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Private Label Hall of Fame
Grocery trends from Expo West
Kroger’s new strategy April 2019 | www.storebrands.com
OUT OF THIS Earth Fare is setting a new natural standard with clean labels and private brands
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Volume 42 No. 4 April 2019
DEPARTMENTS 4
Editor’s Take
6
Viewpoint
CONTENTS
8 New Horizon 9
Around the Industry
10
Getting Social
38
End Cap
CATEGORY INTELLIGENCE 27
Condiments
28
Deli Meats
32
Salty Snacks
35
Paper Products
28
12
COVER STORY
Out of this world Earth Fare is setting a new natural standard with clean labels and premium private brands
FEATURES 18 Private Label Hall of Fame Private brand prominence This year’s five inductees have made unparalleled contributions to the industry
25 Trending Grocery trends from Expo West Here are the big ideas spurring dramatic CPG innovation, which could bode well for private brands
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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. www.storebrands.com / April 2019 / Store Brands
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EDITOR’S TAKE
Business Intelligence for an Evolving Market
8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631 (773) 992-4450
Vice President/Brand Director
LEAVING ‘GENERIC’ IN THE DUST
Eric Savitch
856-489-3336
esavitch@ensembleiq.com
EDITORIAL Editor-in-Chief
Lawrence Aylward
(330) 635-2586
laylward@ensembleIQ.com
Managing Editor
Gina Acosta
(813) 417-4149
gacosta@ensembleIQ.com
Digital Editor
Louisa Hallett
(904) 294-6764
lhallett@ensembleiq.com
Contributing Writers
Rich Mitchell, Dana Cvetan, Nevenka Jevtic
ADVERTISING & SALES Associate Brand Director (708) 565-5350
It was one of those industry roundtable discussions that you wish would have gone on for a few more hours. As was, it lasted an hour, and Brian Sharoff, president of the Private Label Manufacturers Association (PLMA), said it may have been the best roundtable discussion ever held at one of the association’s meetings, this being the PLMA 2019 Annual Meeting & Leadership Conference held in March in Pebble Beach, Calif. The roundtable was billed as the “Anniversary Panel,” as the PLMA was celebrating its 40th anniversary at the meeting. It was moderated by food industry consultants Michael Sansolo and Donna George, and included five private label veterans (some retired) who weren’t afraid to discuss some of private label’s biggest happenings and challenges throughout the years. To no one’s surprise, price often dominated the conversation. Price in private label has been both a blessing and a curse. In the old days of generics, which were often associated with private brands (and unfortunately still are) but really have nothing to do with them, price was a curse. Many products were cheap and their poor quality reflected their low prices. Unfortunately, consumers associated generics as retailers’ own brands. (Some retailers, however, did put their names on the products, which didn’t help matters.) Roundtable participant Raymond Swain, vice president of corporate procurement at Commerce, Calif.-based Smart & Final, which operates about 300 grocery and foodservice stores in several Western states, remembered how challenging it was to dig out from the ugly reputation that generics caused in the 1970s and 1980s. “We spent 15 years trying to win back consumers with quality private label products [after generics waned],” he said. “Thankfully, we got to that point and beyond, but it was quite a challenge.” Roundtable participant James Tomshack, the former senior vice president of sales for Allegan, Mich.-based Perrigo Co., which offers private-branded pharmaceuticals, pointed out that consumers always want to save money and always will. But generics will never satisfy consumers no matter how little they cost, he stressed. “What generics showed is that price alone will not satisfy consumers,” he added. Unfortunately, some consumers and even some so-called grocery experts still believe generics were the beginning of private label. And they still refer to all private brands — even premium ones that have evolved into incredibly successful store brands in terms of quality and innovation — as generics. Retailers and manufacturers have fought hard to shed the generic label and convince consumers that their private brands, which offer better quality than generics, aren’t generics. It’s unfortunate that the word “generic” still comes up in talk about private brands. Today’s store brand innovators and developers deserve better. It’s easy to understand why they loathe and shun the word. They have been running a long time to get away from it. But the good news is that, slowly, they are leaving the term “generic” in the dust. As more consumers identify retailers’ private brands as stalwart product lines, the more the word will fade from the industry vernacular.
Maggie Kaeppel
mkaeppel@ensembleIQ.com
Senior Sales Manager
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EVENTS • MARKETING • DIGITAL • RESEARCH • CIRCULATION CORPORATE OFFICERS Executive Chairman - Alan Glass Chief Executive Officer - David Shanker Chief Financial Officer - Dan McCarthy Chief Operating Officer. - Joel Hughes Chief Innovation Officer - Tanner Van Dusen Ann Jadown – Chief Human Resources Officer Executive Vice President, Events & Conferences – Ed Several
Lawrence Aylward, Editor-in-Chief laylward@ensembleIQ.com
2015
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Store Brands / April 2019 / www.storebrands.com
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Nov.17-19 • Chicago Presented by the Private Label Manufacturers Association Visit www.plma.com
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VIEWPOINT
By Todd Maute
Todd Maute, a partner at CBX, a brand agency and retail consultancy, can be reached at todd@cbx.com.
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Digital activation is the new imperative for store brands If you go to Jet.com and search for “Uniquely J Badass Espresso,” even before you hit “enter” a picture of the package pops into view. It’s minimalist in the extreme: a black-and-gray image of a skull that looks a bit like a design by tattoo artist Don Ed Hardy. Next to the thumbnail you see a “USDA Organic” logo, an element that might otherwise have gone directly on the front of the package. Click the thumbnail and you get even more product info: The espresso has 48 reviews and a four-star rating; its $7.72 price has been reduced from $9.65. To the left are four more pics, including one with raw sugar dumped on a table and sculpted into the shape of a skull. This Walmart-owned brand is an example of the kind of freedom you get as a designer when the online experience does the functional work for you. Inherent in this approach is the recognition that today’s younger, digitally savvy consumers are less brand-loyal. That means giving them an experience that goes way beyond the physical shelf — everything from digital and social media content to direct-toconsumer packaging. It’s time for retailers and designers involved in creating store brands to think harder about, not just the physical space of the store, but also the digital realms in which younger consumers in particular constantly reside. That’s precisely the strategy behind The Kroger Co.’s new cloud-based, AI-driven digital shelf collaboration with Microsoft. Instead of relying on functional packs, it uses long, rectangular screens to digitally display all kinds of product and promotion info. How smart is it? Cameras tell the system whether you’re young or old, and the system adjusts the messaging accordingly. If
you happen to be using Kroger’s Scan, Bag, Go app, it will even guide you to the next product on your list. Kroger and Microsoft are now testing it at stores in Monroe, Ohio, and Redmond, Wa. By providing out-of-stock data, helping associates fulfill online orders faster and creating revenuegenerating opportunities (by selling ads on the digital shelves), it stands to offer benefits beyond the customer experience.
The rules of store brands are changing fast. Digital activation is the new frontier. For years now, savvy retailers have been operating under the correct assumption that the old oneor-zero distinction between bricks-and-mortar and online shopping is collapsing. This insight is reshaping their whole approach to the marketing and design of store brands, especially those targeted toward millennials. As a result, major national retailers and grocers are increasingly supporting their store brands with messaging on the likes of Facebook, Instagram and YouTube, often with the help of popular influencers with millions of followers. In some cases, millennials are now seeing these brands online, responding to them and placing orders — even in markets that lack any bricks-and-mortar operations for these retailers. For today’s store brands, the strategic imperatives hinge on competing, not just with national brands at shelf, but also with the likes of Birchbox, Brandless and Amazon. You need to understand how dynamic digital displays, and maybe even augmented reality, will affect the priority list for the package. The rules for store brands are changing fast. Digital activation is the new frontier. Retailers and designers need to raise their game. SB
Store Brands / April 2019 / www.storebrands.com
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PRO
• OLD FASHI O
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QU
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ING AZ M
The NEW TASTES from Old Fashioned Cheese
Come see what’s at Old Fashioned Foods-–PLMA PLMABooth Booth #F3730 #F3730 Come by seetowhat’s newnew at Old Fashioned Cheese Old Fashioned Foods • PO Box 111 • 650 Furnace Street Mayville, Wisconsin 53050 800-346-0154 • www.oldfash.com
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NEW HORIZON BY SARAH ALTER
NEW HORIZON
Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing 12,500 members, 900 companies and 22 regional groups in the United States and Canada. Learn more at newonline.org.
