category is still churning — even if sales have slowed a bit. After experiencing strong gains from 2012 to 2015, the coffee market slowed the last two years as market penetration of single-cup coffee makers became saturated, according to market researcher Mintel. Retail single-cup coffee sales grew just 3.7 percent in 2016-17 to reach $4.5 billion. But Clay Dockery, vice president of retailer brands for Suffolk, Va.-based Massimo Zanetti Beverage USA, says there is still room for growth as evidenced by the success of private brands. “There is a higher private brand share of the single-serve segment than any other segment in the coffee category,” Dockery notes. “This represents a total coffee category private brand opportunity.” Tom Kriegsmann, vice president of sales for Lafayette, Ind.-based Copper Moon Coffee, says single-serve coffee sales will continue to grow as products are reinvented. “We see growth opportunities by reinventing products with a compelling story of bean-to-cup and commitment to sustainability via packaging,” Kriegsmann says. “Also, consumer value is now a greater part of the purchase equation. Individual 12-count cartons are no longer viewed as cost-effective by consumers. Many discount retailers are now providing larger sizes ranging from 32 to 120 counts.”

DON’T nmerchandise tea where products appear cluttered on the shelf because of the variety of brands and blends in the category. 38

Store Brands /January 2018 / www.storebrands.com

According to Mintel, 53 percent of coffee drinkers consume single-serve coffee. So what are the keys to get the other 47 percent to drink it? “The continual efforts to innovate and market appealing, better-tasting flavors along with the speed, convenience and affordable pricing of singleserve coffee,” Kriegsmann answers. “We plan to communicate this message by utilizing digital strategies including videos, blogs and social platforms.” Aside from price and value, unique coffee varieties are appealing to consumers that want to taste and experience the subtle nuances of different coffees from different growing regions around the world, Kriegsmann says. “Pairing this worldly taste experience along with products that can claim natural, organic, sustainable and fair trade resonates well with middle-to-upscale consumers.” Ready-to-drink (RTD) coffee, which is the fastest-growing segment of the $13.6 billion retail coffee market, according to Mintel, is forecast to grow 67 percent through 2022. Cold-brew coffee sales at retail are skyrocketing — U.S. retail sales of refrigerated cold-brew coffee grew 460 percent from 2015 to 2017 to reach an estimated $38.1 million, according to Mintel. Considering that only 7 percent of coffee drinkers say they have made their own cold-brew coffee at home, there is plenty of room to grow. But to grow the segment it will take education on behalf of retailers and manufacturers. Tom Lavan, CEO of Pittsburgh-based Riverbend Foods, which supplies private-branded cold-brew coffee for TreeHouse Foods, says it’s critical for retailers to demo and sample cold-brew coffee on location to get more consumers to try it and to inform them that the cold-brew process takes longer, requires more beans and removes the bitter taste of coffee. “Once consumers realize that it has a clean and fresh taste and is not bitter, you will win people over much faster,” Lavan says. Dockery points out that the good thing about cold brew is that it’s not going to cannibalize the roast and ground coffee segments, but largely be incremental to total coffee sales. “As such, a thoughtful strategy around incremental shelf-space allocation is critical,” he adds. “It is also important to ensure in design that there is clear

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CATEGORY INTELLIGENCE COFFEE AND TEA differentiation between concentrates and ready-todrink alternatives.” Because cold-brew coffee is still a new but fastgrowing category without a standard of identity, there are opportunities for brands to adhere to basic principles and best practices for brewing and bottling or serving cold-brew coffee, says Chris Brown, marketing director/coffee for Carmel, Ind.based Heartland Food Products Group. “Doing so will ensure the consumer is getting the high level of quality they expect when trying your cold-brew coffee,” he adds. “In addition to ensuring their cold-brew coffees are authentic, other factors needed for private brands to be successful include leading with great taste, having a feeling of craftsmanship designed into the packaging, and launching with an array of desirable varieties.” Brown says the time is now for private brands to embrace cold brew. “With any fast-growing category, private brands typically wait to see how the category will take shape before they enter or follow the pioneering brands,” Brown says. “In cold-brew coffee, retailers have started offering private brands within approximately the last year and a half.”

Store Brands /January 2018 / www.storebrands.com

Whether or not retailers should try to differentiate by offering their own-brand cold-brew coffee depends on a few factors, Dockery says. “Retailers are facing multiple differentiated products from RTD, concentrate, cold-brew filter packs, and ground coffee that is ground specifically for cold-brew methods,” Dockery says. “It is important to complete the analytics on which segments should have offerings.” As a supplier, Lavan says he has to be careful with how many versions and tastes that Riverbend can offer of cold-brew coffee. Retailers want to differentiate with their own brands of cold-brew coffee, but there is a limit to what they can offer. “I have to stay focused, and I need to be where the volume is,” Lavan says. “I’m going to stay close to the masses and try to segment.” Lavan says he views cold-brew coffee as he does craft beer, with different regions adopting different tastes — but not too many flavors. “From a private label standpoint, I can’t have 1,000 formulas,” he says.

