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THE PULSE OF PRIVATE LABEL

FEBRUARY 2020 www.storebrands.com

7-ELEVEN

CBD MOVES FORWARD P.27 SNACKS EXPLOSION P.32

BEEFS UP ITS STORE BRANDS Will 7-Select and 24/7 Life make the chain’s private brands a $1 billion business?


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VOLUME 43 NO.1

42 COVER STORY

DEPARTMENTS

7/11 Beefs Up its Store Brands

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Editor’s Note

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Industry News

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Viewpoint from ChefsBest’s Chris Faridniya

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Viewpoint from Gies College of Business’ Carlos J. Torelli

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Questions/ Answers with Brightfield Group’s Virginia Lee

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Dispatches: Store Brands in the Wild

With a new private brand focused on nonfood, essentials, the c-store giant’s own brand offerings continue to expand

FEATURES

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CBD Moves Forward

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Snack Attack

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Running down leading private label CBD companies

Brand loyalty is fading in the snack category, making room for standout private brands

New Products - Snacks

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What’s Outside Counts

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The Beauty Opportunity Endures

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How manufacturers are reworking packaging for eco-friendliness, maximum impact on the shelf

Owned brands and store exclusives can give retailers a point of differentiation

New Products – Beauty

Store Brands (ISSN-0190-9851; USPS # 0488-370) is published 10x a year by EnsembleIQ, 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631. Subscriptions: One year, $125; two years, $146. One year, Canada $190; One year, foreign $275. Payable in advance with a bank draft drawn on a US bank in US funds.Single copies $20. Foreign, $85. 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 3200 Northbrook, IL 60065-3200. Copyright 2019 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

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EDITOR’SNOTE An EnsembleIQ Publication

DIVING INTO THE INDUSTRY WELCOME TO THE NEW STORE BRANDS, AND MORE IMPORTANTLY, JOIN US AS WE AIM TO BE A LINK BETWEEN VARIOUS PARTNERS IN THE INDUSTRY A new look; a new attitude. The same commitment to addressing the needs of the entire private label industry, from suppliers and distributors to the retailers who are relying on the category to build profits and differentiation in a chaotic marketplace. This is Store Brands in 2020. As you hopefully noticed, we have changed the look of the magazine and, at the same time, are changing the editorial focus to give the private label community more of what they need to be better partners with each other. Our goal: to be a conduit between the various partners in this growing and dynamic industry. Our job is to give the Seth Mendelson industry as much news as possible — whether it is breaking Publisher/ news through our website, storebrands.com, our daily newsEditor in Chief letter and, of course, our magazine, Store Brands, which has for decades served as the voice of the private label and store brands industry. And, it is to talk about the trends that may impact the industry over the next few months or the next few years. We invite you to come along for the ride. Starting immediately, our readers can expect to see more coverage of what retailers are doing to embrace private label and take advantage of its growing power. That means learning how to do more with private label and store brand merchandise to maximize sales, profits and the ability to draw more consumers into their stores. Readers also will see more comments from the suppliers in this industry. Who knows more about private label than the companies that produce the products? We will rely on these experts to give us the lay of the land in private label and to tell retailers and others what might be coming down the pike in the near future and how to prepare for that. Private label is at the forefront of retail these days for good reason. As we all know, competition among retailers is at an all-time high, and merchants must pull out all the stops to differentiate themselves from the competition. Quality private label products can accomplish that goal and also add some much-needed profits to any retailer’s bottom line. The key is doing it right, and it is our responsibility, as a voice for the industry, to get the right information into the hands of the right people so that the right strategies can be developed. Store Brands is here to help. Please reach out to us with any questions and needs. We need your input to be ultimately successful and our doors, plus phones, emails and texts, are wide open. SB

Starting immediately, our readers can expect to see more coverage of what retailers are doing to embrace private label.

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8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631 PublisherEditor-in-Chief Seth Mendelson (973) 650-0263, smendelson@ensembleiq.com

EDITORIAL Managing Editor David Salazar (212) 756-5114, dsalazar@ensembleiq.com Executive Editor Dan Ochwat (773) 992-4416, dochwat@ensembleiq.com

ADVERTISING & SALES National Sales Manager Natalie Filtser (917) 690-3245, nfiltser@ensembleiq.com

PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production Derek Estey (877) 687-7321 x 1004, destey@ensembleiq.com Creative Director Colette Magliaro cmagliaro@ensembleiq.com Advertising/Production Manager Pat Wisser (973) 607-1322, cmagliaro@ensembleiq.com

LIST RENTAL MeritDirect Elizabeth Jackson (847) 492-1350 x 318, ejackson@meritdirect.com

SUBSCRIBER SERVICES/ SINGLE-COPY PURCHASES Omeda (847) 564-1468, STB@OMEDA.com

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

CORPORATE OFFICERS Chief Executive Officer Jennifer Litterick Chief Financial Officer Jane Volland Chief Innovation Officer & Managing Director of Path to Purchase Institute Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several . Senior Vice President, Content Joe Territo

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.


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INDUSTRYNEWS

Casco Bay Hemp Adds Private Label Product Line

Albertsons’ Own Brands Penetration Hits New Heights Albertsons released third-quarter financial results for fiscal 2019, and the success of its Own Brands program had a lot to do with the Boise, Idahobased company’s eighth straight quarter of sales growth. The company’s store brands lineup reached a new high in sales penetration of 25.6% for the quarter, according to the earnings report. In fiscal 2017, Own Brands penetration was 23%. “The team has focused on building a pipeline of innovation that helps differentiate our products and serve a variety of customer demands,” Chad Coester, senior vice president of Own Brands, told Store Brands. “We are growing trend-setters like O Organics and Open Nature while surprising customers with exciting seasonal offerings throughout the portfolio.” Albertsons other Own Brands include Signature Select, Signature Reserve, Lucerne and more. The company said Own Brands sales helped drive the total revenue bump for the 12 weeks ended Nov. 30, 2019, as did a 34% 8

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increase in online home delivery and “Drive Up and Go” sales. Albertsons president and CEO Vivek Sankaran said during the earnings call that the Own Brands portfolio, with over 11,000 products, drives loyalty to the company’s stores and online. The portfolio comprises four brands with sales that exceed $1 billion and Sankaran said the company is on track to launch 800 new products for the full fiscal year, with 675 already on shelves. Additionally, the company’s free-from brand Open Nature saw sales increase by 20.3% in Q3 over the prior-year period. “Overall, Own Brands continues to contribute to identical sales, and sales penetration reached a new high at 25.6% for the third quarter,” Sankaran said. “We aim to grow our Own Brands penetration to 30% over time, through increased merchandising and promotions in under-penetrated geographies and through the addition of new, innovative, high-quality products that appeal to our customers.”

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Casco Bay Hemp is debuting a line of private label CBD products. The Biddeford, Me.-based company said the line contains 0% THC and is looking to capitalize on consumer demand for products with the nonpsychoactive cannabinoid. Casco Bay Hemp said its CBD products, which includes tinctures and salves, are made from either CBD isolate or broad-spectrum CBD distillate, with the former offering a wide variety of cannabinoids alongside CBD and the latter consisting of pure CBD isolated from full-spectrum oil, which often is considered easier to administer. “It is not necessary to consume THC in order to gain all of the wellness benefits associated with hemp/cannabis, and we know that many of our customers are unwilling or unable to try a product containing THC,” said Casco Bay president Eben Summer. “Our new product line, which includes tinctures and salves, has been created specifically to suit their needs.”


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INDUSTRYNEWS

Target Debuts Inclusive Athletic Line Target is kicking off 2020 with a new own brand of activewear and sporting goods called All in Motion, a line that the company said was created based on insights from its Target shoppers. The line includes such apparel items as sports bras, leggings, hoodies and sweats, and such fitness equipment as hand weights and yoga mats. The private brand reportedly will replace an exclusively licensed brand that the retailer was carrying from Hanesbrands called C9 by Champion. It joins the company’s other private apparel brands, which include Goodfellow & Co. for men, Original Use for youth and Wild Fable for women. What stands out most in the new private brand is how the gear spans such a wide audience, with affordable items for children and adults, as well as people in different stages of

their fitness journey. Target said the in-house design team listened to men, women and children, testing out fabrics that wick away sweat. The company also engineered sports bras to fit various body types. All in Motion’s leggings also were engineered to fit all body types, and the company said mannequins and model photographs in-store will reflect the all-inclusive body types that the gear will fit. Target senior vice president and general merchandise manager for apparel, accessories and home Jill Sando said the assortment also uses sustainably sourced materials. When shopping at Target, the new private label line will be featured on open shelving, with items tracked by fit and style. QR codes will also be available to scan in-store to find sizes and styles, as well as provide videos to explain what activities the gear works best for and what level of fitness journey,

TreeHouse Ends Attempted Cereal Sale

The FTC said St. Louis-based Post and Oak Brook, Ill.based TreeHouse were two of three significant manufacturers of private label ready-to-eat cereals in the country. “After thoroughly evaluating our options and the potential outcomes, our Board has determined that terminating the agreement with Post and immediately seeking another buyer for the business is the proper course forward,” said Steve Oakland, president and CEO of TreeHouse Foods. “Unfortunately the business risk, necessary resources and extent of time required to challenge the FTC’s position was not in the best interest of our constituencies.” TreeHouse first acquired the ready-to-eat cereal business from ConAgra Brands as part of the Private Brands transaction it made in 2016. The business operates two manufacturing plants in Lancaster, Ohio, and Sparks, Nev.