BREAK THE GLASS CEILING
(OR BREAK THE LAW) Last fall, California became the first state to pass a law requiring publicly traded corporations to add women to their boards. Hmm, “All male? Go to jail.” Not quite. The state law requires publicly traded companies headquartered in California to appoint at least one woman to their boards by the end of this year. By the end of 2021, a minimum of two women must sit on boards with five members. There must be at least three women on boards with six or more members. Companies that fail to comply face fines between $100,000 and $300,000. “People would prefer that you wouldn’t have to mandate,” Tierney Remick, vice chairman and co-leader of Korn Ferry’s Board and CEO Services practice, said at the time the law passed. “But in reality, [progress is] not moving fast.” As counted just before the law passed, 377 California companies tracked by the Russell 3000 Index (the largest U.S. stocktraded companies) must add at least one woman to their boards to comply with the law, according to Board Governance Research LLC. In total, nearly 700 women must be seated in the next three years. These figures don’t reflect the scarcity of women on boards of smaller public companies headquartered in the state, many of which are likely to have all-male boards, Board of Governance Research CEO Annalisa Barrett told The Associated Press. “Smaller companies haven’t had as much pressure on them to take advantage of the
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benefits of having a diversified board,” she noted. What does it say about deeply entrenched bias in corporate America that the threat of a $300,000 penalty will do more to move the needle on gender equality than the myriad proven competitive and bottom-line benefits associated with women’s leadership? Scores of studies have shown the business benefits of greater representation of women at the most senior levels. Gender diversity and inclusion bring better decision making, higher returns on investment, improved efficiency and lower turnover. One report, by Lehigh University’s Corinne Post and Georgia State University’s Kris Byron, found that women tend to think more broadly and holistically and, companies with women board members are more socially responsible. When that type of thinking is brought to the boardroom, decision-making implications for employees and the communities where companies do business are more likely to be given a voice. PRESSURE FOR PROGRESS At the current rate of progress, though, true equality at the senior level is decades away. The glacial movement is caused, in part, by the many men and women who are satisfied with so little progress. Nearly half the men and a
third of the women surveyed for McKinsey’s Women in the Workplace 2018 study believe women are well-represented at the senior level when they fill just one in 10 roles. Even so, the California law comes at a time when public, shareholder and institutional investor pressure to increase gender diversity at the top is on the rise. Other states — including Illinois, Massachusetts, Pennsylvania, Ohio and Colorado — have issued resolutions encouraging gender diversity on corporate boards. More than 80 percent of institutional investors surveyed by the EY Center for Board Matters reported board composition, with a focus on diversity, would be a top priority last year. “This may include gender, race and ethnicity, age, nationality and geography, socio-economic backgrounds or other forms of diversity, but gender was most commonly cited, partly due to the lack of consistent disclosure on any other characteristic,” EY reported. In February 2018, BlackRock Inc., the world’s largest asset manager, announced it wanted its portfolio companies to have diverse boards, noting “we would normally expect to see at least two women directors on every board.” The firm also asked some 300 companies in the Russell 1000 that have fewer than two women on their boards to disclose their approach to boardroom and employee diversity. Still, California’s law has been opposed by nearly three dozen business groups and will most certainly be challenged in court, likely by the California Chamber of Commerce. But if it takes a state mandate and fine to break down barriers and move toward gender equality, I say, “One down, 49 to go.” SB
Editor’s note: This is the second of six columns that Store Brands is running in 2019 from the Network of Executive Women (NEW).
Store Brands / April 2019 / www.storebrands.com
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AroundtheIndustry Shoptalk coverage
Kroger’s new differentiation strategy Grocer’s Gil Phipps details Our Brands’ sustainability focus during presentation By Gina Acosta
Gil Phipps (left) said more consumers want to make a difference by purchasing products that are sustainable.
Retail innovation is usually associated with seamless checkout, last-mile delivery and personalization. But for The Kroger Co., staying ahead of competitors means keeping a laser focus on private brands, and the next phase of that strategy is all about sustainability and Fair Trade Certification. In a sign of just how far traditional grocers have evolved amid evolving consumers and competitors, Gil Phipps, Kroger’s vice president of branding, marketing and Our Brands, told attendees at the Shoptalk retail conference in March in Las Vegas about the grocer’s sustainability efforts in the Philippines, Rwanda and Egypt. According to Phipps, Kroger believes that having a premium and exclusive product is no longer enough. It must also have a degree of social responsibility built in. “We develop our private brand products by taste profile, but we are definitely finding that different generations resonate differently with
different brands,” Phipps said. “And what we’re finding with millennials and how they react with a [private] brand like [Kroger’s]Simple Truth is 80 percent of millennials say their decisions on what to purchase is driven not only by the products that make them happy but also by products that are also socially responsible.” Phipps said more and more consumers are shopping based on how they can improve and change the world by what they’re buying. “Simple Truth is the largest brand for Fair Trade. Last year we went to the Philippines and made a series of short documentaries taking consumers on that journey,” he said. “It allowed customers to realize, ‘I can make a big difference, I can effectively change the world by purchasing this product.’ ” Kroger’s Simple Truth — the largest natural and organic product line in the country — reached $2 billion in annual sales in 2018. Simple Truth’s current
portfolio of Fair Trade products spans multiple commodities, including coffee, cocoa, coconut, tea, sugar and agave, and leads the private label grocery industry in Fair Trade offerings. To earn the Fair Trade Certification, farms must meet and adhere to a rigorous set of social, environmental and economic standards. Once certified, farmers and workers earn a premium on top of every sale which goes into a community-managed bank account. These funds are then used on projects in areas like health care, education, water and food security to foster advancement in the community. At Shoptalk, Phipps spoke in detail about the company’s sourcing decisions on its private brand coconut products. Cincinnati-based Kroger is sourcing only Fair Trade Certified organic coconuts for its own brand products. Kroger wants consumers to know about its commitment to sustainability. “We just got back from Egypt and Rwanda,” Phipps said. “We’re doing another documentary series. Consumers want to know the story, they want to know where [a product] is grown, how it’s selected, that they’re getting the best product, and that it’s really improving people’s lives,” Phipps says. Around 92 percent of Kroger customers shop its private brands, Phipps said, and the reasons for that are increasingly not just about product quality or even store experience. “We are really going to lean in to Fair Trade. Our Brands is how we differentiate, and why someone would drive by a competitor, either physically or online, and shop at our stores,” Phipps said. “And private brands are only going to keep growing. SB Acosta is managing editor of Store Brands.
www.storebrands.com / April 2019 / Store Brands
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GETTING SOCIAL
Q A with Robin VanDenabeele Director of Exclusive Brands, IGA
How did you come into the world of private brands? I started my career in the consumer packaged goods/food world when I graduated from Western Michigan University’s food marketing program. From that day forward I have always been slicing and dicing data or researching food consumption or working on brand strategy. I took a risk after being on the data and analytics side to move over to category management, and that’s how I landed in the private label world. Describe the private brands industry in one word. Limitless … there is nothing private about private brands. We should always shout to the moon about the beauty of brands that we believe in. During her off-time, Robin VanDenabeele enjoys jet skiing with family members, including her niece Adaline.
What do you like most about the industry? The ability to create an experience from a retailer’s vision through taste, quality, innovation and connection. I promise myself that there should be an experience with each item that’s launched. What do you dislike most about the industry? When someone doesn’t believe in my vision. I tell myself to keep the faith and always hustle harder. What one great thing does the industry have going for it? The consumer is really digging the innovation.
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What is the industry’s biggest challenge? Import challenges, lead times, minimums, speed to market and business closures. What trait in yourself do you attribute most to your success? Well, there are a couple that I believe shaped my character and success: being an achiever, activator, strategist and visionary. What is the biggest obstacle you have ever overcome? Realizing at 27 years old that going back to college was critical to shaping my future and the future of others that I can mentor. It’s 5 o’clock (or later), what do you do for fun? Do you mean 5 a.m.? I am most likely doing an Orange Theory class. I love running. You have a week off. Where do you go and why? I would most definitely go skiing in Utah or Whistler, B.C. If you were born 100 years ago, what would you have done for a living? I would have been an artist or a sculptor. What song do you love to crank up in the car? “Don’t Stop Believing” by Journey. SB
Store Brands / April 2019 / www.storebrands.com
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Ab fea em ret
OUT OF THIS Earth Fare is setting a new natural standard with clean labels and premium private brands If you ask Frank Scorpiniti, the president and CEO of Earth Fare, about the mission of his fast-growing retail empire, he is quick to correct you. “We’re trying to have a higher purpose,” Scorpiniti says in an exclusive interview with Store Brands. “We are a health care provider. And I think, if you’re a health care provider, and the starting point is ‘do no harm,’ then you can’t put the deleterious chemicals on the shelf that are everywhere else today. That’s just not what we choose to do. So many of our customers that have traded with us for a long time, they enjoy that they can trust us with their families and do their only shop with us.” At a time when the retail industry is crowded with everyone from Amazon to dollar stores to convenience stores to drugstores
selling groceries, Earth Fare is trying to raise the standards of retail and the food industry ever higher — with private brands playing a major role. Earth Fare is, in fact, another one of many natural grocery players in retail, but it’s not just another Sprouts Farmers Market, Lucky’s Market or other specialty grocer trying to take share from supermarkets and mass retail. Earth Fare is different because it has made an aggressive and bold push nationwide to sell what it calls “truly natural foods.” After the National Center for Health Statistics first reported in 2015 that life expectancy for Americans declined for the first time in more than two decades, Earth Fare seized on that data and decided to take the “clean label” movement to the next level. In the years since 2015, life expectancy in the U.S. has continued to decline, something that hasn’t happened in more than 100 years, according to the Centers for Disease Control and Prevention.