Sustainability and sales

Sustainability, as in the demand for compostable

CATEGORY INTELLIGENCE COFFEE AND TEA coffee pods and capsules, could remain a factor in single-serve coffee sales. “Consumer research indicates that packaging waste is still the primary negative within the single-serve category segment,” Dockery says. “Consumer awareness is growing as are municipal waste streams that support composting. Looking at the European markets as well as Canada, it is expected that continued growth in awareness of composting will continue at a rapid pace.” Copper Moon is using a compostable plastic single-serve pods, the PurPod 100, in its single-serve coffee products. “Sustainability will continue to play a major role in the coffee category and will continue to resonate with the consumer,” Kriegsmann says. “The PurPod100 is a wonderful compostable product that tastes and performs well in many ways. The

Total Coffee Private Brands

All Brands

Dollar Sales (in millions)

$1,379.7

$9,570.3

Change vs. Year Ago

+16.1%

+.7%

Dollar Share

14.4%

100%

Unit Sales (in millions)

203.9

1,324.8

Change vs. Year Ago

+12.8%

-0.7%

Avg. Price Per Unit

$6.77

$7.22

Private Brands

All Brands

Dollar Sales (in millions)

$789.5

$3,981.2

Change vs. Year Ago

+23.8%

+2.5%

Dollar Share

19.8%

100%

Unit Sales (in millions)

94.3

428.9

Change vs. Year Ago

+18.9%

+1.8%

Avg. Price Per Unit

$8.37

$9.28

Private Brands

All Brands

Dollar Sales (in millions)

$89.752

$1,285.6

Change vs. Year Ago

+3.1%

-0.4%

Dollar Share

7.0%

100%

Unit Sales (in millions)

38.3

376.1

Change vs. Year Ago

-0.7%

-1.9%

Avg. Price Per Unit

$2.34

$3.42

Single-serve Coffee

Total Tea

Source: InfoScan Reviews, IRI, a Chicago-based market research firm. Total U.S. supermarkets, drugstores, mass market retailers, military commissaries and select club and dollar retail chains for the 52 weeks ending Nov. 5, 2017.

Store Brands /January 2018 / www.storebrands.com

general consumer population does not share in the knowledge of this product/format. The consumer education process, via intense marketing, may pose the greatest overall challenge.”

Transforming tea

In tea, Jerry Gilbert, vice president of retail sales for Fort Worth, Texas-based Mother Parkers Tea & Coffee, says the category continues to transform and private-branded tea is changing along with the category. “We are seeing more premium, specialty and functional offerings in the segment similar to craft beer and wine,” Gilbert says. “Premium private label tea now includes longer cut blends in pyramids or sachets as well as new flavors and ingredients with an array of functional benefits including digestive, energy and relaxation.” Gilbert says consumers want to know more about the origins of their tea, including ethical considerations, sustainable growing methods and production techniques. “These attributes should be included in a premium private label item and be communicated on the packaging,” he adds. Gilbert says differentiation is key to keeping and gaining new loyal customers. “Aligning unique blends and attributes with benefits that consumers are seeking is essential in a differentiated private label tea program,” he says. “Also, seasonal items and limited-time offers are important for driving awareness, trial and keeping the tea program exciting and differentiated.” Gilbert says tea shoppers like to experiment with different flavors and blends so offering a discount on multiple products can lead to incremental purchases. “Off-shelf display is important for driving trial and impulse purchases, and floor displays or end caps are vehicles that can be used during the peak seasonal periods,” he states. “Also, the tea shelf can look and feel cluttered due to the variety of brands and blends in the category. Shoppers need to be able to easily find the product they need; therefore, shelf management is very important in the tea category. Shelf signs will help create organization and communicate types of tea while clear and unique packaging will help products get noticed.”SB Aylward, editor-in-chief of Store Brands, can be reached at laylward@ensembleiq.com.