TreeHouse Foods has officially terminated its agreement to sell its ready-toeat cereal business to Post Holdings. The decision comes after the Federal Trade Commission filed against the sale, claiming the $110 million acquisition would give Post more than 60% share of the market and eliminate competition between the companies. 10

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INDUSTRYNEWS

Giant Uncorks Private Wine Brand Artie Giant Food in the greater Washington, D.C., region, is growing its selection with a new private label wine offering. The Landover, Md.-based company has unveiled Artie, a selection of four wines priced between $6.99 and $9.99 a bottle, in 57 stores in Virginia. Artie wines’ labels feature a playful cork icon highlighting the origin country of each varietal. The full lineup includes a 2018 South African chardonnay, a 2017 Australian cabernet sauvignon, a 2018 pinot grigio from Italy and a 2018 sauvignon blanc from France. The company noted that Giant Food’s beer and wine category manager Jeffrey Pygott played an instrumental role in bringing Artie to stores, tasting and hand-selecting each one. “We are thrilled to bring Artie wines, an easy-to-drink, affordable and lighthearted line, to our shoppers in Virginia,” Pygott said. “These wines are a great way to explore different wine varietals and pair with various favorite foods with family and friends.” Private label wine is a big trend in the industry, as just last year several retailers launched new private brand wines such as Target, Amazon and Lidl. Some retailers like Costco and Trader Joe’s have been playing in the space successfully for years.

Socati Unveils Private Label Cannabinoid Line Broad-spectrum hemp extract processor Socati has debuted its private label offering. The Austin, Texasbased company’s lineup allows for customization of the ratios of such cannabinoids as CBD; cannabigerol, or CBG; and cannabinol, or CBN, in the final products, which also contain a non-detectable amount of THC. Socati noted that it offers a concept-to-market partnership to work with companies looking to develop new lines or augment existing offerings. The company employs agronomists, geneticists, food scientists and marketers that it says enables a speedy and efficient launch process. “With the creation of Socati’s private label division, we’re able to provide an efficient route to market for those looking 12

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to introduce new hemp-infused products or improve existing product manufacturing processes,” said Josh Epstein, Socati CEO. “It means brands and product innovators can respond quickly to changing consumer tastes and market trends, developing and launching high specification, quality products at speed and scale without tying up their existing manufacturing capacity or setting up their own costly infrastructure.” The company’s private label products include watersoluble crystalized flavor powder, organic and vegan gummies, tinctures using natural flavorings or essential oils, softgels and two-piece capsules. Socati said it has a Montana-based cannabinoid ingredient manufacturing facility that complies with Global Food Safety Initiative-recognized benchmarking and adheres to good manufacturing practice standards. Socati said its offerings also are tested and verified by third-party labs, as well as non-GMO and kosher.


INDUSTRYNEWS

Maxim Hygiene Adds BPA-Free Applicator to Organic Tampons Maxim Hygiene, a maker of organic cotton-focused menstrual care products, is expanding its offerings. The New Yorkbased company has launched a collection of organic cotton tampons featuring BPA-free plastic applicators that are available as private brand SKUs. Just two weeks old, the tampons are available for retailers to distribute as a private brand in four SKUs — regular, super and super plus, as well as a multi-pack of all three absorbency levels. No retailer is using the product yet as a store brand, the company said.

Organic and natural period products have become a big growth area in the feminine hygiene category, with consumers increasingly seeking out options whose makers are transparent about what goes into them. Leading brands Always and Tampax rolled out their Pure products, which feature 100% organic cotton. The Tampax Pure applicator is made of 90% recycled materials. Additonally, Procter & Gamble last February acquired This is L, a maker of organic tampons. With these options becoming a growing presence, a private label competitor could help round out an own brand menstrual care lineup. Maxim said the BPA-free plastic applicator also is designed with pull-and-lock technology to combine a compact tampon size with the ease of insertion of a standard applicator.

Brandless Calls it Quits After two short years, Brandless has ended. The San Francisco-based e-commerce company, known for selling better-for-you products under its own Brandless label, announced on its website that it was “halting operations.” The announcement was more of a thank you to the customers that supported them during its run and to let them know orders would no longer be taken this week. “While the Brandless team set a new bar for the types of products consumers deserve and at prices they expect, the fiercely competitive direct-to-consumer market has proven unsustainable for our current business model,” a statement on the site said. Brandless was supported by SoftBank Group Corp.’s Vision Fund. The group reportedly has struggled with other investments, which include Uber and WeWork. Just last year, Brandless was exploring getting about 10,000 of its eco-friendly personal care, vitamins and health-focused foods onto brick-and-mortar shelves. The plan was to have products on shelves in 2020, as well as an expansion into CBD products. Instead, the direct-to-consumer company is being forced to layoff its more than 70 employees and shut down. www.storebrands.com

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INDUSTRYNEWS

Kroger Expands Plant-Based Store Brand Kroger has been active with its private brand of plant-based meat substitutes. In early January, the grocer announced a line extension to its Simple Truth Plant Based portfolio with Simple Truth Emerge, a line of meat-free patties and grinds that provide 20 grams of pea-based protein per serving. Additionally, the company said it was expecting to add 50 more products to the current Simple Truth Plant Based line in 2020. Simple Truth Emerge will be in meat cases near traditional patties and meats, just as other plant-based meats are merchandised. In December, along with help from the Plant Based Foods Association, Kroger officially launched its Simple Truth Plant Based meats in 3-ft. meat cases in 60 Denver-area Kroger stores. The launch kicked off a 16-week pilot with the association. Simple Truth signage dominated the merchandising in the sections. About that launch, Marcellus Harris, Kroger’s assistant commodity manager, meat, told Store Brands that they are in the beginning stages of the test and “look forward to amass-

ing customer insights and data that will influence how we market plant-based foods.” Simple Truth Emerge offerings are designed to have the same taste and texture as beef and are free of GMOs, dairy, gluten and soy, per Kroger. Simple Truth Plant Based products currently include patties, sausages, deli slices, roasts, seitan and jackfruit, and they’re all being tested in the Denver pilot. Joe Grieshaber, Kroger’s senior vice president of merchandising, said Kroger will be launching 50 more products to the Simple Truth Plant Based line this year, adding that the current lineup exceeded $2.3 billion in sales last year. He also noted the plant-based category is one of the company’s main drivers of natural and organic sales. Looking out as far as 2030, research and consulting firm IDTechEx, Boston, projects the global plant-based meat market to reach $27 billion. The entire Simple Truth portfolio from Cincinnati-based Kroger includes more than 1,550 natural and organic products, and often adds new products monthly.

Western’s Smokehouse Buys Meat Snack Maker Greentop, Mo.-based Western’s Smokehouse has acquired Thrushwood Farms of Galesburg, Ill., expanding its production of private label meat snacks sticks, strips, bars, bites and more. The two companies have experience producing premium meats such as 100% grass-fed beef, antibiotic turkey, chicken and pork, and pet treats. Doug Hankes, vice president at Thrushwood Farms and a new shareholder in Western’s Smokehouse, said the companies date back to knowing one another for decades. Part of the deal does close a local Thrushwood Farms store to focus more on the snack stick business. An independent investment group, Charis Consumer Partners, supports both companies. 14

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“Dating back 40 years, both companies have had tremendous mutual respect,” said Ben Rudman, president of Western’s Smokehouse and partner at Charis Consumer Partners. “The Hankes family is a pillar of the Galesburg community and the meat processing industry. We are obsessed with delighting consumers and helping our private label customers win, and the Thrushwood team will help us do both.” Rudman added: “On a combined basis, we now have more capacity, capability and innovation resources to help our customers grow.”


INDUSTRYNEWS

Ranir Acquires Steripod

Blount Fine Foods Moves Into Portland Facility Prepared foods company Blount Fine Foods is getting some new manufacturing digs. The Fall River, Mass.-based maker of prepared soups, entrees and side dishes for retail and foodservice, and a leader in private label soups specifically, has purchased a manufacturing facility in Portland, Ore., gaining 80,000 sq. ft. of production capacity for its products. The Portland facility joins the company’s three other production sites, which include its Massachusetts headquarters and facilities in Warren, R.I., and McKinney, Texas. Alongside the new facility, Blount Fine Foods has added a third-party logistics partner with the aim of expanding its distribution and logistics nationwide. Currently, the company has third-party logistics locations in Taunton, Mass., Fort Worth, Texas, and Atlanta, with plans to

add two more in Oregon and the Midwest this year. In the coming months, the company said it plans to invest more than $25 million in the Portland facility to ensure it is state-of-theart and ready for the next soup season, which starts in July. The investment will include a spiral hydro chiller for quick-chilling soups and proprietary cooking kettles large enough to bring production efficiencies but small enough for the soups to largely be made in small batches by hand. Blount provides private label soups to retailers nationwide and makes its broader portfolio of products available to stores. Blount said the company expects to employ roughly 50 people once the facility opens in the latter half of 2020. By the time the site is fully operational in 2021, the company said it expects to employ roughly 150 there.

Store brand oral care product manufacturer Ranir has acquired the oral care assets of Steripod, a Culver City, Calif.-based toothbrush accessory brand that makes toothbrush protectors, kids’ products and tongue cleaners. Grand Rapids, Mich.-based Ranir — a subsidiary of Perrigo — said it sees the acquisition as a way to build out its innovation platform and grow its portfolio of store brand oral care products, notably the expansion of a product line dedicated to the self-care trend in the oral care category. Currently, the company produces a range of oral care store brand products that includes powered and manual toothbrushes, teeth whiteners, dental floss, toothbrush protectors, flossers and more. Rich Sorota, president and CEO of Ranir, said the acquisition advances the company’s mission and enhances its ability to grow and offer consumers quality, affordable oral health care products. “Steripod is a leading innovator in the toothbrush protector category,” he said. “Our organizations are jointly dedicated to ensuring customer health and safety through innovative products, and we are better positioned than ever to execute on our commitment to ‘Delivering Millions of Affordable, Healthy Smiles’ every day.” Ranir said it will add in Steripod’s oral care products into its broader portfolio over time.