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Store Brands / April 2019 / www.storebrands.com
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Above, the new Earth Fare in Wesley Chapel, Fla., features private and branded label bulk foods. At right, employees restock produce wearing T-shirts with the retailer’s value proposition on their backs. In 2017, Earth Fare accelerated its expansion plans and launched a new campaign called “Live Longer With Earth fare” aimed at empowering Americans to take back their health through their food choices. The company expanded what it calls its “Food Philosophy” to forbid hundreds of chemicals and ingredients from making their way onto store shelves. The standard is among the strictest in U.S. food retail. Today, Earth Fare sells foods and products that are free of hormones, antibiotics, preservatives and artificial ingredients. The grocery chain boasts more than 4,000 non-GMO items storewide, with more than 1,000 gluten-free products and a wide assortment to meet other dietary needs as well. Earth Fare has also been extending these strict standards to its private brands program, which it has been aggressively expanding almost as much as its store footprint. The company now has a roster of more than 1,300 private label products and all of them are made with only non-GMO ingredients. At least half of the retailer’s store brands are also certified organic. As shoppers become more conscientious about health and wellness, there’s a growing demand not just for stores with natural foods, but also for stores with stricter food standards like Earth Fare’s, Scorpiniti says. “Our pledge is what makes us different from any other retailer today,” he adds. “The ethos of our business is that there’s truly a spirit in people’s minds, whether it’s our customers or our team members, that they believe in this mission, that we’re helping people live healthier lifestyles and making it easy to do so. And that’s what helps us attract some of the best people in the industry to work for us. And that’s the enthusiasm at retail that we bring to our customers.”
Earth Fare, with its strict natural Food Philosophy, might seem like a recent entry into the grocery space from the more healthconscious West Coast. But the chain actually started back in 1975 as a tiny one-room shop in Asheville, N.C., by a man named Roger Derrough. He wanted to open a store where shoppers could feel confident enough that they didn’t necessarily have to turn around every package to look at the ingredients. Back then, the company was called Dinner for the Earth. “Roger came up with the name Dinner for the Earth because he thought food grown ecologically was good for the Earth,” said Laurie Aker, a spokesperson for Earth Fare who showed off the company’s 51st store in the northern suburbs of Tampa, Fla., earlier this year. “In the early 1990s, Derrough decided to expand the smaller operation into a premier grocery store chain.” In 1993, Earth Fare began to define its Food Philosophy, starting by banning hydrogenated oils. Over the years, the company’s philosophy continued to evolve. Earth Fare was the first major grocer to ban highfructose corn syrup. The company says its employees read product labels so that shoppers don’t have to. Its list of banned items, called the “Boot List,” regulates the brand’s Food Philosophy and has grown to include over 100 ingredients, including artificial fats and trans fats, added hormones, artificial sweeteners, bleached or bromated flour, antibiotics, artificial preservatives, and artificial colors and flavors. Earth Fare’s early and aggressive push into clean label has resonated with shoppers and paid off for the company. Since the 1990s, the retailer has grown to having a footprint of 54 stores across the Southeast, Midwest and Mid-Atlantic. The www.storebrands.com / April 2019 / Store Brands
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Above, Earth Fare has an expanded assortment of popular plant-based products. At right and below, the retailer takes pride in exclusive in-store features such as bulk oil and vinegar and an organic salad bar.
company now plans to at least double its store footprint by 2024. The rapid expansion follows the chain’s new access to capital after Oak Hill Capital, a private equity firm, acquired an 80 percent interest in the brand in 2012. In 2015, Earth Fare reportedly had more than 2,500 employees and estimated revenues of $239 million, according to the Charlotte Observer. “We know where the next 50 stores are,” Scorpiniti says. “Our team has been to the locations, and we’re under various levels of negotiations with landlords. We announce them as they’re signed. Florida is definitely an area of focus for us.” The company says it tries to localize each store as much as possible through its Community Advisory Boards program. “Whenever we go into a new market, we hand-select anywhere from 15 to 25 individuals. It’s an opportunity for us to meet with them and ask them, ‘What are your ideas and thoughts and suggestions? What is your neighborhood in need of most regarding healthy food options?’ ” Aker says. “To my knowledge, I don’t think any other grocery store has a program quite like ours. So at the end of all the meetings, we put these ideas on features in-store, and we merchandise products that the board feels the community will gravitate toward.” While Earth Fare differentiates itself with strict standards on natural foods and a focus on wellness, the retailer also extends those standards to how it builds and operates its stores. Each Earth Fare store is an easy-to-shop, 25,000-square-foot box with a reflective roof designed to keep the store cool sustainably. The stores feature concrete flooring free of harsh chemicals and, if a customer has to stop at the restroom, he or she will find organic hand soap. The water misters over the fresh produce use only filtered, reverse osmosis water to ensure that organic produce stays organic and free from contaminants in tap water. With more shoppers looking to food as a way to prevent and 14
treat disease, Earth Fare has hired a chief medical officer to advise the leadership team and write customer communications in-store. Angela Hind, Ph.D., a former internist, works across all departments to implement and oversee a corporate health and wellness strategy that fulfills the grocer’s guiding principles of new product selection and merchandising to ensure the healthiest assortment in stores. “Our country has an unprecedented epidemic of chronic illness from the food we eat,” Hind says. “Grocery stores have enormous power and responsibility to step up and be part of the solution by providing healthy food to everyone. That is Earth Fare’s mission, and my role as chief medical officer demonstrates Earth Fare’s commitment to being a place of wellness for its customers, its staff and for our society.” For Scorpiniti, Hind’s role is a deeply personal reminder of his drug store days. Scorpiniti is a pharmacist by training who led transformations at Rexall Pharma Plus in Canada and Duane Reade in New York before becoming CEO of Earth Fare in 2015.
Store Brands / April 2019 / www.storebrands.com
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“As a pharmacist, here’s what I saw. My patients just kept getting sicker and sicker. They started with an anti-hypertensive drug. Then they’re on an antilipidemic drug. Then they would get on something for diabetes. And then they would graduate to insulin. And it goes on and on,” Scorpiniti says. “And so I asked myself, how do we stop all that? I believe we stop all that with what we eat.” Earth Fare has been leveraging its intense focus on wellness and clean label products to also take private label to the next level. The company offers private brand products in categories across the store, from pantry staples to fresh meats and produce to personal care products. “That is what sets us apart from a lot of the grocery stores where there’s natural and private brands,” Aker says. “We have a private brand team that actually goes out and visits with the different vendor facilities to make sure certain practices are being followed 100 percent across the board.” Around four years ago, Earth Fare launched a rebranding of its private label program, Aker says. “We really wanted the package to speak to the consumer,” Aker says. “We wanted to tell a story through the photography on it, and the packaging now is just beautiful.” Along with the rebranding, Earth Fare greatly expanded its assortment of private label products. Earth Fare now offers three tiers of private label, from value products to specially curated premium lines. The company says its store brand offerings help create a value proposition for the natural foods shopper that is irresistible. “We’re really proud of our private brand program,” Aker says. “It’s very affordable, it’s a compelling value, it offers great selection. I think that when people come in here and see our private label, they think, ‘I can afford healthy eating.’ We’re trying to make healthy eating easy and accessible for everyone everywhere. Private brands are helping us do that. And we’ll be growing that program more and more.” Its latest private label line, a premium range called Handpicked, Discovered by Earth Fare, launched last year and has
been a big hit with shoppers. The curated line of globally inspired products with sophisticated flavor profiles adheres to the grocer’s stringent Food Philosophy. “Our Handpicked product line is free of artificial ingredients and harmful additives, and — like all of our private label food products — is sourced using non-genetically modified ingredients. The result is unique, flavorful and authentically sourced products,” Scorpiniti says. To create the new line, Earth Fare says its private brand team traveled the globe, sourcing frozen vegetarian entrees from Thailand; hand-topped, wood-fired pizzas from Modena, Italy; and awardwinning brie exclusively from a famous creamery in Vermont. When it comes to higher quality in private label, Earth Fare also extends that to the meat and seafood department, which carries an impressive array of private brand fresh and frozen meats and sustainable seafood, much of which is organic. The company recently launched a private label frozen shrimp line and two meal solutions programs called 123 Meat and 123 Fish, many of which feature Earth Fare private brand ingredients. Each meat or seafood product comes fresh or frozen, already marinated or seasoned, and ready-to-cook. “We have the highest quality meat and seafood in the industry, hands down. And our private brand chicken is free of GMOs,” Aker says. “All of the seafood that’s sold at Earth Fare will be 100 percent traceable, sustainably sourced as well as additive free.” Earth Fare has what it calls a Day Boat program, in which the retailer is able to buy from seafood suppliers whatever is on the boat for that day, no matter how small or how large the catch. “The program offers security for these folks that are going out there, but also it means our seafood isn’t sitting on the boat for days on end,” Aker says. “So with the Day Boat program we can offer seafood that is extremely fresh. From water to here in the store it’s about a 24to 48-hour turnaround, which is phenomenal for a grocery store.” At the Earth Fare store in north Tampa, shoppers ogled exclusive features not seen in any other grocer in the area, such as a self-service juicing station and bulk oil and vinegar stations (including private label options), as well as organic foods and spices sold in bulk. An extensive prepared foods department with many organic options also awaited shoppers, along with a fresh salad and hot bar and ready-to-go packaged meals. The bakery offered a tempting display of fresh-baked goods, including traditional French macarons, a 98-cent signature baguette and several artisan bread options. All of the breads and many of the other bakery products were organic. While Earth Fare has seen success differentiating itself through a focus on wellness and clean foods, Scorpiniti says there’s room for Earth Fare to grow even more because it offers something that its competitors do not. “When we launched the Live Longer campaign in 2017, we issued a challenge to any retailer in America. We said we’d fly to their office, we would put our entire management team on an airplane, and show any retailer how to be a clean retailer,” Scorpiniti says. “Nobody took us up on that challenge. But we’re going to continue to make health a priority. We could sell more stuff, but we would not sleep well at night doing it. We’re not going to go there. We are growing at 20 percent a year or so. We must be doing something right.” SB Acosta, managing editor of Store Brands, can be reached at gacosta@ensembleiq.com
www.storebrands.com / April 2019 / Store Brands
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Private brand prominence This year’s five inductees into the Private Label Hall of Fame have made unparalleled contributions to the industry By Lawrence Aylward
They are the people behind the notable progress of private brands. The Private Label Manufacturers Association (PLMA) began recognizing them in 2006 when it began the Private Label Hall of Fame, which with this year’s class now includes 64 inductees. Over the years, the Private Label Hall of Fame has welcomed retailers, vendors, thought leaders and pioneers who helped propel the profession to prominence. The 2019 inductees are worthy additions to that list. Without them, the private label industry wouldn’t be where it is today — they have made unparalleled contributions. To identify those worthy of induction into the Private Label Hall of Fame, the PLMA and Store Brands solicit nominations each year from a wide range of industry experts. The individuals selected must have contributed significantly to store brand development and innovation; advanced the growth of private brands through creative marketing, merchandising and promotions; improved manufacturing, packaging or quality assurance processes in the industry; and/or served as champions of store brands within their own companies, business communities and the consumer marketplace. Let’s meet the distinguished members of this year’s class:
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Nancy Cota — Part of the evolution
d There’s no denying that Nancy Cota is absolutely thrilled to be inducted into the Private Label Hall of Fame. “This is really special. It means a lot,” she says. But what means more to Cota, the vice president of own brands, product management, innovation and brand management for Boise, Idaho-based Albertsons Companies, is that she has been able to play a role in what she calls “this huge evolution” of private brands, an industry she remembers as fledgling when she began her career in the grocery industry more than 40 years ago. “I’ve been able to see the industry grow from just being a value price play to being an industry that leads and innovates and offers products that shoppers trust,” Cota says. “It’s exciting to be alive to live that and see how private brands have evolved to that degree.”