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CATEGORY INTELLIGENCE OILS AND VINEGARS

A HIGH PRIORITY ON HEALTH Retailers can boost shopper interest in private brands by merchandising oils and vinegars with clean ingredients

DO offer more flavor varieties

Health is at the heart of the oil and vinegar evolution. Fueled by growing consumer interest in wellness, the sector is steadily expanding, with such items as vegetable and seed oils losing share to higher quality and healthier selections, including olive oil, reports Euromonitor International, a London-based market research firm. U.S. sales of edible oils will total approximately $3.7 billion in 2017, up 7.2 percent from 2012, with a compound annual growth rate (CAGR) of 1.4 percent, Euromonitor notes. Revenues are forecast to reach approximately $3.8 billion in 2022, a 3 percent increase from 2017, with a 0.6 percent CAGR. “Healthy edible oil alternatives will continue to heavily influence demand in coming years,” Euromonitor states. “Current trends in oils revolve around minimal processing and novel ingredients.” Products with a “natural” or “organic” label also are likely to continue to perform better than items that consumers associate with high levels of processing or that make no mention of health benefits, Euromonitor adds. Indeed, oils and vinegars with clean, transparent labels that carry a health halo, including non-GMO selections, will become increasingly popular, says Colleen Nash, director of marketing for Mizkan America Inc., a Mount Prospect, Ill.-based vinegar supplier. “Consumers of all demographics want ingredients that they can understand,” she states. “They desire products with fresher, minimally processed ingredients that are simple and easy to

DON’T neglect to use eye-catching packaging 44

Store Brands /January 2018 / www.storebrands.com

pronounce and also are sustainable.” That interest in wellness is leading more brands to connect products to the SmartLabel program, notes Tim Jacques, retail private brand expert with the St. Louis-based United Soybean Board. Soybeans are used in the production of vegetable oil. SmartLabel is a tool that enables consumers to scrutinize product data by scanning QR codes on packages with their smart phones, as well as by visiting participating brands’ websites, searching the internet, and using a product search on the SmartLabel website. SmartLabel information includes nutritional data, ingredients, allergens, third-party certifications and social compliance programs. The initiative is run by the Trading Partner Alliance, a group formed by the Washington, D.C.-based Grocery Manufacturers Association and the Arlington, Va.-based Food Marketing Institute.

Educate the shopper

With more national brands embracing SmartLabel, it is becoming increasingly important for retailers to also provide data about their private brands, including the source of the oils and vinegars, Jacques notes. “Consumers across all demographic segments are more informed and are asking for increased label transparency,” he says. An increasing number of private brand oils and vinegars, meanwhile, consist of premium and healthier ingredients, including selections that are imported and GMO-free and oils that come from avocados and coconuts and have less saturated fat, says Diana Sheehan, director of retail insights for Kantar Retail, a Boston-based research and consulting firm. “Private label assortments are reflecting what shoppers are demanding,” she notes, adding that it is important that retailers spotlight attributes on packages to differentiate store brands from the national selections. Messaging can include country of origin and whether an item is natural or organic. “Packaging has to call out to shoppers from the shelf and make the buying decision easier for them,” Sheehan says. “Even stating that olive oil is imported can make the difference when a shopper is choosing between a store brand and another high-end option of equal quality.”

CATEGORY INTELLIGENCE OILS AND VINEGARS An emphasis on freshness also will attract more shoppers, particularly for olive oils, notes Mark Coleman, senior vice president, retail division, for Catania Spagna, an Ayer, Mass.-based oils supplier. “Olive oil is the opposite of wine in that it does not age well once harvested and bottled,” he says. “Consumers of extra virgin olive oil are starting to understand what the product should really taste like. Private brand developers can take note of this trend and learn how to capture the sub-category that is growing quite rapidly within the olive oil category itself.”

Make flavor a selling point

In addition to marketing products with health and quality

Cooking & Salad Oils Private Brands

All Brands

Dollar Sales (in millions)

$809.9

$1,810.4

Change vs. Year Ago

+10.5%

-0.1%

Dollar Share

44.7%

100%

Unit Sales (in millions)

211.7

425.3

Change vs. Year Ago

+5.4%

-0.9%

Avg. Price Per Unit

$3.83

$4.26

Private Brands

All Brands

Dollar Sales (in millions)

$365.6

$1,196.8

Change vs. Year Ago

+7.1%

+1.4%

Dollar Share

30.6%

100%

Unit Sales (in millions)

51.7

153.7

Change vs. Year Ago

+2.1%

-0.8%

Avg. Price Per Unit

$7.07

$7.78

Private Brands

All Brands

Dollar Sales (in millions)

$277.1

$641.8

Change vs. Year Ago

+10.0%

+15.8%

Dollar Share

43.2%

100%

Unit Sales (in millions)