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VIEWPOINT

MIND THE GAP ADDRESSING PERCEPTION BY TOUTING QUALITY IN PRIVATE BRANDS By Chris Faridniya Chris Faridniya, director of sales and marketing, ChefsBest

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rivate brands are reshaping the grocery store experience. According to Cadent Consulting, private label dollar share could reach 25.7% by 2027, growing more than eight percentage points from where it is today. The volume of private labels being sold at mass retailers, club stores and dollar stores rose 33.2% over the past five years, while national brands rose less than 1%, per a study from the Private Label Manufacturers Association using data from Nielsen. By and large, private brand purchasers are typically value-conscious buyers. Yet, there is still the perception of sacrificing quality, and retailers are struggling to overcome this decades-old assumption for two reasons. First, the value proposition remains primarily focused on price, and consumers have been trained to expect lower quality in exchange for lower price regardless of industry. Further, marketing budgets for private brands are much smaller on a perproduct basis than leading national brands. This helps them go to market at a lower price point, as there is not a multimillion-dollar budget for a single product, but also restricts the degree to which they can broadly advertise product benefits beyond price. Their 16

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Cadent Consulting suggests that private label dollar share could reach

25.7% by 2027, growing more than eight percentage points from where it is today.

influence in this area is limited within the vast pool of messages consumers receive regarding quality. Starting with this public hypothesis that low price may not equate to high taste quality, after nearly two decades of evaluating national brands, the ChefsBest team began putting private label products through our proprietary Sensory Attribute Quality Analysis — a rigorous tasting evaluation conducted by our team consisting of an expert moderator and executive-level chefs trained as Certified Master Tasters. What we found was that it is not fair to

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assume that private brand products are of lower quality, and that products need to be judged and independently evaluated. Through our testing, we saw that private brand products exceed or surpass quality standards at a very similar rate as national brands. We tested Walmart’s Great Value Peanut Butter to determine whether or not it met or surpassed standards of a high-quality peanut butter. First, our Certified Master Tasters, led by the moderator, defined quality for the category and developed a quality definition. The quality definition specified ideal features of a peanut butter, including appearance, aroma, texture, flavor profile and sweetness intensity, among others. Following a blind taste test measured to the 21 attributes defined in the quality definition, the panel of executive-level chefs scored the products, ultimately concluding that Walmart’s Great Value Peanut Butter is at parity with one national leading peanut butter brand and superior to another. In 2016, we tested Kroger medium salsa versus two leading national brands among the ready-to-eat salsa category. We found that the private brand product was rated highest in overall quality. As such, the product would be eligible for the ChefsBest Excellence Award along with substantiation of associated advertising claims, and being statistically superior — which the other leading brands would not have been eligible for. Once seen strictly as price fighters with lower quality, it’s clear why private brand growth has surged in recent years. Proceeding with the “high quality” messaging that a select few of them (and virtually all longstanding national brands) have built their consumer confidence around will alleviate concerns that consumers may harbor regarding the relationship between quality and price. Alternately, national brands — whether legacy products or ones just entering the market — will need to work a little harder on informing customers about what distinguishes them from other options in what is still the most important message in food and beverage: taste. SB


VIEWPOINT

CULTURE-BASED PRIVATE BRAND POSITIONING ACADEMIC RESEARCH SUGGESTS RETAILERS SHOULD POSITION PRIVATE LABEL AS PREMIUM TO GET THE ATTENTION OF LOWER-INCOME SHOPPERS By Carlos J. Torelli Carlos J. Torelli, professor of marketing, Gies College of Business at the University of Illinois at Urbana-Champaign

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rivate label brands traditionally have appealed to the cost-conscious consumer that often is on a budget. Recently, some of these brands have become more sophisticated in their marketing by focusing on product innovation and quality, as well as by enhancing their status appeal through eye-catching packaging. This has elevated these private brands to a premium status, and hence increased their acceptance among U.S. consumers. For instance, Target’s strategy of investing in its private label brands has helped the company successfully compete with Amazon and Walmart. However, as U.S. markets become more culturally diverse due to accelerated migration patterns, managers of private label brands should not only pay attention to budget considerations when segmenting their markets, but also to cultural factors that could foster the development of ethnic markets. In this regard, recent research conducted with my colleagues suggests

that managers of private label brands should segment their markets based not only on budget considerations (i.e., lower- vs. higher-status consumers), but also by considering the extent to which consumers’ cultural priorities emphasize the acceptance and endorsement of a social hierarchy. This cultural variable — the extent to which people in a cultural group accept and endorse status differentials along a social hierarchy — also is called power distance belief, or PDB. Crossing these two dimensions delineates four different segments of consumers with different needs and aspirations, and with different propensity to favor national versus private label brands. Consumers who accept inequality and hierarchy (high PDB), and who also have a relatively lower status, tend to have a heightened need of consuming for status, and hence tend to favor the status appeal of national brands. This preference is particularly pronounced for mundane, utilitarian products that hold low symbolic val-

ue (e.g., cleaning products). For these consumers, national brands serve a psychological purpose, by heightening feelings that their status has been uplifted. In contrast, regardless of their status, consumers who believe that society is more egalitarian (i.e., low PDB) tend to favor private label and national brands equally. PDB varies widely between cultures and nations, and in the United States it can fluctuate across different ethnic groups. For instance, immigrants with Asian and Hispanic heritage tend to be high in PDB. Based on this new research, low status consumers from these groups would have heightened status consumption needs, and hence likely be responsive to the premium status of national brands. What should managers of private label brands do to win this growing segment of high-PDB consumers? Although the findings in this new research sound like bad news for private label brands, there are positive steps that managers of these brands can take. For one, instead of solely focusing on low price and good value of their products, private brands may be wise to increase their brand equity via eyecatching packaging and improved product quality, as these steps would create a more upscale and premium image. This would entice low-status consumers high in PDB because of the perceived status provided by the product. If product affordability became a concern for these consumers, managers of private label brands might manipulate product size rather than dilute the product’s status. SB

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QUESTIONS/ANSWERS

ROOM TO GROW BRIGHTFIELD GROUP’S VIRGINIA LEE DISCUSSES THE FUTURE OF THE CBD SPACE

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he Food and Drug Administration took surprising action in November against one of the biggest categories right now — CBD. The regulatory agency sent warning letters to 15 companies for illegally selling CBD, and it revised its Consumer Update listing to highlight safety concerns about potential liver damage, harmful side effects and increased drowsiness when CBD is used with alcohol. Among the experts who were surprised by the FDA’s actions was Virginia Lee, a CBD research manager with Chicago-based Brightfield Group, helping CBD and packaged goods companies with strategic planning by developing and executing syndicated research on the U.S. CBD market. She recently presented an in-depth morning session at the PLMA Private Label Trade Show in November 2019. Store Brands spoke to Lee about what the future holds for the category.

STORE BRANDS: How do you think the FDA’s actions will impact the overall CBD market? Virginia Lee: I think many CBD companies will tighten their production processes and reduce their use of health claims on their packaging, website, social media accounts, and marketing communications. More CBD companies will become Current Good Manufacturing Practice-certified and highlight this certification on their websites and marketing communications. Longtime CBD users are unlikely to reduce CBD consumption just because the FDA highlighted safety concerns. However, consumers who have not yet tried CBD may need additional information about production standards and third-party testing methods, and reassurance about the safety profile from family, friends and store employees. SB: In what categories do you see the most opportunity CBD? 18

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VL: Beauty and skin care products, capsules and drinks are fast-growing CBD categories to watch. The entrance of large mainstream chain retailers including CVS Pharmacy, Walgreens, Kroger and Albertsons, and beauty specialists Ulta and Sephora into the CBD space in 2019 boosted sales of CBD beauty and skin care products from $17 million in 2018 to $311 million in 2019. Sales of CBD capsules grew by 526% to reach $477 million in 2019 despite the FDA not allowing the sale of CBD as dietary supplements. CBD capsules provide an easy to use, dosage-controlled, discreet option for consumers looking for natural alternatives to pharmaceuticals. CBD drinks are expected to continue seeing high rates of revenue growth and innovation, with sales of CBD drinks reaching $143 million in 2019, up 1276% from 2018. New innovations in CBD drinks — ranging from sparkling waters

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to coffees, teas and single-serve shots — provide relaxation, energyenhancement, sleep-enhancing and workout-recovery benefits in a familiar and convenient format. SB: Who is the consumer of CBD products, do you have an idea of what demographics or types of shoppers lead this category? VL: Brightfield Group’s consumer insights research shows that overall, CBD users are more likely to be women, parents and millennials. Women comprise 52% of CBD users. A majority (62%) of CBD users are parents, with 48% having children at home. Millennials are avid users of CBD, with 50% of CBD users between the ages of 21 and 40. Many CBD users are regular users, with 50% saying that they use CBD two or more times a week. CBD users are using CBD as a natural alternative to treat a variety of ailments including anxiety, chronic pain, depression and insomnia. Nineteen percent of CBD users are “daily symptom attackers” who are using CBD to manage chronic conditions such as multiple sclerosis, endometriosis and chronic pain. SB: Where do you see hempCBD products in the next five to 10 years? VL: In the likely case that the FDA creates a regulatory framework for CBD usage in supplements, food and drinks, and the mainstream market continues to embrace hemp-derived CBD, the U.S. CBD market is expected to grow exponentially, reaching $24.3 billion by 2025. Over the next five years, we expect expansion of CBD products — beyond topicals and skincare products to include supplements (tinctures, capsules), food and beverages, pet products — across both pharmacy and grocery as well as into mass merchandisers, gyms, chain pet stores and other bigbox retailers. SB


COVER STORY

7-ELEVEN

BEEFS UP ITS STORE BRANDS Will 7-Select and 24/7 Life make the chain’s private brands a $1 billion business?

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fficials at 7-Eleven plan on taking private label to new levels in the coming years. The giant convenience store operator quietly rolled out a new private brand — 24/7 Life — that brought with it a new array of private label electronics accessories that the retailer said were benchmarked for quality against top national brands. But the launch is turning out to be bigger than that. 24/7 Life will take over all of 7-Eleven’s nonfood private label products, creating a clearcut delineation between its nonfood store brand offerings and its packaged foods, which will remain under the 7-Select name.

By Dan Ochwat

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Together, in the year ahead, the private brands will continue to be a force inside the c-store’s overall sales growth, according to Jack Stout, senior vice president of merchandising and demand chain at Irving, Texasbased 7-Eleven. “This year, 7-Eleven expects to exceed $1 billion in private brand sales,” he said. The estimated growth comes just 12 years after 7-Eleven began its private brand business. In 2008, the convenience store retailer introduced 7Select with just 87 items, primarily food and beverage products, according to Stout, but the company slowly added 7-Select health and beauty products, medicine and more. The company now produces roughly 1,500 private brand items in total, and it was this growth that caused the company to seek to develop two primary private brands. “As our assortment grew to nearly 1,500 products, we recognized an opportunity to separate 7-Eleven private brand products into two categories and bring nonfood items under one label,” Stout said. “7-Select continues to serve as our innovative and trusted line of food and beverage products, while 24/7 Life is an expansive assortment of nonfood products that fit the needs of our customers varying lifestyles.”