Oh, Cota has lived it, all right. Her impact on the industry has been considerable. Albertsons Companies, which owns Safeway where Cota spent several years of her career, recently achieved 25 percent market share for its private brands. Cota had much to do with that. While with Safeway, Cota spearheaded the launch of the retailer’s free-from Open Nature store brand in 2011. She also led the development of Albertsons’ Primo Taglio (premium meats), Waterfront Bistro (seafood) and Signature Café (fresh meals) lines. She has made major contributions to the retailer’s O Organics line, now a $1 billion brand. When she walks in a Safeway or other company-owned store and sees the results of her work on store shelves, Cota won’t deny that it’s a wonderful feeling. But it’s a motivator, too. “I see the fruits of it,” she says, “and it fuels me to move on to the next level. I inspire myself because I get excited about what I do. It’s just not a job for me. It’s something I really love. … When I look at my career, I feel very blessed. It’s always nice to feel like you contributed.”
Terry Lee — Three times an impact Terry Lee steered successful private brands programs for not one … not two … but for three major retailers. It doesn’t get more hall of fame than that. In his more than 30-year career in retail, with most of those years spent in private label, Lee was vice president of corporate brands for Safeway (1996-2000), vice president of corporate brands for Albertsons (2002-2006) and vice president of private brands for Dollar General (2008-2011). “As far as I know, I’m the only individual that has had the opportunity to lead private brands programs as an officer for three major retailers,” Lee says. “I’m incredibly fortunate.” So were the store brand programs of Safeway, Albertsons and
Last November, Cota was honored by Women Impacting Store Brand Excellence (WISE) with its Lifetime Achievement Award. In 2017, she was a member of the inaugural group inducted into Progressive Grocer’s Top Women in Grocery Hall of Fame. And now she is in the Private Label Hall of Fame. The awards might insinuate the “r” word, but Cota is not considering that. “I’m not ready for retirement,” she says. “I’m going full steam and having fun. And there’s so much more work to be done.” When Open Nature becomes a $1 billion brand, Cota vows to consider retirement. “We’re already on our way, but I have a lot of work to do,” she says. So Cota will keep on keeping on, giving everything she has to grow Open Nature and Albertsons Companies’ other private brands. “I see more growth,” she says. “I know our shoppers are willing to trade over to our brands. We have our sights set on achieving 30 percent market share.” Cota may be in the hall of fame, but she still plans to add to her hall-of-fame credentials. l
Dollar General under Lee’s direction. At Dollar General, Lee rejuvenated the value retailer’s private brand program, which was badly in need of rejuvenation. Under Lee, Dollar General added hundreds of new products in its consumable segments, including Clover Valley, DG Home, DH Health, DG Baby, Rexall and Sweet Smiles private brands, and increased its penetration from 17 to 25 percent in some categories. It was a challenging task, considering dollar stores had been known as purveyors of cheap and lousy private brands products for years, Lee says. That was the case at Dollar General. But Lee implemented standards and processes to significantly improve quality to national brand standards. “We had to change consumer perception,” Lee says. “It was a significant undertaking.” Realizing that many shoppers of Dollar General were cash-strapped, Lee’s goal was to deliver less-expensive private
www.storebrands.com / April 2019 / Store Brands
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brands that didn’t disappoint them. “If a product fails them, it’s a significant part of their expenditure,” he says. Lee, who holds a master’s degree in business from the University of Southern California (USC), grew up in grocery. His family owned a large independent supermarket in the Sacramento, Calif., area for about 25 years. Lee began working there when he was 14. After graduating from USC, Lee went to work in consumer products marketing for RJR Nabisco in its Del Monte Foods division, where he worked as a brand assistant for Hawaiian Punch. He spent a decade in consumer products marketing before becoming vice president of corporate brands for Pleasanton, Calif.-based Safeway in 1996. It was the first time Safeway had an officer head the position.
Safeway wanted someone to ‘energize’ its private brands program. Lee did that. “They wanted someone to bring some consumer products expertise to the business,” Lee says. Safeway wanted someone to “energize” its private brands program. Lee did that through introducing products that were well-targeted to consumers and creating what he calls “meaningful differentiation” to set Safeway’s private brands apart from competitors. Lee joined Boise, Idaho-based Albertsons in 2002 and was empowered with directing a private brand program that he says was behind the times. Lee and his team brought the program up to times by
implementing a new branding strategy with an emphasis on consistent product quality. He led the initiative to redesign every package and introduce a new premium tier. “It was a radical and significant rebuild to get that business ahead of the market,” Lee says. Lee left Albertsons in 2006. Based in the San Francisco Bay area, he has worked as a private brand consultant for more than seven years. “I really am quite blessed,” Lee says of his induction into the Private Label Hall of Fame. l
Mark Krakauer — A trusted professional While Krakauer “I’ve been around for is a a while,” says Mark Krakauer, after being survivor, told “congratulations” for his election into the his legacy Private Label Hall of is much Fame. When asked what more than his claim to fame is, Krakauer didn’t hesitate that. when responding, “I’ve survived.” Indeed. Krakauer, the president of his own marketing and consulting firm, MWK Marketing, was first introduced to private label in the 1960s when he worked for a large food broker in the U.S. More than 50 years later, Krakauer is still impacting the industry with his New York-based business — and his vast private label experience — which he started in 1978. “I’m the only employee, and I’ve always been the only employee,” he says. Like any business that has endured for many years, MWK Marketing has had a few ups and downs, mainly due to difficult
economic periods and industry consolidation. But the firm always rebounded. While Krakauer is a survivor, his legacy is much more than that. His distinction is his expertise, but it is also his character. “One of the things I’ve never had a problem with is my reputation,” says Krakauer, who is a founder of the PLMA. “Most of my customers over the years have become very close friends. I’ve never asked for business to be given to me because of me. It has to be right for both parties. If it’s not, then it doesn’t work.” MWK Marketing had to reinvent itself more than a few times over the years to keep up with what’s hot and what’s not. These days, Krakauer finds himself offering advice in two of the industry’s hottest categories for private brands: healthy foods and pet care. Krakauer says keeping a positive attitude about the industry has also benefitted his business. “I always held the position that my attitude has to be positive toward private label, even if I didn’t directly benefit,” he says. “Because if private label prospered, then I would eventually benefit. So if you tie yourself to an industry and you support the growth of the industry, then you are going to grow too.” Before starting MWK Marketing, Krakauer ran the private label division for Milford, Conn.-based ATI, which was a major
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Mark Krakauer — Continued developer and manufacturer of many types of national brand products. ATI used Krakauer’s expertise and entered the private label arena in 1975, a very progressive move for that time. Krakauer went on to work for Private Products, a manufacturer of private label baby wipes. Krakauer oversaw the company’s non-food private label program. In 1979, Coca-Cola purchased Private Products for its Presto division. “Presto came to me and said they didn’t have anybody calling on non-foods and asked if I would be interested,” Krakauer says. His answer was “yes,” and that’s when Krakauer formed MWK Marketing, with Presto being his first client. Krakauer is astonished with what the store brands industry has become. “The growth has been spectacular,” he says. Of course, Krakauer has been a contributor to that growth. That’s why he’s now in the Private Label Hall of Fame. l
Patricia Nicolino — ‘Change agent’ Patricia Nicolino wasn’t supposed to work for Clement Pappas and Co. as a full-time employee. But the leaders of the Carneys Point, N.J.-based supplier of store brand ready-to-drink fruit juices and drinks and cranberry products were so impressed with her marketing ingenuity, they felt they had to make her a permanent part of their team. Nicolino was working as a consultant when she began what was expected to be a short project with Clement Pappas and Co. in an effort to secure private label business from one of the nation’s leading grocers. “I was brought in to do a six-week project to help them come up with a presentation to get business from a major customer they essentially had very little business with,” Nicolino says. It was 2005, and the six-week project turned into several months, taking up most all of Nicolino’s time. She found herself managing a team of several people to create a product development program to be presented to the major retailer. A few months later, when Nicolino made the presentation to the retailer and opened the door for Clement Pappas and Co. to secure some major business from the retailer, the company’s CEO Dean Pappas said to her, “Well, you can’t leave now. You have to stay.”