128.0

227.8

Change vs. Year Ago

+5.2%

+7.2%

Avg. Price Per Unit

$2.17

$2.82

Olive Oil

Vinegar

Store Brands /January 2018 / www.storebrands.com

attributes, merchandisers can attract shoppers by offering more flavor varieties, Nash states, including selections that are influenced by international cuisines. “Global food trends are rising in popularity as consumers seek out new and interesting flavors to add to vegetable and grain-based dishes,” she says. Millennials are having the greatest influence on oil and vinegar development, Nash adds, noting that many are “foodies” who are searching for new tastes while valuing authenticity, transparency and sustainability. “Millennials participate in ‘meal-blurring’ where they tend to favor on-the-go snacking throughout the day rather than three fixed meals,” she notes. “This means product developers need to consider new ways that oil and vinegar can be used in quick and convenient meals.” Along with offering attractive products, retailers should also merchandise the selections in eye-catching packaging to further enhance awareness, Nash suggests. Coleman adds that retailers and their suppliers can develop oils and vinegars that are “truly better” than the national brands and convert shoppers with in-store sampling, stating it is important to “get out of the price war and make better products.” Yet, retailers still should develop pricing strategies that appeal to private brand shoppers, Nash notes, while also seeking to have the optimal amounts of store and national brands on shelves. Though retailers often situate oils and vinegars near baking products, salad dressings and marinades, merchandisers can generate even greater interest by also marketing items near complementary selections that might be part of recipes, such as mustard for homemade vinaigrette, Sheehan says. In addition, retailers can spotlight private brands by distributing recipe cards in which oil or vinegar is an ingredient; having co-merchandising displays with meat, produce and seasonings; and displaying signage that indicates product use such as noting that an oil is “good for dipping bread,” she states. “Because oil is becoming commoditized, retailers and manufacturers tend to deprioritize it from a merchandising perspective,” Sheehan says. “But there is room to generate more excitement such as by having endcap displays that connect to the other components that you might use oil for. Demystifying what is a simple category but sometimes still hard to understand could be very helpful.” SB Mitchell is a freelance writer from Wilmette, Ill.

CATEGORY INTELLIGENCE NUTS AND TRAIL MIXES

NOT YOUR AVERAGE SNACK Retailers can enhance the appeal of private brand nuts and trail mixes by emphasizing the healthy attributes while merchandising unique alternatives

Increasing shopper interest in quick snacks and better-for-you foods is spurring sales of nuts and trail mixes. Convenience and nutrition are key product purchase drivers, with many consumers seeking resealable packaging and single-serve containers along with value selections that are high in protein and fiber and free of artificial ingredients, reports Mintel, a global market research firm. While the nuts and trail mix category, which includes seeds, is active — with retail revenues reaching $8.6 billion in 2016, a 28 percent increase from 2011 — Mintel forecasts a growth slowdown. Sales, when accounting for inflation, will increase 9 percent to $9.9 billion by 2021, Mintel states, citing competition from other snack food options, including packaged snacks that have nuts as an ingredient. Still, the category is solid, with 88 percent of U.S. households purchasing nuts and 59 percent buying trail mix, Mintel notes in its June 2016 “Nuts, Seeds and Trail Mix” report, adding that peanuts, almonds and cashews are the most popular nut varieties. To help generate greater activity, merchandisers can include recipes containing nuts in marketing materials and on packaging while also touting wellness elements. “Brands should emphasize nutritional comparisons to other types of salty snacks that are less nutritious, such as potato chips, to further stress these products’ positive health attributes,” Mintel reports. “There is also opportunity to further alleviate concerns about sodium and fat content.” Indeed, more consumers are demanding clean labels and transparency and also want to know where products are from and how the items were farmed or grown, says Wesley Edwards, regional sales manager for Woodstock Farms, an Edison, N.J.-based supplier of nuts and trail mixes.

offerings as organic apple and honey almonds or cashews. Because there also is a greater shopper focus on premium items, retailers should merchandise more indulgent store brands, such as kettle-roasted cashews with toasted coconut, says Scott Reindel, vice president of business development and retail strategy for Trophy Nut Co., a Tipp City, Ohio-based supplier. “Most retailers market the same 14 to 16 items, including such basics as dry roasted peanuts, honey roasted peanuts and cashews,” he states. “But just offering the same selections in their own brands will turn the products into commodities.” Reindel notes that many consumers are willing to pay more for premium varieties and that retailers can develop innovative store brands to keep the category fresh. Getting merchandisers to launch new selections, however, can be challenging as many retailers fear change, he says. But such actions as eliminating duplicate national brand items from shelves to create more space for own brands is prudent, he says. “There is no reason to have three different types or brands of honey roasted peanuts,” Edwards agrees. “Develop a sriracha honey trail mix or

DON’T replicate national brand offerings; innovate with unique flavors and mixes

DO crossmerchandise nuts in the produce section and at the cash register

Keep vibrant with variety

Selections also are important as many shoppers, especially millennials, are seeking nuts and trail mixes with innovative flavors, Edwards notes. “Retailers must differentiate their brands and make their stores destinations by adding flavors that the national brands are not supplying,” he states, noting that options can include such unique www.storebrands.com /January 2018 / Store Brands

CATEGORY INTELLIGENCE NUTS AND TRAIL MIXES tequila lime almond and replace the duplicate SKUs with the retailer’s unique private brand.” Retailers, meanwhile, should work closely with suppliers that have consumer trend data, creative research and development departments and flexible packaging options to create the most alluring selections, he says. “The category must step away from hickory, mesquite and smokehouse almond flavors and add new varieties and flavor profiles,” Edwards adds.