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BUILDING ON HERITAGE

The name 24/7 Life reflects the retailer’s heritage as a round-the-clock retailer. Introduced in 1946, 7-Eleven was a store with rare, extended operating hours. Then, in the ’60s, the chain tested a 24-hour, seven-days-a-week concept store just off the Las Vegas strip and another near the University of Texas football stadium in Austin, Texas. Slowly more stores adopted the 24/7 model, especially near universities and colleges. The company said that as America got younger in age and more jobs had workers staying late and coming in earlier, 7-Eleven shifted to be open and available for consumers. In a sense, that’s what the 24/7 line aims to reflect, carrying items that are there 24/7 when consumers need them, even perhaps at a time that’s least expected. “We provide customers with what they want, when they want it — 24/7, for life’s needs, whether that’s wireless earbuds on the way to the airport, medicine for a sick child, sunscreen at the beach or detergent for laundry,” Tim Cogil, 7-Eleven’s senior director for private brands, said in a release when the items launched. Stout said 7-Eleven is “obsessed with making life easier” for customers. “We

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This year, 7-Eleven expects to exceed $1 billion in private brand sales. JACK STOUT SENIOR VICE PRESIDENT OF MERCHANDISING AND DEMAND CHAIN 7-ELEVEN


were the first retailer to operate 24 hours a day, seven days a week, and we know our customers are hardworking, busy and need convenient quality solutions to keep them going 24/7, which led to the name 24/7 Life.” Currently, the line comprises more than 200 products, including batteries, over-the-counter medications, cleaning products, paper goods, office supplies, wine accessories, beauty products, health-and-wellness offerings, travelsize toiletries and more. The products are available in stores now, but a visit to stores will still show some older 7-Select nonfood products on shelves as it’s still being phased out. Some 24/7 items also are available on the company’s 7NOW delivery mobile app. Whereas convenience store chains may not stand out as the slickest of retail operators, the 24/7 Life logo

does pop with a slicker, modern feel than perhaps expected of 7-Eleven. The stylized logo in the company’s trademark green, red and orange colors stands out on the packages, which are in a variety of colors. The new line’s calling card seems to be electronics, which are being sold in four categories — audio, cable, charge and accessories — each of which is assigned a specific color-coded packaging. Currently, they are the 24/7 items most stocked in stores, along with some OTC products. Electronic items consist of wireless charging pads, speakers, wireless speakers, earbuds, power banks, chargers and cables, phone mounts, adapters, tech organizer bags, and screen-cleaning kits. Consumer insights work told the company that consumers were looking for longer charging cords that are com-

patible with leading electronic brands like Apple and Android, and that is evident in the new line as cords come in lengths as long as 10 ft. 7-Eleven is particularly looking to market and stock electronics items in stores near hotels, airports and stadiums. “Our dedicated 7-Eleven private brands team is constantly in the marketplace and attending tradeshows to find trustworthy vendor partners who share the same quality standards as we do,” Stout said. “Not only do we seek out partners that create products we know our customers will love, we also put time and resources into building lasting relationships with them.” In the product announcement, Cogil said it was important to make sure the electronics in the 24/7 line were benchmarked against national brands. “To ensure compatibility with leading

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...in the last year, 7-Eleven also has been innovating with its on-the-go food options. electronic brands such as Apple and Android, all lightning cables, chargers and adapters are certified by a thirdparty firm. 7-Eleven also has contracted with global trend forecasters about consumer trends and emerging products to stay out in front of rapidly changing technology trends.”

7-SELECT GOING STRONG

While maybe the newest rollout, 24/7 Life will likely be the little brother to the 7-Select brand, which carries a much larger portfolio, and to 7-Eleven’s foodservice options, as well. For 7-Select, three products were recently honored at the Private Label Trade Show, put on by the Private Label Manufacturers Association, winning awards in the Deli/Prepared Foods/Meal Kits category, Cookies and Crackers, and Mexican/Latin American Foods category. The products were a 7-Select Gourmet Snack Trio, a mix of cured pork genoa salami and provolone cheese; 7-Select French Macarons; and 7-Select Fresa Paleta bars, a Mexican-style frozen dessert. The winning products are a testament to the innovation coming out of the retailer’s private brands group. Big Bite hot dogs and taquitos may be the retailer’s claim to fame in foodservice, but in the last year, 7-Eleven also 22

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has been innovating with its on-the-go food options, too. Recent launches include pulled pork and smoked turkey sliders, a first-of-its-kind breakfast pizza, gingerbread-flavored lattes, a Jarritos fountain drink for Big Gulp cups and more. The Slurpee, of course, is always evolving, even most recently adding a flavor inspired by 7-Eleven’s store brand energy drink Quake. “Although fresh meals do not fall under the private brand portfolio, we do listen to customer feedback and tune into industry trends to enhance our assortment in all categories, whether it be organic coldpressed juice under the 7-Select label or health and beauty products under the 24/7 Life label,” Stout said.

QUIET LEADERS

If one was to do a quick Internet search of 7-Eleven, that person would find that 7-Eleven doesn’t do a whole lot of trade press interviews. The retailer wouldn’t even share with Store Brands the names of people on its private label team, although leadership consists of president and CEO Joe DePinto, Stout, senior vice president and chief marketing officer Marissa Henderson Jarratt, Cogil and others. The retailer is seeing astounding growth globally though, having just

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cracked 70,000 stores worldwide in 18 countries. In the two years that the company’s loyalty program 7Rewards has been active, it has grown from 9 million users to 25 million. And, for the company to say it expects to see $1 billion dollars in sales from its private brands is impressive. By comparison, Kroger’s Simple Truth brand with roughly 1,500 products earned more than $2 billion in 2018. The grocer’s largest private brand, the Kroger brand, generated more than $13 billion in annual sales, selling eight times more than any other consumer goods brand in the store. In 2018, 7-Eleven reported its highest operating income ever, seeing samestore sales rise by 3.4%. The company said it was driven by its fresh foods and 7-Select brand. With 24/7 Life in the fold, the retailer can expect more from its private brand assortment. And, according to Stout, they are going to continue to innovate. “With 7-Select as our primary packaged food brand, we continue to build equity in that category as we introduce innovative offerings,” he said. “Similarly, the assortment of products under the 24/7 Life brand will constantly be evolved and diversified to appeal to the nonfoods needs of customers.” SB


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Welcome to PLMA’s New Industry Newsletter Introducing PLMA’s new industry newsletter with information and insight about what is happening in America’s supermarkets, drug chains and mass merchandisers. Prepared monthly by Carol Angrisani, former editor and reporter for Supermarket News, Carol’s Newsletter spotlights the products and promotions of retailers as they market their store brands. For your monthly copy of Carol’s Newsletter visit http://plmanewsletter.com/subscribe.

Store Brands Are Sold at These ‘Cashierless’ Stores No waiting in the checkout line. No placing groceries on the checkout counter and rebagging once they are scanned. With timesaving benefits like these, it’s understandable why more “checkout-free” food stores are opening across the country. From Ahold’s Nature’s Promise salad kits to Whole Foods’ 365 Everyday Value trail mix, store brands play an important role in this new retail concept. At Amazon’s “Go” smallformat stores, shoppers can get a variety of store brand products from Amazon-owned Whole Foods. Depending on the store, these may include packaged cashews, organic dried mangoes, banana chips, feta cheese crumbles and raspberry fruit spread. At one of the newest Amazon Go stores, located on 42nd street in Manhattan, store brand selections include 365 Everyday Value organic milk (half gallon), brown cage-free eggs (one dozen), oats and honey granola (17-ounce box) and electrolyte water (50.7 fl. ounce). Plus, the stores sell Amazon’s own brand of meal kits. Selling for $15.99 to $19.99, selections include Chicken Picatta with Gemelli and Caper Butter Sauce; and Seared Salmon with Corn and Edamame Succotash. The kits contain all the pre-cut and pre-measured ingredients necessary to prepare a meal for two people in 30 minutes. Here’s how Amazon Go stores work: shoppers download the Amazon Go app and scan the app at

the entrance to the store. Overhead cameras and sensors detect anything they buy. Anything they remove from the shelf is charged to their Amazon account. If an item is picked up but returned to the shelf, the shopper isn’t charged. Amazon currently operates more than 20 Amazon Go stores. It reportedly has plans to open many more. The checkout-free concept is catching on with other retailers. Retail Business Services, the services company of Ahold Delhaize USA, is testing a concept that’s similar to Amazon Go. (Ahold Delhaize owns , Giant Food Stores of Carlisle, Hannaford and online grocer Peapod.) RBS is testing a checkout-free store, dubbed “Lunchbox,” in its Quincy, Mass., office. Once employees scan a barcode at the entrance to the convenience-style store, they can walk in, shop and simply walk out. In-store technology detects which products are removed from shelves. The store stocks grab-and-go convenience items like snacks, salads and fresh fruit. Store brand selections include Ahold’s Nature’s Promise store brand organic milk (half-gallon) and Nature’s Promise single-serve organic salad kits, according to a promotional video. (continued on next page)


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Welcome to PLMA’s New Industry Newsletter Introducing PLMA’s new industry newsletter with information and insight about what is happening in America’s supermarkets, drug chains and mass merchandisers. Prepared monthly by Carol Angrisani, former editor and reporter for Supermarket News, Carol’s Newsletter spotlights the products and promotions of retailers as they market their store brands. For your monthly copy of Carol’s Newsletter visit http://plmanewsletter.com/subscribe.

Food Stores Cater to Special Diets Now that the New Year is here and resolutions are set, more shoppers are seeking groceries suitable for the Whole30, Keto, Paleo and other special diets. Food stores are responding with shopping lists, tips and discounts on special-diet foods. Take the Whole30 diet, a highly restrictive food plan consisting of whole, natural foods. It calls for eliminating processed foods, white and wheat flour, sugars (including artificial sweeteners), grains, legumes, alcohol and dairy for 30 days. The diet emphasizes high-quality proteins, healthy fats, seeds, nuts, some fruit and veggies.