Congratulations
on your Private Label Hall Of Fame Award.
On behalf of your friends at Lassonde Pappas and Company, Inc. • 1 Collins Drive, Suite 200 • Carneys Point, NJ, 08069 • Phone: (856) 455-1000 • www.lassondepappas.com • info@lassondepappas.com
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Patricia Nicolino — Continues “It was an extraordinary experience,” she says. Nicolino helped bring a new thinking to the company and helped it establish a clear vision. She helped the company build strong relationships with retailers based on trust. She advocated thought leadership on all fronts, which resulted on innovation. “I was their change agent essentially, not by title but by function,” Nicolino says. “I can tell you that’s a job everybody thinks they want, but you had better have a suit of armor on. Because as the change agent, you are forcing change to happen by definition. It’s a very complex and involved process, and eventually touches everybody in the company.”
Nicolino helped bring a new thinking to the company, and helped it establish a clear vision. In time, Clement Pappas and Co. gained a reputation as a thought leader, and retailers were asking the company to come visit them and help them establish private brands programs with the company’s products. “Some of the best business meetings of my career occurred when I was with Clement Pappas,” Nicolino says. “There was a level of depth and honesty … they were extraordinary conversations.” Six years into her career with Clement Pappas and Co., the company was acquired by Canada’s Lassonde Industries and became Lassonde Pappas and Co. The merger was smooth, and the new company maintained its “family dynamic,” Nicolino says. Although retired, the passionate-as-ever Nicolino says she could “go back to work 10 minutes from now and just go at it 100 miles an hour.” That said, Nicolino says you can’t beat retirement and spending winters in Palm Springs, Calif. As far as being inducted into the Private Label of Fame, Nicolino says she “really, really appreciates it.” But she says the honor is not just about her, it’s about the team — the people around her who believed in her and embraced the change she brought to the company. “If ever there was a team award, this one is it,” she says. l
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Kurt Goldschmidt — Put private label paper on the map Upon hearing he was inducted into the Private Label Hall of Fame, Kurt Goldschmidt didn’t give himself a pat on the back for a job well done. Goldschmidt, who left the American Tissue Co. as senior vice president of sales in 2001, thanked the people who voted him in. Grateful — that’s Goldschmidt for you. In the late 1950s, Goldschmidt, who came to America as young boy with his family in the late 1930s to escape Nazi Germany, began his career path in the paper industry when he joined the now-defunct Hudson Paper Co. For awhile Goldschmidt also had his own business as a paper broker before moving on to American Tissue, where he spent nearly 20 years. Goldschmidt’s claim to fame? He was one of the first people to advocate for private label in the paper business. He evolved into a stalwart salesman of household private label paper goods, including paper towels, napkins and tissues. Incidentally, private brands own 47 percent of the sales in the paper napkin category, 32 percent of sales in the paper towel category and 23 percent of sales (and rising fast) in the toilet tissue category, according to the most recent data from Information Resources Inc. Goldschmidt helped put American Tissue on the map with its private label products. It wasn’t an easy task, either. The big national brands were dominant with their big paper plants and huge promotional budgets. But Goldschmidt succeeded by forging strong relationships with many supermarket buyers. “Private label was my entity; that’s what I pushed for,” he says. Goldschmidt became widely known in the industry for his efforts. He attended the Private Label Trade Show regularly as an exhibitor with the company, his wife Annabelle often by his side. He also brought his son Jeffrey into the business, who worked for American Tissue for 18 years. After leaving American Tissue, which is now out of business, Goldschmidt spent more than a decade with the PLMA and was involved with the association’s PLMA Live! online video and Salute to Excellence programs. Goldschmidt is humble about his induction, saying he doesn’t want to take credit for his achievements, and that others also played big roles in making private brands popular in the paper industry. But his induction speaks volumes about his career. SB Aylward, editor-in-chief of Store Brands, can be reached at laylward@ ensembleiq.com
Store Brands / April 2019 / www.storebrands.com
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Congratulations to Nancy Cota!
Inducted into the 2019
Presented by Store Brands Magazine The individuals selected for the Private Label Hall of Fame have contributed significantly to store brand innovation and advanced the growth of private brands through creative marketing, merchandising, and promotions. Nancy has over 45 years of experience in the grocery industry and has served as champion of private brands within Albertsons Companies, business communities, and the consumer marketplace. Her passion and commitment to Albertsons Companies has positively impacted our work culture and overall business goals.
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PAST HALL OF FAME INDUCTEES
Retailers
Manufacturers
2006
2007
Etienne Thil, Carrefour Hypermarkets Dave Nichol, Loblaws Supermarkets
Larry Weisberg, Personal Care Products
2007
Marvin Benjoya, Perrigo Co.
2008
Bob Anderson, Walmart Nick Hahn , The Kroger Co.
2009
2008
2010
Sir Terry Leahy, Tesco PLC
2009
Don Spellman, PLMA Dan Huish, Huish Detergents Bill Robbins, American Safety Razor
Joe Coulombe, Trader Joe’s Kenton Gast, The Kroger Co. John Huffman, leming Cos. Karl Albrecht, ALDI Group Theo Albrecht, ALDI Group
2011
2010
2013
Jim Sinegal, Costco Wholesale Danny Wegman, Wegmans Food Markets
2011 John Mackey, Whole Foods Market Bill Moran, Save-A-Lot
Mike Jandernoa, Perrigo Co.
2012 David Skarie Inc., Ralcorp Holdings Peter Pappas, Clement Pappas Peggy Davies, McCain Foods Donald Welge, Gilster-Mary Lee