Nutritional Snacks/Trail Mixes Private Brands

All Brands

Dollar Sales (in millions)

$502.8

$937.2

Change vs. Year Ago

-1.1%

+1.5%

Dollar Share

53.7%

100%

Unit Sales (in millions)

107.4

215.4

Change vs. Year Ago

-1.5%

+1.9%

Avg. Price Per Unit

$4.68

$4.35

Private Brands

All Brands

Dollar Sales (in millions)

$1,200.1

$4,033.0

Change vs. Year Ago

-2.6%

+1.9%

Dollar Share

29.8%

100%

Unit Sales (in millions)

252.9

885.6

Change vs. Year Ago

-5.2%

+3.1%

Avg. Price Per Unit

$4.75

$4.55

Snack Nuts

Toasted Corn Nut Snacks Private Brands

All Brands

Dollar Sales (in millions)

$0.5

$17.3

Change vs. Year Ago

-40.6%

+3.4%

Dollar Share

2.7%

100%

Unit Sales (in millions)

0.4

10.5

Change vs. Year Ago

-45.0%

+0.3%

Avg. Price Per Unit

$1.27

$1.66

Source: : InfoScan Reviews, IRI, a Chicago-based market research firm. Total U.S. supermarkets, drugstores, mass market retailers, military commissaries and select club and dollar retail chains for the 52 weeks ending Nov. 5, 2017.

Visibility is vital

Offerings with clean spices and flavors can be particularly strong differentiators and attractive attributes to list on product packaging, says Mike Swiatkowski, vice president of sales and marketing for Hickory Harvest Foods in Akron, Ohio. In addition to such callouts, packaging with high-end graphics and vibrant colors will create greater interest in store brands, he notes. To maximize visibility, retailers also must determine the most effective in-store locations in which to situate their private brand selections, Swiatkowski says, which can include the center store, produce section and front-end registers. The produce area is a particularly effective venue for merchandising nuts and trail mixes as many shoppers already perceive these products to be fresher and more natural, Reindel says. Retailers also can attach a fresh halo to private brands by situating items near the prepared-foods area of delis and spur activity by marketing nuts near complementary products, such as beer, he states. “Putting nuts in multiple locations throughout the store enables retailers to have their private brands play in spaces that used to just be for the national brands,” Reindel says. “The biggest challenge is getting retailers to realize that they can compete in the category with their own brands.” Indeed, it often is easier than expected for retailers to roll out unique private brands as developing products for a limited amount of stores requires relatively small manufacturing runs. “Retailers can be more nimble than the national brand suppliers,” Reindel notes. “But many don’t offer premium or innovative flavors because they don’t know such offerings exist or that they can include the varieties in private brands.” In addition to offering distinct selections, retailers seeking to generate loyalty also need their store brands to be of equal or better quality than the national selections, particularly because many shoppers are willing to pay high prices for products, says Stephen Stern, vice president of sales for Mister Snack Inc., based in Amherst, N.Y. “Cashews and pistachios are the two nuts for which people do not look at cost,” he says. “Consumers who want those items buy them.” SB Mitchell is a freelance writer from Wilmette, Ill.

Store Brands /January 2018 / www.storebrands.com

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CATEGORY INTELLIGENCE SAUCES, MARINADES, SALSAS

MAKE IT RELEVANT

DO crossmerchandise sauces and marinades

Merchandisers of sauces, marinades and salsa are feeling the impact of the health craze sweeping the grocery sector. Not only are consumers increasingly seeking items that carry a healthy halo, but also many are eschewing familiar products because of changes to their diets. Indeed, the top reason given by consumers for using less sauce is that they are decreasing their pasta consumption, states Mintel, a global market research firm, in its December 2015 “Cooking and Pasta Sauces, Marinades – US” report. Pasta sales have been struggling in large part because of consumers’ avoidance of glutencontaining and carbohydrate-rich foods, resulting in lower demand for sauces, Mintel notes. Mintel forecasts a 7 percent sales growth for pasta sauces from 2015 to 2019, similar to that of pasta. Total sales of cooking sauces, pasta sauces and marinades, meanwhile, are forecast to increase 13 percent between 2015 and 2020 to $6.2 billion, Mintel states, with marinades, the smallest segment, forecast to have the strongest growth, with a 17 percent increase to $1.6 billion. Driving marinade sales are a greater consumer interest in cooking, along with rising purchases of poultry and seafood — proteins that often are part of marinade recipes, Mintel states.