Kroger-brand packaged spinach, canned tuna, packaged bacon, canned green beans and eggs. Kroger’s Keto list also includes products that qualify as healthy fats and snacks, including Kroger’s Simple Truth-brand pecan pieces and its “CarbMaster” store brand high-protein, low-sugar yogurt.

Shoppers Play a Role in New Grocery Brand What do shoppers want in a grocery brand? That was the type of question Wakefern Food Corp. posed to 5,000 shoppers when it launched one of its largest store brand rebranding initiatives.

Online natural and organic grocer Thrive Market recently offered 30% off Whole30-approved foods, including its Thrive Market store brand grass-fed bone broth, organic virgin coconut oil, and non-GMO chunk light tuna.

The result was the launch of two new brands - Bowl food/beverages and Paperbird for household goods at Wakefern’s 278 ShopRite-banner stores. Thanks to the consumer input, Wakefern decided to create two different brands for food and nonfood, versus having one umbrella brand.

Sprouts Farmers Market, Phoenix, Ariz., has also positioned itself as a one-stop-shop for special diets. The sprouts.com website has a downloadable checklist of Whole30-approved foods. Included on the checklist are its Sprouts-brand canned coconut cream, extra virgin olive oil, avocado oil cooking spray, organic salsa and flavored seltzer water.

Wakefern is converting its existing ShopRite, ShopRite Kitchen, ShopRite Trading Co. and Cape Gourmet store brands into the two new premium brands. The new brands will include 3,500 products by the end 2021.

The Kroger Co. makes it easy for consumers to shop for special diets, including Paleo and Keto. Its website has a listing of keto-friendly low-carb foods. Shoppers can click the product they want, and it is automatically added to their online shopping carts. Included on its Keto-compliant product list are

Bowl out late last year. Several hundred rebranded products are currently on store shelves. These include packaged salads, eggs, salty snacks, cooking oils, bottled water and paper towels. Some existing items will be reformulated and improved before they are added to the new lines.


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Along with existing products that have been converted to the new brands, new specialty items are being introduced, including New Orleans-style potato chips and avocado oil.

follows the 2016 launch of ShopRite’s Wholesome Pantry line of organic and free-from groceries.

‘Cave-Ripened’ Cheese Gains a Following Wegmans has become a destination for cheese lovers. What makes its store brand cheeses unique is that many are sourced from both local and international suppliers and ripened in Wegmans’ very own high-tech facility that mimics the environment of Europe’s famed cheese caves. Located near its Rochester, N.Y., headquarters, the 12,300-square-foot facility has seven cheese-ripening chambers. Each room has just the right temperature, air flow and humidity necessary to age Brie and other cheeses perfectly, according to the retailer. A red icon reading “Cave-Ripened by Wegmans” is featured on the packaging of all cheeses that are aged in the facility. Wegmans has won several industry awards for its cheese. For instance, its “Professor's Brie” won 2nd place “Best of Show” at the American Cheese Society’s 2019 Judging and Competition.

Organic Buyers Have New Wine Options Kroger customers who buy organic groceries can now add wine to their shopping carts. That’s because the supermarket chain has introduced a store brand line of wine made from organically grown grapes. The Simple Truth-brand wines come in four varieties: Sauvignon Blanc, Cabernet Sauvignon, Rosé and Prosecco.

The Sauvignon Blanc is made from grapes from organic vineyards within the Wairau Valley in New Zealand’s Marlborough region; the Cabernet Sauvignon, from grapes grown on one of California’s largest organic vineyards, located in the hills of Paso Robles on the Ventral Coast; the Rosé, from the Coteaux Varios en Provence wine region in France; and the Prosecco, produced from organic Gleravariety grapes and fermented in Northern Italy’s Veneto region. Each sells at an introductory price of $14.99 at select Kroger, Ralphs, Dillons and other Kroger Co.-owned supermarkets. Other retailers are also raising a glass to organic wine. Trader Joe’s, for instance, sells “Shaw” store brand wine made with organic grapes. The line includes a California Pinot Grigio made with 100% organically grown grapes. Each bottle has the (California Certified Organic Farmers) designation. The wines sell for just $3.99 in most stores where wine is sold.

Grocer Donates One-Year Supply of Cat Food There’s a happy ending for a crafty cat who gained viral attention for his attempted escapes from an animal shelter. Not only was “Quilty” adopted, he also received a one-year supply of Heritage Ranch store brand cat food from the H-E-B supermarket chain, according to a post on the H-E-B Facebook page. Quilty gained fame late last year during his stay at the Friends for Life Animal Rescue and Adoption Organization in Houston. Quilty somehow got out of the shelter’s “senior” cat room and accessed another room. Security footage revealed that Quilty would jump up and pull the handle down on the door. Quilty became a feline celebrity after the shelter posted about his escapades on social media. He now has his own Instagram page with more than 50,000 followers. (continued on next page)


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New Tech Accessory Brands Are Here The big electronics stores aren’t the only places where consumers can get phone chargers, adapters and power cords. Food stores, mass merchandisers - even convenience stores - are getting more involved in the tech accessory business. For instance, power banks, charging pads and cellphone cases are among the items in Walmart’s “Motile” tech store brand. Likewise, the 7-Eleven convenience store chain has its own line of tech accessories. Its new “24/7 LIFE” brand includes lightning cables, ear buds, chargers and adapters. All the accessories are benchmarked for quality against top national brands and certified by a third-party firm, according to the company. Tablet cases, ear buds, portable speakers, screen protectors and other tech accessories are part of Target’s “Heyday” store brand. Target describes the line as a combination of style and fashion with accessories that sport colorful hues and designs. Most items cost $20 or less.

Upscale Foods Are Part of Target’s Good & Gather Line Pomegranate Fruit Strips. Ravioli made with Burrata Cheese and Lemon Zest. These are a few of the unique groceries that are part of Target’s new Good Target’s Archer Good Farms and Simply Balanced private brands, as well as some Market Pantry products. By the end of this year, there will be more than 2,000 Good beverages. They are made without artificial flavors and sweeteners, synthetic colors and high-fructose corn syrup. Along with everyday staples like milk, eggs and cheese, there are plenty of other specialty offerings, including organic blue corn tortilla chips with flax seeds.

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Trend Alert: Specialty Spices From Tellicherry Black Peppercorns to Pink Himalayan salt, specialty spices are sharing space on store shelves with oregano, paprika and other traditional offerings. Spices and herbs are increasingly in demand among today’s healthoriented shoppers because they flavor foods without adding a lot of salt and fat.While traditional spices have just a 6- to 9-month shelf life, whole spices can stay fresh for up to 2 years. So more manufacturers are selling whole spices with built-in grinders. Consumers simply turn the top for fresh ground spices. The Kroger Co. family of stores sells a variety of grinder spices under its Private Selection store brand. A Tellicherry Black Peppercorn Grinder and Pink Himalayan Salt Grinder are among the selections sold at Kroger, Ralphs, Dillons and other Kroger Co.-owned supermarkets. Midwest food retailer Hy-Vee also sells spice grinders. For instance, its Hy-Vee store brand “Pepper Supreme” grinder contains a mix of four different types of peppercorns: Black, Green, White and Pink. And the Hy-Vee-brand Fish and Seafood seasoning grinder contains a combination of savory herbs, garlic and onion. Organic spices are also trending. The Albertsons chain of supermarkets, for instance, sells a variety of organic herb and spices under its O Organics brand. Selections include organic ground ginger, thyme and oregano. Likewise, Ahold Delhaize USA also sells organic spices under its Nature’s Promise store brand. There’s organic ground cinnamon, ginger, sesame seed, cumin and dill weed. The Ahold Delhaize USA chain includes the Food .n Lion, Giant Food-Landover and Stop

Welcome to PLMA’s New Industry Newsletter Introducing PLMA’s new industry newsletter with information and insight about what is happening in America’s supermarkets, drug chains and mass merchandisers. Prepared monthly by Carol Angrisani, former editor and reporter for Supermarket News, Carol’s Newsletter spotlights the products and promotions of retailers as they market their store brands. For your monthly copy of Carol’s Newsletter visit http://plmanewsletter.com/subscribe. Published by the Private Label Manufacturers Association 630 Third Avenue, New York, NY 10017 • Telephone: (212) 972-3131 • Fax: (212) 983-1382 • email: info@plma.com


STORE BRANDS l CBD

CBD STANDOUTS COMPANIES MAKING THEIR MARK IN PRIVATE LABEL CBD OFFERINGS By Debby Garbato

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BD is about as hot as any category in mass retail. Why can’t it also be hot in private label? The answer, of course, is that it can and retailers and suppliers are quickly looking to private label suppliers to gain a greater edge in this still quite mysterious category, which offers the promise of robust sales growth and strong profits. The bottom line is that CBD products continue to gain popularity among consumers, with the legal U.S. CBD market expected to surpass $24 billion in annual sales by 2025, according to market research firm Brightfield Group’s recent “From Farm to Aisle: US CBD Market” report. Consumer response, say many industry followers, has been very positive, particularly in categories like topical personal care. According to BDS Analytics, retail chains are looking to make stronger commitments to the category and are showing strong interest in private label CBD offerings. Sans Food and Drug Administration approval and legality of CBD merchandise at the federal level, this would allow retailers to set standards of their own, giving them tight control over products’ ingredients, claims and traceability while also alleviating consumers’ safety and liability concerns. BDS Analytics noted that a product’s success will largely be determined by the quality of consumer education programs and consistent labeling — elements retailers with proprietary product programs are wellequipped to do. These chains also can capitalize on a unique advantage that the CBD category presents: it is demographically agnostic. Unlike most new trends, CBD products appeal to people of multiple ethnicities, age groups and income levels. According to BDS, 40 is the average age of CBD consumers. But they skew far older, with AARP Magazine recently devoting several articles to the popularity of CBD among seniors for wellness and recreational use. To help retailers gain a better understanding of the players in the private label CBD market, Store Brands is taking a look at some of the products and ingredients now available to retailers looking to pursue the lucrative opportunities inherent to private label CBD programs that can address a range of consumer needs.