2014 Gerry Pencer, Cott Beverages Rick Witherspoon, Merico/Earth Grains
2015 Sam Reed, TreeHouse Foods
2016 Leonard Pearlstein, Confab Tom Ewing, T.Marzetti
2017 2012 Ron Carlson, American Stores Charles Butt, H-E-B
2013
Tom Chaffee, Sturm Foods
2018 Greg Baskin, Hormel Foods Prem Virmani (2018) Cott Beverages
Steven Burd, Safeway Neil Golub, Price Chopper
Pioneers
2014
E.W. Williams, Private Label magazine
Dennis Kinser, AWG Don Albrecht, Federated Foods Doug Palmer, Safeway
2015 David Dillon, The Kroger Co. Doug Rauch, Trader Joe’s Chuck Carlbom, Western Family Foods
2016 Ed Crenshaw, Publix Super Markets Allan Noddle, Ahold Delhaize USA Mayro Kanning, The Kroger Co.
2006 2007 Dr. Herb Shuster, Shuster Laboratories
2008 Don Watt, DW+Partners Peter Schwartz, Daymon Worldwide
2011 Herb Pease Sr., MMI
2013 Milt Sender, Daymon Worldwide
2015
2017
Myra Rosen, PLMA
Bob Mariano, Roundy’s Gary Smith, Safeway
2016 Phil Fitzell, Exclusive Brands
2018
2017
David Glass, Walmart Lori T. Latta, Trader Joe’s
2018
Peter Brennan, Daymon Worldwide Tom Stephens, Brank Strategy Consultants
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TRENDING TRENDING
GROCERY TRENDS FROM NATURAL PRODUCTS EXPO WEST Here are the big ideas spurring dramatic CPG innovation, which could bode well for private brands BY G I N A AC O S TA
If you really want to know which product trends will dominate the consumer packaged goods (CPG) industry over the next year, let me tell you about my goody bag after having attended Natural Products Expo West in Anaheim, Calif., last month. It contained: • Salted caramel Reishi mushroom protein bars. • Barbecue-flavored protein crisps. • Tahini granola. • Fruit roll-ups infused with cannabis. • Pineapple-flavored coconut chips. • Organic chickpea puffs. • Chocolate chip cookies made with coconut sugar. • Plant-based protein water. • Dried jackfruit strips. • And lots of foods and beverages loaded with “calming” ingredients Nearly 90,000 attendees from 136 countries were treated to samples of many of these innovative products at the 39th-annual Natural Products Expo West at the Anaheim Convention Center. This year the event set new records, bringing together more than 3,600 exhibiting companies, including more than 600 first-time exhibitors, shaping the future of the CPG industry. “Every year at Expo West we foster the connection between emerging brands who are impacting the landscape and industry pioneers who have paved the way for decades,” said Lacey Gautier, group show director at New Hope Network, the Boulder, Colo.-based organization that stages the show. “This event highlights the importance of community engagement and the role everyone plays to create a more sustainable
packaged goods industry. With so much to celebrate in organic agriculture and ethical business practices, you can feel the energy throughout the campus.” On display throughout the trade show were exhibits from branded and private label manufacturers showcasing the latest in food and beverage, beauty and home, and supplements and nutrition. But it wasn’t just the booths that made a statement about where retail and CPG are going. Expo West attendees who were hungry could snack on vegan hot dogs at the convention center snack bar. Condiments were locally made ketchup and mustard. Food was served on recycled paper plates with wooden forks. Plastic cups and dinnerware were verboten. This year, walking the vast trade show spread across multiple convention center halls and hotels, six notable CPG trends stood out: Plant-based: There’s no doubt that vegan and plant-based products continue to dominate the focus of innovation in CPG. Companies showcased a broad assortment of meat, dairy and egg alternatives, but the plant-based trend has also accelerated in the frozen dessert, water, grab-and-go and fresh categories. For example, exhibitors such as Chef ’d gave samples of its meal kits, but none contained meat (all were vegan). Other companies that make grab-and-go salads for grocery and convenience stores also touted their meatfree meals. Samples of vegan “ice cream” and “gelato” were everywhere. Booths showcasing meat products overall were few and far between at Expo this year. Protein: If you thought that the Keto diet trend was no different than the Atkins fad, think again. Companies are doubling down on both Keto and Paleo products,
www.storebrands.com / April 2019 / Store Brands
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TRENDING which feature foods and beverages heavy on the protein and low on the carbs. At Expo West, everything from sugar-free protein bars to low-carb granola, shake mix, meal kits and sweeteners made with monk fruit were promoted as being “Keto-” or “Paleo-friendly.” Even veteran brands such as Bob’s Red Mill and private label suppliers such as B&G Foods are getting into the low-carb diet biz by launching protein bars and cauliflower rice products. Coconut: It seemed as though every aisle at Expo West had foods or beverages with coconut in it. Coconut protein water, savory coconut crisps, coconut sugar breads, coconut salad dressing, coconut curry bars. If last year’s Expo West was all about turmeric, this year’s biggest ingredient trend seemed to be coconut, which continues to endure as an ingredient. CBD: I was expecting to see a lot of innovation in hemp and cannabidiol (CBD) products, and I was not disappointed. Industrial hemp was legalized in the recent Farm Bill, but CBD is not a federally
Nearly 90,000 attendees from 136 countries attended the 39th-annual Natural Products Expo West.
approved additive for food and beverage. Still, many show booths displayed coffee and meal replacement bars infused with hemp or cannabidiol. Digestive: Startups and veteran brands alike are convinced that digestive health is a significant trend in 2019. Food manufacturers and ingredient suppliers at Expo West showed off new products that go beyond having lots of fiber and probiotic ingredients. Beverages and foods containing prebiotics and fermented foods were ubiquitous. Products containing Reishi mushroom claimed to have inflammation-fighting effects on the digestive system. Calming: Perhaps the most surprising trend I saw was the number of beverages, foods and supplements designed to calm or reduce stress and anxiety. I’m talking about “calming” salad dressings containing chamomile, gummy supplements that calm nerves, coffee that is designed to reduce anxiety and not rev you up, and sleep-inducing sparkling water for bedtime. SB
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CATEGORY INTELLIGENCE CONDIMENTS
CONDIMENTS MAKE A COMEBACK Ketchup and mustard may be eternal, but for the last few years consumers have been a little disillusioned with the standard bearers of the condiment aisle. Even though Americans still favor the staples of ketchup, mustard and mayonnaise overall, condiment sales in the United States have been less than spicy over the last several years as shoppers look for healthier products and flavors that reflect global cuisines. But now it seems as though the tide is turning when it comes to ketchup, mustard and mayo. Ketchup and mustard sales in the United States were up 3.1 percent to $1.2 billion in the 52 weeks that ended Jan. 27, 2019, according to market researcher Information Resources Inc. (IRI). Private label ketchup and mustard sales combined were up 3.8 percent to $266 million. When it comes to salad dressings, though, the growth there is still stagnant. Salad dressing sales were flat at $2 billion during the same period. While Euromonitor International forecasts annual U.S. condiment revenues to reach $28 billion by 2021 at a compound annual growth rate of 3.4 percent, dressing sales are expected to remain flat over the next three years despite health-conscious shoppers looking for more pourable fresh dressings in the refrigerated case. Retailers could potentially enhance dressing and other condiment sales by enticing shoppers to try new and innovative assortments. One example of a recent branded innovation in the center store condiment aisle comes from Heinz. The company made waves this year when it launched a ketchup and mayonnaise mashup called Mayochup; the company also plans Mayocue (mayo and barbecue sauce) and Mayomust (mayo and mustard) launches later this year. Images of Gen Z foodies dipping their veggies and sandwiches into Mayochup went viral on Instagram. “As private label continues to gain more share of the shelf there needs to be an understanding that consumers do still want national and regional brands on the shelf as well. While the margins are better for private label, branded products should remain and be easy to find for most retailers,” says Tony Treadway, founder of Creative Energy, a full-service food-focused advertising and marketing firm. While Heinz continues to be the dominant brand in the condiments aisle, private brand retailers and manufacturers have accelerated innovation when it comes to ketchup, mustard and mayonnaise and other condiments. Many of those classics are now offered in
private label no-added-sugar, no-addedsalt and organic varieties. Meanwhile, global flavors such as kimchi, Sriracha and avocado are mixing things up in the condiment aisle as private brand retailers look to woo millennials with adventurous appetites and Instagram accounts. “Millennials are what most of my food manufacturing clients are tuning their products to attract,” Treadway says. As the spending power of millennials rises in the future, the demand for bolder and global flavors in the condiment aisle is expected to continue. Beyond clean label and bold flavors, the other opportunity for private brand retailers and manufacturers looking to accelerate condiment sales exists in leveraging consumers’ willingness to migrate between categories. “Some retailers are doing better than others at differentiating their private brand condiments,” Dinunzio says. “They’re cross-merchandising with other departments such as meat and seafood. That’s always key. Tying them into recipes that are seasonally appropriate. Making sure that consumers see the complete meal with the condiment.” SB
DO develop products with clean labels and millennial-friendly flavors. DON’T underestimate the power of an Instagram-friendly mayonnaise-based condiment.
Ketchup Private Brands
All Brands
Dollar Sales (in millions)
$151 million
$823 million
Change vs. Year Ago
3.5%
5.6%
Dollar Share
18%
100%
Unit Sales (in millions)
$95.1
$339.2
Change vs. Year Ago
4.2%
1.4%
Avg. Price Per Unit
$1.49
$2.43
Private Brands
All Brands
Dollar Sales (in millions)
$114 million
$416 million
Change vs. Year Ago
4.3%
-1.1%
Dollar Share
27%
100%
Unit Sales (in millions)
$102 million
$239 billion
Change vs. Year Ago
9.9%
1.6%
Avg. Price Per Unit
$1.12
$1.74
Mustard
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 Jan. 27, 2019. www.storebrands.com / April 2019 / Store Brands
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CATEGORY INTELLIGENCE DELI MEATS
HEALTHY GROWTH
DO offer products that offer exclusivity and innovation, which is what consumers are looking for.
“The deli department shines as a true growth engine for the store,” declares the International Dairy Deli Bakery Association (IDDBA) in its “What’s in Store 2019” report. Bolstering that viewpoint, the Madison, Wis.based trade organization points to 14 percent total deli dollar sales growth and 14.5 percent volume growth from 2016 to 2018, according to Nielsen. Deli department sales totaled $33.3 billion for the 52 weeks ending July 21, 2018, representing 4.2 percent of total store sales, according to Nielsen Total Food View data. Significantly, deli foodservice accounted for 58 percent of total deli sales, posting dollar growth of 19 percent and volume growth of 18.2 percent for the same three-year period. “People are buying more prepared foods; they’re dining out more than in the past, and that’s what retailers need to compete with,” says Eric Richard, IDDBA’s industry relations coordinator. Retailers are rising to that challenge, Richard notes, offering ready-to-eat deli offerings that are comparable and often superior to what’s available in restaurant channels.