DON’T fail to develop private brand fresh salsas

Store Brands /January 2018 / www.storebrands.com

Because Mintel research found that half of all shoppers seek natural products with no additives or preservatives, as well as recipes containing simple or minimal ingredients, retailers are likely to boost or sustain activity by offering wellness-oriented selections. “Consumers are becoming more aware of how food impacts the body,” Mintel notes. “As millennials, the largest generation in American history, grow older, demand for more healthful sauces and marinades will grow.”

Hot salsa sector

Sales of pre-made salsa, meanwhile, also are on the upswing with suppliers producing healthier alternatives and newer flavors, states IBISWorld Inc., a Los Angeles-based market research firm, in its August 2016 “Pre-Made Salsa Production in the US” report. IBISWorld projects revenues to increase at an annual rate of 6.7 percent to $3.7 billion from 2016 to 2021, up from $2.7 billion in 2016. “The industry has experienced increasing revenue as per capita disposable income and consumer demand for Hispanic cuisine has risen,” IBISWorld states. “While the price of industry goods rose due to higher input costs, rising incomes allowed many consumers to choose quality dipping sauces made with vegetables to complement their snacks and meals.” Demand for premium salsas, meanwhile, including items that are gluten-free and organic, will rise as health and nutrition becomes more important, IBISWorld reports. Indeed, the greater interest by shoppers in healthy alternatives, along with newer flavors, is helping to fuel the launch of additional varieties of private label salsa, says Angelo Fraggos, chairman and chief executive officer of Italian Rose Gourmet Products, a Riviera Beach, Fla.-based salsa supplier. Consumers in diverse regions, he notes, are embracing salsa flavors and styles that are native to other geographic areas. “With today’s emphasis on food trends and the consumer’s greater willingness to try new food experiences, these regional and cultural pockets are crossing into national eating trends and expanding traditional market boundaries,” Fraggos states. Because of limited retail merchandising space, however, particularly in the refrigerated section of grocer-

ies, it is crucial that retailers still closely track and maintain inventories of the most popular selections to minimize out-of-stocks, he says. “Use category data to identify the building blocks of items that meet consumers’ everyday wants and add rotating seasonal offerings to keep interest in the section,” Fraggos suggests. The expanding shopper focus on fresh foods, meanwhile, also is likely to boost interest in fresh salsa and enable retailers to charge a higher price than for shelf-stable options, he notes. “The ‘fresh trend’ in salsa is in the early stages of development and many retailers are just beginning to address shelf-space expansion and optimize the opportunity in both the deli and produce departments,” Fraggos notes.

or below it, and therefore may not always catch the shoppers’ eyes,” Roerink states. In addition, merchandisers can make it easier for consumers to create meals with marinades by attaching identification tags to the most suitable meat and poultry cuts, similar to the labels that callout items in the case that are appropriate for grilling, she says. Because many shoppers, and especially millennials, crave variety, retailers can also generate and sustain interest in marinades, and

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Ready market for marinades

The marinade sector also is ripe for growth as more consumers are seeking ways to enhance meat, poultry and seafood selections. Indeed, with an expanding base of shoppers already paying premium prices to purchase pre-marinated proteins from the full-service cases of groceries, retailers that market containers of marinades are in position to steer consumers to the lower-cost, do-it-yourself option. “Shoppers are creatures of habit and will buy the same items again and again unless we manage to break through the routine purchase by inspiring them with ideas and easy solutions for a tasty dinner,” says Anne-Marie Roerink, principal of 210 Analytics, a San Antonio, Texas-based marketing research and marketing strategies firm. “Spices and marinades are an ideal way to do that.” She notes that retailers can trigger marinade sales by making displays visible and logical. “Marinades are often placed on top of the meat case or counter

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www.storebrands.com /January 2018 / Store Brands

CATEGORY INTELLIGENCE SAUCES, MARINADES, SALSAS Barbecue Sauce Private Brands

All Brands

Dollar Sales (in millions)

$51.7

$726.6

Change vs. Year Ago

+ 0.2%

-0.1%

Dollar Share

7.1%

100%

Unit Sales (in millions)

37.3

325.9

Change vs. Year Ago

+1.4%

-0.6%

Avg. Price Per Unit

$1.39

$2.23

Spaghetti/Italian Sauce Private Brands

All Brands

Dollar Sales (in millions)