Ingredient Alliance is a vertically integrated grower and supplier that uses specialized genetics to create a variety of water-soluble cannabinoids for use in food, beverages and personal care products. The watersoluble ingredients contain 20% active cannabinoids by volume, allowing retail product manufacturers to make more potent merchandise with less filler. According to a Eurofins study, bioavailability can be as high as 70%, compared with the 12% derived from traditional oilbased cannabinoids. Water soluble cannabinoids also yield clearer liquids with no cloudiness or settling. Ingredient Alliance’s own private label merchandise also incorporates a number of derivatives from the hemp cannabinoid family, including cannabidinol, or CBN, which purportedly aids sleep and relaxation, and cannabigerol, or CBG, a muscle relaxant that may be an option to drugs like Flexeril. Its family of functional beverages includes hemp tea and hemp H20, which have hydrating benefits and contain non-psychoactive hemp extract. The extract is said to ease inflammation, anxiety and joint pain. Personal care offerings include a CBD patch with 40 mg of CBD. It also produces pain-relieving CBD- and CBGinfused compression sleeves for various parts of the body, with the cannabinoids at a 4-to-1 ratio to each other, creating a unique genetic combination. A CBN sleep mask and a CBN sleep cream are infused with lavender essential oils. The sleep cream has 25 mg of CBN per 30 ml. There also is a skin care line made with natural ingredients. Ingredient Alliance supports sustainable farming and processing and operates its own farms in Northern California and other parts of the U.S. It conducts clean soil sampling and provides traceability information from seed to sale.

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Bushman Farms/Hemp Heaven produces CBD oils derived from hemp grown on farms that have been under family ownership for six generations. The oil is extracted and processed in the company’s own facilities. Farms and facilities are located in Wisconsin, Minnesota and Michigan, which company officials said creates a highly visible, traceable supply chain. This type of “seed-to-sale” traceability is particularly important when it comes to CBD ingredients. The quality of CBD oil is directly determined by where and how the hemp is grown. Hemp easily absorbs everything from the soil in which it is planted. This means that any soil contaminants end up in the hemp and, subsequently, in the CBD oil and final merchandise. Products made by Bushman Farms/ Hemp Heaven are free of pesticides, lead, mold, mercury and other contaminants and have a high level of purity. Products include CBD isolates, distillates and broad-spectrum oils. All CBD oils are certified with national testing labs and come with certificates of analysis. The company even encourages customers to visit its farms to observe its processes.

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ShiKai’s CBD Unscented Body Lotion is produced using CBD isolate. This pure cannabidiol comes in the form of white crystals or powder that have been isolated from the rest of the hemp plant material. This process removes all other cannabinoids and plant impurities, making the isolate devoid of color, smell or taste. The body lotion, along with other ShiKai CBD topicals, contains 125 mg of pure CBD per ounce. Its texture is silky and smooth. The suggested retail price is $49.99. ShiKai’s CBD personal care products contain no THC, parabens, synthetic fragrances, artificial colors, dyes and sulfates. The hemp plants from which ShiKai’s CBD ingredients are derived are grown and produced on Farm Bill-compliant farms in Kentucky and Oregon. Isolates used in manufacturing are quality tested after extraction for total cannabinoid content, foreign matters, bacteria, yeast and mold as well as heavy metal, pesticides and solvent contaminants. Test results are available via a QR code on product packaging. ShiKai is a family-owned company that has been marketing products containing botanical ingredients for a half-century. More than 50 hair and skin care items are formulated and manufactured in the company’s 40,000-sq.-ft. facility in Northern California. Smith & Vandiver is a 40-year-old, family-owned, domestic manufacturer of both branded and private label merchandise that specializes in topical CBD personal care. Emphasis is on clean and natural ingredients. Currently, S&V supplies more than 14 CBD assortments that are marketed under other companies’ labels. Private label offerings in CBD topicals include balms, salves, lotions and oils. These skin care products are manufactured using a CO2 extraction process. Their key differentiator is S&V’s patent pending, proprietary Agilosomes manufacturing technology. The polyethylene glycol-free Agilosomes process replaces petrochemicals with green ingredients, company officials said. For maximum skin absorption, it uses tear-drop shaped liposomes that do not become blocked or stuck between skin cells. This is meant to allow the products to deliver a more effective dose of encapsulated CBD deeper into the skin. S&V’s topical CBD items are THC-free and can be custom produced with CBD contents ranging from 25mg to 1,000 mg or more.

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A UNIQUE SPIN ON BEAUTY AND HEALING Ingredient Alliance generates consumer demand with first-to-market concepts that will set your brand apart Beauty Sleep CBN Product Platform – Awarded Innovative Product of the Year at the 2020 White Label World Expo

Sleep Mask*

• Non-woven sheet made with 30% Hemp fibers and Lyocell • Promotes a natural, calm feel for the face

Cream Mask*

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STORE BRANDS l CBD NutraPak USA is a comprehensive source for full- and broad-spectrum distillate CBD oil and isolate powder. It is also the largest private label contract manufacturer of CBD tinctures, gels and gummies for retailers and brand marketers in the United States and elsewhere. Products are manufactured in the company’s domestic facilities using fully green production methods. Ingredients are derived from U.S.-grown hemp. Certifications include HACCP, GMP, ISO 9001, Non-GMO and USDA Organic. Known for its high level of customer care, NutraPak offers a comprehensive roster of turnkey solutions and client support services. Its product development team provides customized formulations designed to meet the specific needs of customers. NutraPak’s vertically integrated manufacturing and packaging process allows it to schedule flexible production runs to respond quickly to shifting market conditions and new consumer demand. Pricing is competitive. NutraPak stocks a variety of packaging options, including bottles, caps, pumps, droppers and seals in multiple configurations, materials, and colors. It is strongly committed to providing customers with green, eco-friendly and sustainable packaging, according to company executives. Centuria also offers end-to-end USDA-certified organic processing that covers the extraction and remediation process for bulk oil and water-soluble products. The company’s cutting-edge technology decreases THC content while boosting the profiles of minor cannabinoids. Solvents and catalysts used in this process are organic and plant-based. In addition to oranig, Centuria’s products carry a number of other certifications, including NSF (dietary supplements), good manufacturing practices, kosher and gluten-free. Beneficial Blends’’ NanoLyte Water Soluble CBD Oil can be used in the production of a wide range of consumable products, including foods, beverages and topical HBC items. Created by a team of global experts, the all-natural ingredient is created using a proprietary process that results in high quality CBD oil that is both safe and effective. NanoLyte has high bioavailability, providing fast and complete absorption by the body. Compatible with water, it works well in the production of beverages, yielding translucent, non-hazy formulations. It also has a mild taste, with or without the use of bitter blockers. NanoLyte is produced in Tampa in an FDA compliant, certified organic and SQF Level III manufacturing facility. The hemp from which it is derived is grown on organic-certified farms. Product certifications include GMP and USDA-certified organic. The company follows fair trade practices and maintains total transparency with third-party and in-house lab testing.

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Value Max Products’ CBD-infused Bamboo Island line of private label bath and body products is all about fragrant relaxation. When products are used in a warm bath, pores open up, allowing CBD oil to be easily absorbed through the skin. Offerings include a 5-oz. Bath Bomb, which contains 30 mg of full-spectrum CBD oil sourced from Colorado, as well as mineral soaks, which have 100 mg of full-spectrum oil. The latter comes in a 10-oz. pouch, providing enough product for two bathing sessions. Fragrance options for both lines include spearmint eucalyptus, lemongrass coconut, lavender sage, tea tree peppermint and Tahitian lime and blood orange. Both items are American-made. Bath bombs have a suggested retail prices of $9.99 each; Mineral Soaks are $14.99. Customized CBD content, product sizes and fragrances also are available for marketers seeking private label. Other private label services offered worldwide include custom packaging design, warehousing and distribution, logistics, and custom P-O-P displays. Centuria Foods provides CBD ingredients and technologies that company officials said can overcome the problem of oral bioavailability inherent to cannabinoids. Its C10 Water Soluble CBD is produced using a nanoparticulation process and Centuria’s proprietary C10 Boost technology. This increases the body’s CBD blood serum absorption rate by 45 times the rate generated by CBD isolate. The process takes 10 minutes compared with four hours for CBD isolate. Findings are backed by a pharmacokinetic study. C10 Water Soluble CBD is frequently used as an ingredient in beverages as an isolate alternative. It also is available in a powdered form. SB


Solving Big Problems, Inspiring Bold Ideas EnsembleIQ is a premier business intelligence resource that believes in Solving Big Problems and Inspiring Bold Ideas. Our brands work in harmony to inform, connect, and provide predictive analysis for retailers, consumer goods manufacturers, technology vendors, marketing agencies and service providers. EnsembleIQ’s integrated suite of solutionsbased, total-market resources give you all the tools you need to achieve a strategic market advantage, giving you the insights, positioning, focus, and access, along with a team of dedicated strategic consultants to help you bring it all to life.

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STORE BRANDS l SNACKS

SMALL BITES, BIG PROFITS AS THE SNACKS CATEGORY EXPLODES, PRIVATE BRANDS BENEFIT FROM CONSUMERS’ LACK OF BRAND LOYALTY By Nora Caley

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nacks, no longer a frowned-upon treat between meals, are so popular now that consumers are snacking instead of eating full meals. As schedules fill up and days become more hectic, people are turning to snack mixes, nuts, jerky and other quick bites. Market research firm Packaged Facts forecasts the U.S. salty snacks market will exceed $29 billion in 2022. For private brands, the category carries big potential. Not only are people snacking more, but they are not looking solely for branded items. “It’s a great time for retailers to leverage snack trends to boost private label sales,” said Lisa Smith, senior marketing communications manager for Charlotte, N.C.-based Truly Good Foods. Smith added that among the current snack trends are big flavors, spicy sweet hybrids, and ingredients 32

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with added benefits, such as the mood-boosting ingredients in the company’s ReCharge snack mixes. Smith recommended retailers add one to two new flavors to existing private label lines. “It’s a great way to keep your customer base excited and engaged, while remaining loyal to your private label brand.” Others agreed that flavor blends are on-trend right now. “Brands are being more innovative with product, so there is a trend in cross-pollinating new popular flavors to make interesting and unexpected combinations,” said Braden Bennie, senior marketing manager of TH Foods, based in Loves Park, Ill. Grain-free is still a big trend, and Bennie predicted that the next big flour will be cassava flour, which contains several nutrients. Cassava is a key ingredient in TH Foods’ new line of Crunchmaster Grain-Free crackers. The company is de-


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veloping grain-free platforms for retailers who want to keep these health-minded consumers in the stores. “The more positive experiences consumers have with a private label brand, the higher probability they will repeat more frequently and across categories,” Bennie said.