DON’T forget the importance of offering information about the products you sell, such as stories about their origins. 28
Additionally, consumers look to grocers for knowledge about food and nutrition, whether in store or through social media platforms, Richard adds. “People want information, they want it readily available and they want the story about the food they eat. If you can provide that, you have an advantage. The more information you can relate to your consumers, the better.” WHAT’S NEXT? Consumer needs are driving innovation in the category. The deli meats category has shifted toward higher quality, better-tasting offerings with cleaner labels, thanks to consumer desires for transparency and best animal welfare practices, says Erin Ronzheimer, director of marketing for West Liberty Foods LLC in West Liberty, Iowa. “Our private label customers have consistently asked ‘what’s next?’ and our answer has always been to turn to the consumer. Consumers continually look to private label brands to be innovative,” Ronzheimer explains. The current focus on ingredients, animal welfare, health and wellness led West Liberty to develop carrageenan-free deli meats, several antibiotic free deli meats and launch an organic program. The company is currently working on sugar-free deli meats as well, Ronzheimer reports. Sugar-free deli meats are starting to pick up steam as the public learns about the affects sugar has on the body, Ronzheimer says, adding, “We can see sugar-free offerings eventually becoming the norm.” Animal welfare and clean products without the use of antibiotics are becoming more and more important in the category, says Alessandro Sita, CEO of Cibo Italia LLC in Moonachie, N.J. Younger consumers especially care about well-being and sustainability, Sita points out. The push toward healthier options is pretty much universal, says Ron Godshall, president of Godshall’s Quality Meats in Telford, Pa. Baby Boomers in particular are conscious of their heart health and will look for low-sodium offerings; a product endorsement from the American Heart Association also helps, Ronzheimer says. Quality and authenticity are the keys to growth in deli meats, Sita notes. “We see important
Store Brands / April 2019 / www.storebrands.com
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CATEGORY INTELLIGENCE DELI MEATS growth potential for specialty imported deli items like prosciutto, prosciutto cotto, mortadella and porchetta.” Also poised for growth are specialty Italian regional cuts with deeper and more complex flavors and textures, like guanciale and culatello, Sita adds. “Thanks to social media, the consumer is now more aware and open to trying very niche, top quality products. They are looking for a true experience and want the real thing,” he says. PACKAGING FOR A NEW AGE Deli developed as a bulk business because consumers value custom-sliced orders, even
Luncheon Meats
Private Brands
All Brands
Dollar Sales (in millions)
$997.7
$5,623.4
Change vs. Year Ago
4.4%
0.8%
Dollar Share
17.7%
100%
Unit Sales (in millions)
258.4
1,620.1
Change vs. Year Ago
6.0%
-0.7%
Avg. Price Per Unit
$3.86
$3.47
Refrigerated Sliced Lunchmeat Private Brands
All Brands
Dollar Sales (in millions)
$983.0
$5,386.4
Change vs. Year Ago
4.0%
0.5%
Dollar Share
18.3%
100%
Unit Sales (in millions)
254.4
1,565.8
Change vs. Year Ago
5.7%
1.0%
Avg. Price Per Unit
$3.86
$3.44
Refrigerated Non-Sliced Lunchmeat Private Brands
All Brands
Dollar Sales (in millions)
$14.7
$237.0
Change vs. Year Ago
30.9%
7.2%
Dollar Share
6.2%
100%
Unit Sales (in millions)
4.0
54.2
Change vs. Year Ago
26.2%
8.5%
Avg. Price Per Unit
$3.71
$4.37
Source: Market Advantage, IRI Liquid Data, IRI, a Chicago-based market research firm. Total U.S. multi-outlet (grocery, drug, mass market, military and select club and dollar retailers) for the 52 weeks ending Jan. 27, 2019. 30
if it means taking a ticket and waiting in line, Godshall says. That is changing. “Consumers want to pick up deli in lifestyle packaging, reflective of their family size and use patterns,” Godshall adds. “[This] may look more like 8 ounces in a resealable tray than a pound in brown paper. The rise of 24-hour retailers amplifies this; it’s simply not feasible to staff a full-service deli counter day and night. We see many retailers moving their real estate to self-serve deli, and that looks likely to continue.” Godshall’s operates a clean room to package sliced deli meat. Millennials in particular tend to prefer prepackaged, sliced deli meats they can grab and go, Ronzheimer says. “It’s important that private label brands find a way to reach them at the shelf, and that would be by providing high-quality deli meats that promote health, wellness, animal welfare and transparency, all at an affordable price,” Ronzheimer adds. Consumers also want environmentally friendly packaging, but it’s a challenge in this category. Deli meats have to be packed in barrier films, which provide ultimate protection against foodborne pathogens, Ronzheimer points out. “This type of film is generally not recyclable. [However], there is a major opportunity for manufacturers to work with film suppliers to figure out what’s next in deli meat packaging in order to improve recyclability and promote sustainability within private label brands,” Ronzheimer adds. FORGING BONDS Exclusivity and innovation create a solid link between consumers and retailers when the consumer trusts the private brand to deliver unique and exceptional products, Sita says. Private brands have to stand apart from national brands, Ronzheimer agrees. “The deli meats category is huge, and the shelf is full of big names. Private label brands have done an excellent job staying up to date on current trends in the category, and implementing innovations not only in their product lines, but in packaging as well.” Whether it’s regional flavor inquiries or recipes that further a retailer’s identity, exclusivity and innovation “are baked into our formula for future success, so much so that we’ve invested in a stand-alone research and development facility to address that opportunity,” Godshall says. SB Cvetan is a contributing writer to Store Brands.
Store Brands / April 2019 / www.storebrands.com
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CATEGORY INTELLIGENCE SALTY SNACKS
TUG OF WAR
Demand for healthier options competes with desire to indulge in flavor, satisfaction
DO consider offering products with different shapes and textures, particularly puffed snacks, to drive sales. DON’T forget that more consumers desire better-for-you snacks.
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The problem with temptation is … it’s just so darn tempting. The demand for healthier snack options is strong, yet consumers admit health concerns don’t strongly influence their snacking behavior, according to market researcher Mintel in its recent March report, “Salty Snacks US.” Talk about a devil-on-one-shoulder and angel-onthe-other situation. A recent Lightspeed/Mintel online survey of 1,818 adults revealed 57 percent prefer salty snacks to all other types and 54 percent prefer salty snacks to sweet ones. Consumers fancy the flavor, satisfaction and portability of salty snacks, but are turned off by the perception that they are too high in calories, Mintel found. Thirty percent of the poll’s respondents said they cut back on salty snacks compared to the previous year, and 64 percent said they wished more healthy salty snack options were available to them. Better-for-you products are appealing to an expanding segment of consumers, market researcher Packaged Facts reports in its “U.S. Food Market Outlook 2019,” published in February. To grow the category, Packaged Facts advises developing: full-flavored salty snacks with maximum health and nutrition benefits; new and unique taste and flavor combinations; non-potato snacks with better-for-you ingredients that include different proteins, grains, pulses, vegetables and superfoods; and snacks in unique shapes, particularly in extruded products. Asked which attributes they think constitute a healthy salty snack, 606 adults surveyed online by Lightspeed/Mintel listed in descending order: low sodium, low calorie, low fat, high protein, low carbohydrates, inclusion of vitamin and minerals, grains as an ingredient, a short ingredient list, vegetables as an ingredient, organic and small pack size.
Manufacturers have responded by formulating products with reduced levels of sodium and fat, and by eliminating high fructose corn syrup and trans fats. New product launches include organic and gluten-free snacks plus those that include more beneficial ingredients such as whole grains, multiple grains, seeds and vegetables. Health attributes aren’t the whole story, however. Indulgence is still a key driver in the salty snack market and consumers “crave ever more unique and delicious eating experiences,” says Packaged Facts. Extruded and puffed snacks are a fast-growing segment, it notes, because they are ideal for delivering new flavors and textures. SNACKING RULES Despite competition from other types of snacks (such as yogurt, cheese, bars and meat snacks), salty snack sales are relatively steady, reaching $26 billion in 2018, reports Packaged Facts. With a compound annual growth rate of 3.8 percent between 2013 and 2018, salty snack sales have increased in both volume and dollar sales, making it one of the few core snack categories to grow in both measures, according to Packaged Facts. Mintel projects continued but slower-paced growth for the category through 2023. Potato and tortilla chips find their way into threequarters of homes, but a growing number of consumers are clamoring for healthier-for-you products, according to Packaged Facts. Better-for-you chips, ready-toeat popcorn and products with different shapes and textures, particularly puffed snacks, will drive growth in the category, Packaged Facts asserts. Pork rind sales grew at their fastest pace in the last two years, and cheese snacks and other (nonnut) salty snacks are experiencing resurgence, Packaged Facts reports.
Store Brands / April 2019 / www.storebrands.com
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CATEGORY INTELLIGENCE SALTY SNACKS All Salty Snacks
Private Brands
All Brands
Dollar Sales (in millions)
$1,273.8
$18,971.4
Change vs. Year Ago
5.9%
4.5%
Dollar Share
6.7%
100%
Unit Sales (in millions)
695.3
7,330.1
Change vs. Year Ago
7.7%
2.9%
Avg. Price Per Unit
$1.83
$2.59
Potato Chips
Private Brands
All Brands
Dollar Sales (in millions)
$517.7
$5,892.3
Change vs. Year Ago
4.8%
2.1%
Dollar Share
8.8%
100%
Unit Sales (in millions)
316.1
2,621.6
Change vs. Year Ago
7.7%
2.1%
Avg. Price Per Unit
$1.64
$2.25
Source: Market Advantage, IRI Liquid Data, IRI, a Chicago-based market research firm. Total U.S. multi-outlet (grocery, drug, mass market, military and select club and dollar retailers) for the 52 weeks ending Jan. 27, 2019.