$222.5

$2,381.7

Change vs. Year Ago

+6.7%

+1.7%

Dollar Share

9.3%

100%

Unit Sales (in millions)

124.6

1,040.9

Change vs. Year Ago

+8.0%

+0.1%

Avg. Price Per Unit

$1.79

$2.29

Store Brands /January 2018 / www.storebrands.com

subsequently meat and poultry, by rotating selections and offering flavors that align with the seasons or featured items, Roerink states. “Store brand meats have done very well in recent years and aligning them with private brand marinades and spices is a natural extension for the shopper,” she says. “The more retailers do the thinking for the consumer, the more likely they are to see an increase in items in the basket.” The biggest challenge in developing such cross-merchandising programs, however, is getting personnel in different store departments to cooperate, as the individuals often “think and operate within their own silos,” Roerink notes. “The minute you bring center store or produce items into the meat section, the big question becomes who is responsible for such tasks as rotating and stocking,” she says. “But in a world where all emphasis should be on growing basket size and thinking for the shopper, those are challenges that have to be overcome.” SB Mitchell is a freelance writer from Wilmette, Ill.

CATEGORY INTELLIGENCE PAPER PRODUCTS

SEEKING SAVINGS Slicing costs and offering value keys to private brand growth in household paper products

DO consider products featuring Through Air Drying (TAD), which offer improved absorption and softness

Lowering costs while matching or exceeding the quality of national brands is essential to growing private brands and producing acceptable margins for all partners involved in the household paper products category, says Steve Keiper, director of retail sales for Phoenix-based Royal Paper Converting, a manufacturer of 100 percent-recycled paper products. “The entire category is always looking for innovative ways to take out cost at every level of production and logistics while improving quality to meet or exceed the national brand standards,” Keiper explains. The category will always be a focus for retailers due to its size and household penetration, but volume will be driven by special packs offering consumers greater value, both through conventional grocery and other channels, says Marc Robinson, vice president of business development for Global Tissue Group in Medford, N.Y. Private brands currently capture a significant portion of household paper product sales: 20.2 percent of toilet tissue, 29.8 percent of paper towels, 24 percent of facial tissue and 46.6 percent of paper napkins, according to Chicago-based market research firm IRI. Store brands beat out the overall market in percentage change of dollar sales and percentage change of unit sales over the previous year in toilet tissue, paper towels and facial tissue, according to IRI. Statistics for the 52 weeks

DON’T forget that millennials want soft bath tissue without a lot of bulk

Store Brands /January 2018 / www.storebrands.com

ending Nov. 5, 2017, are: Total dollar sales of private brand toilet tissue rose 5.8 percent and unit sales increased 2 percent; paper towel dollar sales were up 4.5 percent while unit sales dipped 1.7 percent (less than the overall decrease of 2.5 percent) and facial tissue dollar sales increased 7 percent while unit sales went up 6.2 percent.

Developing trends

Though the online presence of private brands is still relatively small, Robinson points out that Amazon’s recent launch of its Presto brand of private label bathroom tissue and paper towels at competitive pricing presents an opportunity for store brands. “Traditional brick-and-mortar outlets will be able to compete on price with this channel, and consumers still want to touch and see the product,” Robinson explains. “Many retailers will use their own online platforms to give consumers choices (between) buying branded and store brands. How the retailer utilizes this data and assists in the growth of own brands will be the key to future success.” As for technology’s role in the category’s growth, Keiper believes Through Air Drying (TAD) paper products, which offer improved absorption and softness, will continue to be a strong trend in the private brand paper towel sector.

Building for the future

The majority of retailers have extensive amounts of data from loyalty cards; however, the data is not focused enough on their own brands’ value equations, Robinson asserts. “To win the race for the future, an all-in effort focused on own brands (that will) convince the consumer to switch will be the longterm benefit,” he adds. As for product development, all retailers expect innovations from their partners, Robinson says. His own company is focused on bringing various paper grades and types to market ahead of its competitors. Even so, many retailers are hesitant to test or commit to non-national brand equivalent products, Robinson says. To make exclusive innovations work requires commitment from both sides, he adds. In terms of the specific attributes consumers seek in the category’s products, Keiper says that towels must be absorbent, soft facial tissues must please consumers, and millennials want soft bath tissue without a lot of bulk.