DIFFERENT LEVELS

Other manufacturers agreed that store brands are important for attracting repeat customers. “In private label if you disenfranchise a customer you’re not going to get them back,” said Christie Frazier-Coleman, vice president of sales and marketing with Lehi Valley Trading Co., based in Mesa, Ariz. “There are too many other brand options or other private label options in other retailers.” One way to keep these customers is to offer tiers of store brand snacks, including less expensive bulk items, healthier items, and more upscale indulgent items. “We’re seeing private label dig deeper into segments in different categories and different decision points,” Frazier-Coleman said. Premium is one of the growing segments. According to a Nielsen report, “The Rise of Premium Private Label and its Impact on Discount Retailers,” 44% of surveyed Americans say they would pay the same or more for the right store branded product, while only 26% of those surveyed felt that name brands are worth the extra price. Retailers work with manufacturers that create their own brands and also help develop store brands. “They do want a partner in innovation,” said John Larsen, president and owner of Marathon Ventures, headquartered in Bellevue, Neb. Retailers can try the manufacturer brand first, and if an item takes off, convert it to a store brand. That takes some of the risk out of introducing new snacks. Nuts continue to be favorite snacks, including peanuts. “They are a great carrier for flavor, and they are budget friendly,” said Krista Daly, director of marketing for Marathon Ventures. The company is working on peanut snacks that have unique flavor profiles and can command a higher price point than the usual salted or unsalted iterations. 34

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GROWING WITH PROTEIN

Nuts provide plant-based protein, itself a hot trend. “You’re seeing a lot with nut butters, things that have that healthier halo,” said Dawn Sykora, vice president of marketing for Mount Franklin Foods in Oakbrook Terrace, Ill. The company launched Nubu nut butter bites in cashews, peanuts and pecans. Also new is Brewhouse Legends pub inspired snack nut mixes in Hoppin’ Chili, Hops Pepper and Michelada. The flavors respond to demand for bold and global flavors. Meat snacks are having a protein-driven resurgence. “Pork rinds are protein rich and low carb, or zero carb, and even grain free,” said Kevin Allen, director of marketing for Snak King in Los Angeles. “Consumers are also excited to see bold and spicy flavors.” Allen added that non-GMO and organic are also important attributes. The plant-based trend is also gaining traction. Improved Nature, based near Raleigh, N.C., partnered with Perky Jerky to produce and distribute a vegan, plant-based jerky product under the Perky Jerky name in Whole Foods and online. Rody Hawkins, president and CEO of Improved Nature, said the snack offers the characteristics of beef jerky but is plant-based, clean-label, and non-GMO. “It’s a seamless replacement,” he said. “Plant proteins are not always complete because they don’t always have nonessential amino acids, but our particular soy protein is a complete protein.” One advantage for retailers, Hawkins said, is that soy prices do not fluctuate as much as beef prices, so plant-based jerky can be more profitable. Manufacturers said the private label snack business will continue to grow, partly driven by snacking itself being a huge trend. “The traditional three-meal concept is becoming more outdated as consumers turn to snacking to get their nutritional boosts throughout the day,” said TH Foods’ Bennie. “Snacking occasions are now becoming the norm as consumers are eating smaller-portioned meals upwards of five times per day.” SB


NEW PRODUCTS l SNACKS

TH Foods Goes Grain Free TH Foods launched its first grain-free line, Crunchmaster Grain-Free Crackers. The crunchy, baked crackers are made from cassava flour and other grain-free ingredients for a simple savory taste. Like the brand’s other multigrain and multi-seed crackers, Crunchmaster Grain-Free Crackers also are gluten-free to complement the rest of the portfolio.

Truly Good Foods Rolls Out New Branding ReCharge, a line of better-for-you snack mixes from Truly Good Foods, is rolling out new branding focused on moodboosting ingredients. ReCharge is one of the company’s top-selling lines, and the three mixes are Dark Chocolate Energy Boost with dark chocolate espresso beans, Super Charged Cranberry Blend with cranberries infused with pomegranate oil and Omega-3, and Chia ReCharged Stix Mix with chia seed benefits. ReCharge mixes are available in stand-up resealable bags, resealable cubes and bulk. Truly Good Foods also launched Protein Punch, a snack mix that contains natural protein sources like edamame, chickpeas and peanuts. The snack mix is available in bulk and resealable bags.

Snak King Offers Corn Snacks

Snak King offers Nutibles, which are baked corn snacks coated with nut-based flavors. Nutibles have 5 g of protein per serving, are gluten-free, and are certified by the Non-GMO Project. Also from Snak King, Whole Earth Tortilla Chips are available in Really Seedy, Sweet Chili Really Seedy, Organic Garden Medley and Organic Blue Corn varieties.

Marathon Ventures

One hot trend is the seasonings on everything bagels, and Marathon Ventures offers Everything Bagel Flavored Cashews under its Pear’s Gourmet and several store brands. Also new is Sugar Cookie Confetti Cashews. The snacks are available to private label customers, too.

Mount Franklin Foods Taps Beer-Inspired Flavors

Mount Franklin Foods offers Brew House Legends, a snack mix based on flavor profiles that beer enthusiasts enjoy. The snack mix is available in Hops and Pepper, Hoppin’ Chili, and Michelada, which is a tangy tomato flavor. www.storebrands.com

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STORE BRANDS l PACKAGING

NO MORE KNOCKOFFS STORE BRANDS ARE TAKING MORE RISKS WITH PACKAGING BUT MAY NEED TO GO FURTHER TO WIN OVER YOUNGER SHOPPERS By Michael Applebaum

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as private label finally shed its reputation for copycat packaging? That question is still a matter of debate. But one thing is certain: Thanks to the steady growth of the private label business, retailers are increasingly looking to separate their brands from those of national manufacturers by developing a distinctive overall brand identity that starts with the package design. “Store-owned brands no longer consider packaging as simply a product delivery system. Instead, they are focused on truly designing packaging to compete with national brands,” said Scott Brill, senior vice president of market development at New York-based Prs In Vivo. Retailers are eager to replicate the success of such multimillion-dollar brands as Kroger’s Simple Truth and Costco’s 36

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Kirkland Signature, along with eye-catching new entrants like Target’s Good & Gather line of food and beverages, introduced last September. Total U.S. store brand sales increased 4% to $136.3 billion in 2019, which was in line with the growth in 2018, per Nielsen. Part of the appetite for greater risk-taking in packaging innovation comes from lower costs. Advances in manufacturing technology are allowing smaller runs of packaging to be produced more affordably, and Brill said this may motivate more store brands to experiment with features like foils, holograms, unique structures, different finishes and color palettes. “These tactics are still not being fully utilized, but when implemented, they have allowed retailers to support brand extensions and promote premium versus value lines,” he noted.


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Design Innovation

Checklist What are the keys to designing store brand packaging for maximum impact? Daymon has developed the following checklist through a variety of sources and methods, including analyzing cultural design influences, syndicated data patterns and emerging product category trends. 1. Keep it simple: Reduce the visual noise in order to heighten the impact of each design component — color, communication and branding.

3. Image is everything: Images that feel real and less stylized have the greatest reach and impact with consumers, particularly in social media. 4. You’ve got personality: Expressing the individual character of the brand will help make the me-too problem a thing of the past. 5. Tout the typography: Think simple — and big — by carefully choosing words and fonts to convey just the right message.

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Millennials are driving much of the innovation in private label packaging. According to an October 2019 report by IRI, more than half (54%) of millennial shoppers say that store brands are extremely influential or very influential in determining which stores they decide to visit. Yet nearly 1-in-5 shoppers (18%) overall said that packaging makes private brands appear to be of lower quality than national brands, per IRI. Experts agree with IRI’s conclusion that inferior packaging creates a purchase barrier for light shoppers and millennials, who often look to the packaging of consumer products as a way to communicate brand attributes that are consistent with their values. “While all generations have environmental concerns, millennials see the strongest connection between being eco-friendly, being healthy and having a better quality of life,” said Tim Whelan, director of marketing and product development at Evergreen Packaging in Memphis. According to Evergreen’s research, nearly 60% of millennials said that they try to buy products in packaging made with plant-based materials. A further 64% of millennials say that eco-friendly products are worth paying a premium, compared with 37% of baby boomers. This creates both a challenge and an opportunity for all store brands. “Retailers will be challenged to find sustainable and economically viable packaging choices in their stores that offer real value to consumers,” Whelan said.

SPECIFIC CATEGORY CHALLENGES

2. Color is key: A cohesive color palette helps create brand recognition throughout the store.

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MILLENNIALS: A MISSED OPPORTUNITY?