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Business is good, agrees Mark Singleton, vice president of sales and marketing for Rudolph Foods Co., a Lima, Ohio-based manufacturer of pork rinds and cracklins. Private label sales of pork rinds rose 25 percent over the past 52 weeks and 29 percent over the past 12 weeks, Singleton says, citing Nielson figures. Protein awareness and protein acceptance are driving pork rind sales, including for premium varieties, says Singleton, adding, “People are also realizing what we’ve known for 25 years — pork rinds taste great. We were completely ready for this. We knew this was going to happen.” Pork rinds are growing in popularity among females, fitness enthusiasts and northern city-dwellers (even in Seattle), Singleton reports. Across America, 42 ballparks and stadiums sell pork rinds from their concession stands, he notes. “We’re attracting a whole new consumer. [They] are excited about protein, innovation, new flavors and eating as an adventure. They give us permission to color outside the lines with new flavors like blueberry habanero — blueberry habanero! They don’t want to just eat the same thing all the time.” SB Cvetan is a contributing writer to Store Brands.
Store Brands / April 2019 / www.storebrands.com
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CATEGORY INTELLIGENCE PAPER PRODUCTS
NO PAPER TIGER The paper products sector is a proving to be an increasingly potent revenue platform for private brands. With many consumers using price as the purchase criteria for such items as paper towels, toilet paper and tissues, retailers are in position to boost already vibrant private brand sales activity. Private label toilet tissue revenues rose 11.3 percent for the 52 weeks ending Jan. 27, 2019, versus a 1 percent decline for the national brands, reports market researcher Information Resources Inc. (IRI). Store brand paper towel revenues grew 8.3 percent for the period, versus a 0.1 percent drop for the national brands. In addition, private brand paper towels had a three-year compound annual dollar growth rate of 4.8 percent, compared to a 0.5 percent decline for national brands, reports market researcher Nielsen. “Household paper is a market where consumers look to cut spending more than seek out paradigmchanging innovation,” notes Mintel, a global market research firm, in its “March Household Paper Products US” report. “As such, market share is gained through discounts more than step-changing improvements. Private label is capturing share from name brands.” Store brand merchandisers also are benefitting from newer manufacturing equipment that is enabling retailers to offer private brands with similar capabilities as the national selections, Mintel states. Indeed, Mintel research reveals that 38 percent of all consumers, and 42 percent of those between the ages of 18 and 34, believe that store brands are as good as national brands. “There are ongoing advances in manufacturing technology to produce products that meet all the functional and aesthetic requirements more efficiently and cost effectively,” says Mark Pitts, executive director of printing-writing, pulp and tissue, for the Washington, D.C.-based American Forest & Paper Association. “This includes making products that are softer, more absorbent and stronger, which not only improve functionality, but provide the opportunity for tissue and towel products to do more work with each use.” The ability of suppliers to make all household paper goods extra soft or extra strong is resulting in declining interest in facial tissues and napkins, Mintel states, as more consumers are able to substitute toilet paper and paper towels for those products. Cost and
the desire for simplicity are the key drivers of the trend, the firm notes. “The toilet paper segment shows the magnitude of private label’s rise,” Mintel adds. “This is the segment where consumers are most willing to pay for premium features like extra-soft toilet paper, but it is also the segment with the biggest gap between store brand and name brand growth. Clearly, store brand manufacturers’ investment in premium-focused assets is paying off.” Along with a focus on price and functionality, more consumers are seeking eco-friendly paper goods selections, as well as transparency in product content and sourcing, Pitts notes. “There is a growing focus on environmental sustainability,” agrees Kevin Otero, CEO of Royal Paper Converting Inc., a Phoenix-based paper products manufacturer. He notes, for instance, that paper product options with Forest Stewardship Council (FSC), Rainforest Alliance or Green Seal certifications attract more shoppers. Key catalysts for such products are the large base of millennials who are changing their consumption behavior to reduce impact on the environment, Otero notes, adding that sustainability is an important way for retailers to be consistent on what their brand stands for beyond price. As a result, it is vital for merchandisers to develop products that respond to changing consumer needs and trends and to prominently spotlight the claims that are most appealing to shoppers, including information
DO keep products wellstocked to satisfy pantry-loading consumers.
DON’T forget the growing importance of environmental sustainability in the category.
www.storebrands.com / April 2019 / Store Brands
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CATEGORY INTELLIGENCE PAPER PRODUCTS Paper Napkins
Private Brands
All Brands
Dollar Sales (in millions)
$328.0
$689.8
Change vs. Year Ago
-1.3%
-2.9%
Dollar Share
47.6%
100%
Unit Sales (in millions
161.5
292.2
Change vs. Year Ago
-2.5%
-3.5%
Avg. Price Per Unit
$2.03
$2.36
Paper Towels
Private Brands
All Brands
Dollar Sales (in millions)
$1,672.7
$5,262.7
Change vs. Year Ago
8.3%
2.4%
Dollar Share
31.8%
100%
Unit Sales (in millions)
461.8
971.3
Change vs. Year Ago
0.9%
-2.2%
Avg. Price Per Unit
$3.62
$5.42
Source: Market Advantage, IRI Liquid Data, IRI, a Chicago-based market research firm. Total U.S. multi-outlet (grocery, drug, mass market, military and select club and dollar retailers) for the 52 weeks ending Jan. 27, 2019.
on sustainability and certifications, he states. “On-pack messaging is still the most effective marketing method as the majority of private label purchase decisions are made at the shelf,” Otero says. “Getting product attributes on-pack is critical.” In addition to highlighting such eco-features as made from recycled paper, merchandisers can accentuate the procurement of wood fiber for production from certified fiber sourcing programs, Pitts states. “Consumers will likely continue to raise the bar on their expectations and those producers that stay close to their customers, and shoppers will continue to innovate and create products that meet these changing needs,” he says. “There will be a place for both premium and value brands.” Mintel notes, however, that while the industry has “introduced meaningful innovations” over the past several years, many consumers still see the category as a cost-cutting segment rather than “a source of new, lifestyle-enhancing innovation.” Further savings, the firm states, will likely occur as the household paper category transitions away from tree-based fiber sources to the use of fast-growing plants. Mintel says that will “make the category greener” while reducing supply chain costs as wood pulp is a highly volatile commodity that is subject to big price swings. SB
Sustainable packaging today for a better tomorrow
Today’s consumers enjoy great choices when purchasing fresh beverages. But what about the sustainable packaging they seek?
For store brands wanting to be more relevant to their customers, the PlantCarton™ package is a plant-based solution that can reduce plastic use by about 80%.* The sustainability edge comes from the fact that PlantCarton™ packaging is made with at least 70% renewable material; paper made from trees where responsible forestry practices are used.
North American Packaging for Evergreen Packaging. “This is a sustainability story that retailers can take advantage of today when they switch to PlantCarton™ packaging,” he added.
PlantCarton™ packaging is also recyclable. The line includes Traditional and also RenewablePlus™ which offers options made with up to 99% renewable materials when a barrier coating produced from sugarcane is used.
• Reduce your plastic use by about 80% *
PlantCarton™ packaging means you can: • Offer a sustainable packaging option to meet consumers’ growing demands
• Distinguish store brands on the shelf with slimmer carton profiles with SmartPak™ options • Bring in a natural fit for clean label products
“We are already seeing companies express interest in transitioning to PlantCarton™ packaging from petroleum-based packaging,” said DeWitt Clark, Vice President of Sales PlantCarton.com Sustainable packaging today for a better tomorrow. *PlantCarton™ packages 52-64oz use about 80% less plastic than comparably sized plastic packages. RenewablePlus™ line is higher.
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Store Brands / April 2019 / www.storebrands.com
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Sustainable packaging starts here. The PlantCarton™ product line is made from at least 70% and up to 99% renewable material,* paper, made from trees grown in forests where the overall rate of forest growth exceeds use. PlantCarton™ packaging is recyclable, and the paper is made with about 55% renewable energy from biomass.
Make the PlantCarton™ sustainability story your story to tell.
PlantCarton.com *Depending upon carton size, coating type and use of a spout/closure.
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CATEGORY CLOSEUP
1622
Water is first bottled for sale in the United Kingdom’s Holy Well bottling plant. The practice expands with the bottling of mineral spring water across Europe and the U.S. in the 1700s and beyond. Source: The Guardian
72%
Bottled Water
5.1% 22 The percentage increase in bottled water consumption by consumers in the United States in 2018. Source: Beverage Marketing Corp.
MILLION
The projected size of the U.S. bottled water market by the end of 2024. Source: Persistence Market Research
$2.3
BILLION
Sales of private-branded bottled water from January 2017 through January 2018, an increase of 6.5% from the previous year. Private brands own 29% percent of the category.
Source: Information Resources Inc.
$217 BILLION
The estimated size of the global market for bottled water through 2026. The compound annual growth rate for bottled water is estimated to be 13.5%. Source: Beverage Marketing Corp.
The percentage of Americans surveyed in 2019 who say that bottled water (still and/or sparkling) is among their most preferred non-alcoholic beverages – an increase of 9 percent over 2018. Source: International Bottled Water Association
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Store Brands / April 2019 / www.storebrands.com
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