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CATEGORY INTELLIGENCE PAPER PRODUCTS Toilet Tissue Private Brands

All Brands

Dollar Sales (in millions)

$1,722.9

$8,530.9

Change vs. Year Ago

+5.8%

-0.7%

Dollar Share

20.2%

100%

Unit Sales (in millions)

381.7

1,291.7

Change vs. Year Ago

+2.0%

-2.5%

Avg. Price Per Unit

$4.51

$6.60

Private Brands

All Brands

Dollar Sales (in millions)

$1,537.2

$5,154.6

Change vs. Year Ago

+4.5%

+0.5%

Dollar Share

29.8%

100%

Unit Sales (in millions)

455.8

1,000.9

Change vs. Year Ago

-1.7%

-2.5%

Avg. Price Per Unit

$3.37

$5.15

Paper Towels

ADVERTISER NAME

PAGE#

Millennials and baby boomers are two different types of consumers with the same needs but opposite buying habits, Robinson observes. The millennial generation is more comfortable with digital purchasing and is “most willing to be less national brand loyal.” The younger generation’s needs, both current and future, will probably only grow in volume and channel influence, he says. Boomers are more brand loyal and still want to shop at brick-and-mortar stores, Robinson says. However, they are accepting own brands in tissue as true national brand equivalents in quality — at substantial savings, he adds. This generational divide illustrates the power of omnichannel and how it will become more focused and successful, Robinson believes. “Change is ongoing, and the growth of own brand tissue will be a focus for all channels to drive traffic,” Robinson says. “Once brick-andmortar retailers focus on their own brands and are less influenced by national brands, everyone will win.” SB Cvetan is a freelance writer from Barrington, Ill.

ADVERTISER NAME

PAGE#

Bascom Family Foods . . . . . . . . . . . . . . . . . . . . . . . . . . 21

LiDestri Food & Drink . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Berner Food & Beverage . . . . . . . . . . . . . . . . . . . . .12-13

Massimo Zanetti Beverage USA . . . . . . . . . . . . . . . . . . 39

B.O.V. Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Maxwell Gida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Buendia Coffee, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Mother Parkers Tea & Coffee . . . . . . . . . . . . . . . . . . . . . 7

Casestack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC

Old Fashion Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Catania Oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Private Brands Consortium PBC . . . . . . . . . . . . . . . . . .BC

Delgrossos Foods Inc . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Private Label Manufacturers Association. . . . . . . . . . . 11

Copper Moon Coffee, LLC . . . . . . . . . . . . . . . . . . . . . . 43

Riverbend Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Furlani’s Food Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Royal Paper Covering Inc. . . . . . . . . . . . . . . . . . . . . . . . 55

Giovanni Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Tetra Pak Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Global Tissue Group . . . . . . . . . . . . . . . . . . . . . . . . .IFC-3

Virginia Diner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Italian Rose Gourmet Products. . . . . . . . . . . . . . . . . . . 51

Westrock Coffee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

ITI Tropicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Woodstock Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 www.storebrands.com /January 2018 / Store Brands

CATEGORY CLOSEUP

WATER

Gulping It Down Top reasons

consumers drink bottled water Hydration To quench their thirst Better quality than tap water Digestive health Skin health Convenience Weight loss To stay full Based on Lightspeed/ Mintel survey of 1,760 consumers who are 18 and over

Americans are now drinking more bottled water than soda, according to research and consulting firm Beverage Marketing Corp. Bottled-water consumption in the United States reached 39.3 gallons per capita in 2016, while carbonated soft drinks slipped to 38.5 gallons, according to Beverage Marketing Corp. Strong sales growth in sparkling water has been key to growth from 2015 to 2016, while the convenience/PET still water segment and the jug/bulk still water segment have seen sales improve, but more modestly, according to Mintel. A positive macroeconomic setting and positive demographic trends including more consumers aged 25-34 and Hispanic families should help bolster bottled water growth. The market is forecast to remain strong and post 44.3 percent sales growth from 2016-21, reaching $28.8 billion in 2021.

THE BOTTLED WATER MARKET GREW

6.4% IN 2016, REACHING ALMOST

$16.5 billion. Source: Mintel

Bottled Water Sales

Bottled Water share of segment

52 weeks from October through October

BY YEAR

Store Brands / January 2018 / www.storebrands.com

PRIVATE BRANDS IN BILLIONS

ALL BRANDS IN BILLIONS

77.5

9.1

2012-13

23.7

76.3

9.5

2013-14

24.1

75.9

10.3

2014-15

24.5

75.5

2015-16

24.7

75.3

3.0

3.3

3.6

2013-14

2014-15

2015-16

ALL BRANDS PERCENT

22.5

2.8

2012-13

PRIVATE BRANDS PERCENT

2011-12

BY YEAR

8.9

2.6

2011-12

Source: Nielsen

While key benefits of bottled water include its portability and convenience, the wide availability of refillable water bottles undercuts these advantages, according to Mintel. Forty percent of consumers report using refillable water bottles, which are often promoted as cost-effective and eco-friendly alternatives to bottled water.

11.0

Source: Nielsen

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