Giving consumers what they want with regard to sustainable packaging is sometimes easier said than done. For example, most CPG companies are actively looking to reduce the percentage of plastic in their packaging. Yet the two leading packaged coffee brands — Folgers and Maxwell House — still rely on the thermoplastic polymer high-density polyethylene in their canister packages, which cannot be recycled. In soft pack coffees, there are challenges with using compostable materials related to product quality. “Companies are looking at using recyclable paper, but oxygen is the enemy of coffee and it will begin to stale if exposed to air,” said Clay Dockery, vice president of corporate brands at Massimo Zanetti, one of the largest private label coffee producers in North America. “Current substrates are laminated multiple layers that prevent the package from being recycled but maintain the shelf life of the product. We’re looking at some of these other materials, in compostables, that can provide the right level of barrier protection.” The coffee pod, meanwhile, is a slightly different case. Because of the compact size, manufacturers are able to use a compostable “mother bag” in pod packs to maintain the freshness of product. Dockery said that “compostable is a little bit of a lean forward in our category because there are not a lot of commercial composting facilities,” but that it likely will grow as shoppers look for more solutions. Innovation in sustainable packaging doesn’t necessarily need to entirely upend the familiar. Incremental changes — using a more biodegradable form of plastic or reusable sandwich bags made from beeswax — can go a long way toward pleasing shoppers, according to Jennifer Gaeto, senior creative and strategy director at package design firm Equator, whose private label clients include Schnucks, Aldi and Giant Eagle. There also are regional trends that could spread into the U.S., Gaeto noted, citing ovenproof paper trays and brown pa-

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per labels used on refrigerated meat packages at Aldi UK. Katie Simmons, director of marketing for the North American packaging division at Evergreen, says that on-package storytelling via paper labels is often a missed opportunity and can be particularly important for store brands. “In the fresh beverage categories, one of the primary benefits of paper-based packaging is the expansiveness of the four available panels for messaging about that particular product,” she said. “Even the simple opportunity to cross-sell or offer a coupon on another store brand item is missed.”

STANDING OUT ON THE SHELF

Product packaging remains a critical first touchpoint at the shelf. In order for store brands to stand out through package design, retailers need to further understand what consumers want from packaging and deliver on those needs, Prs In Vivo’s Brill said, noting that there is opportunity for innovation to help private brands stand out. “From a strategic perspective, store brands should push the envelope — similar to that of start-up brands — as they are typically not wed to an existing design architecture in the same way as established national brands where too much deviation often creates confusion.” There are ways to elicit a desired response from shoppers using traditional branding cues, added Steve Cox, creative director at New York-based package design firm Daymon. Premium coffee companies are moving away from the traditional black-label approach and no longer only rely on dark or rich colors to connote premium quality. “They’re starting to inject more personality and playfulness into a tier of products that has been a bit more serious,” Cox said. “How far to go against the grain in any given category is a subjective decision that each store brand has to make.” As for ridding private label of its decades-old “me-too” image, Brill said it is going to take some time to fully address this issue in the minds of consumers. “It is certainly heading in the right direction, especially as consumers struggle to immediately acknowledge what is and is not a store brand offering,” he said. He pointed to ShopRite’s Bowl & Basket as an example of a store brand whose packaging and story identify it as more than a copycat offering. “Only when this is commonplace will the reputation be fully addressed,” he said. SB

When it comes to packaging, Superior Pack Group has it covered. The full-service, single-source contract packaging company helps manufacturers get the package they want and need with the quickest turnaround, in order to deliver optimum quality and shelf appeal to the consumer. Based in Harriman, NY, Superior Pack Group provides top quality packaging solutions to get products onto shelves quickly, accurately and cost effectively. “We have experience in all types of co-packing and can cover everything – with over 100 pieces of equipment in our facility we service a wide array of companies in the food and CPG industries,” reports company president Israel Schiff. In addition to its turnkey packaging solutions and state-oftheart technology, Superior Pack Group offers warehousing, distribution and fulfillment as well as ingredient sourcing, bulk purchasing and fully automated inventory control systems, among other services. Continually striving to offer the best and most updated services to manufacturers, the company maintains with pride the Safe Quality Food (SQF) certification and is now both Kosher and Organic certified. Because of its extensive system of equipment and its end-toend services, Superior Pack Group is able to help companies develop custom packaging according to their standards and needs. “We understand that packaging is a very important part of their business. Once we help customers design their package, we work with them closely to put the product on the shelves, with a quick turnaround,” Schiff says. For more information, visit http://superiorpackgroup.com, call 845-534-1015 or email sales@superiorpackgroup.com.

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STORE BRANDS l BEAUTY

BEAUTY BONANZA OWN BRAND AND RETAILER-EXCLUSIVE BEAUTY LINES SET STORES APART By Seth Mendelson

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ore and more mass retailers are using private label as their latest weapon to win greater share of the beauty and personal care category, hoping that it will attract a more loyal consumer and greater profits down the road. According to the Private Label Manufacturers Association, health and beauty store brands are worth roughly $16 billion, representing an 18% share of total category sales. And that’s a number on the rise, doubling since 2017, according to Euromonitor. CVS Pharmacy, Walgreens, Target, Walmart, Aldi, Ulta Beauty, Kroger, Amazon and even Dollar General are among the mega retailers putting a fresh spin on beauty exclusives. The goal is to halt the migration of shoppers to specialty stores or online beauty purveyors. To do so, there has been an overhaul in store brand beauty strategy — rather than merely mimic national brands, the beauty entries seek to fill white spaces in mass market assortments. Sure, there are still store brand alternatives 40

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to Head & Shoulders or Cetaphil, but the new breed of proprietary brands are designed to build loyalty to the retailer and fill an assortment gap. “Traditional private label business, where the retailer’s name is front-facing on the package, is still relevant. However, we are seeing proprietary branding emerge in the space,” said industry consultant Ben Bennett. “Proprietary branding treats the business as a third-party business, with a brand name and often its own commerce and social media presence separate from the retailer. In many cases, the consumer is unaware that the retailer owns or is involved in the brand.” While national brand equivalents are still key, top retailers want innovation to rival upscale lines, according to Bennett. Offering something different from the store across the street is paramount. “People can buy the same beauty brands at many other places now,” said Scott Oshry, chief marketing officer and partner at Maesa Group, which is behind Flower Beauty by Drew Barrymore, Target’s blockbuster Kristin Ess hair care, Dollar General’s Believe and the recently announced Hairitage by Mindy for Walmart. “The best way


to drive people to stores is to give them something they can’t buy elsewhere.” Another quest for retailers is to serve up products that address unmet consumer needs and the onus is on the suppliers to find these niches. “We always look to solve a problem for a retailer and bring value,” said Tracy Holland, the CEO of HatchBeauty. To accomplish this, retailers are turning to a cadre of specialists that includes Maesa, HatchBeauty, Cosmax and Beach House Group, as well as other contract manufacturers. Realizing their main goal is to sell products, many retailers concede creation is best left in the hands of experts. Social media also has been a great equalizer — retailers can promote their own brands without the need for mega marketing dollars. “An influencer with 10 million followers who mentions your brand can give you overnight awareness,” Oshry said. Additionally, PLMA director of public relations Dane Twining said private labels help court younger shoppers — a target of mass beauty merchants — who are “far less focused” on brand names.

...the new breed of proprietary brands are designed to build loyalty to the retailer and fill an assortment gap. Walmart, in particular, has been ramping up its firstto-market and exclusive strategy. Hairitage fuses two big beauty trends — a Walmart-only brand and influencer collaborations. The 16-SKU range was devised under the tutelage of Mindy McKnight, founder of YouTube channel CuteGirlsHairstyles. McKnight — who has experience with various hair textures because of her biological and adopted children — said the goal with Hairitage was to create a line of products that work for all hair textures. Walmart is doubling down in exclusives ranging from Found, a naturally-positioned makeup line to two clean skin care collections. One is called Cleen Beauty from Beach House; the other is Earth to Skin, which was devised by Cosmax. There is also the homegrown ingestible brand in conjunction with Bobbi Brown called Evolution_18, which is a Walmart retail exclusive. Target always has been an innovator in private labels, especially in fashion and home. Under the direction of Christina Hennington, senior vice president and group merchandise manager for essentials, beauty, hardlines and services at Target, beauty has moved to the front burner. A key example is the Maesa-developed Kristin Ess hair care range that has morphed into more than a $100 million business. Ess is a celebrity hairstylist who has handpicked the items which have generated a positive consumer buzz on reviews. “We partner with experts in their field to develop products that are first to market and can only be found at Target,” she said. Walgreens has remodeled its beauty departments to move its homegrown products up front and center. The roster includes No7, Your Good Skin, Liz Earle and Soap & Glory. Walgreens’ documents have pegged private label beauty at 15% of the chain’s beauty sales. Often house brands are being called upon to fill something a retailer doesn’t have — in the case of Amazon, the launch of Belei ushered it into skin care. Priced between $9 and $40, it offers Amazon a brand to retail between mass and class. Many skin care brands have been slower to add to Amazon’s roster, so it fills a white space. It is a bold move that could accelerate Amazon’s progress to build out its beauty platform and national roster, according to Stephanie Wissink, equity analyst for Jefferies, which she notes has had “relatively slow” progress to date. Continued on page 44 www.storebrands.com

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STORE BRANDS l BEAUTY NEW PRODUCTS l BEAUTY Continued from page 41 Kara Trousdale, head of beauty for private brands at Amazon said in a statement that the brand is about spending less time and money on the hunt for the right skin care. “We took a simple, no-nonsense approach when creating Belei, developing products with ingredients that are both proven to deliver results and also offer customers great value for the quality.” Not to be left out, supermarkets and dollar stores are looking to private label beauty as a traffic and basket builder. Trader Joe’s offers up its own creams, body butters, hair care and masks. Aldi wins kudos from families for its Little Journey baby essentials. Costco has turned to HatchBeauty to help it offer a premium hair care line in conjunction with celebrity hairstylist Orlando Pita — something HatchBeauty’s Holland said the retailer was missing. Even Dollar General jumped into the private label beauty sector with a line called Believe Beauty, codeveloped with Maesa that is sold in more than 15,000 of its stores. There are 150 makeup products that all retail for under $5. Maesa’s Oshry sees Believe as an avenue for Dollar General to dive deeper into cosmetics. Dollar General also sells Studio Selection, a range of hair and skin products. Not all brands rocket to success. 7-Eleven added makeup two years ago, but visits to stores did not show it being currently stocked. CVS Pharmacy and Walgreens also have eliminated some of their homegrown logos over the years. And, as mass merchants seek to beat upscale merchants to consumers, department stores that include Hudson’s Bay, Belk and Saks Off 5th have cooked up their own house brands. SB 44

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Kristin Ess Launches Fragrance Free Collection Kristin Ess has extended her Target-exclusive, eponymously named hair care brand with a Fragrance Free Collection. Currently rolling out is a line of seven products: fragrance-free shampoo, conditioner, styling products and hair treatments. “Fragrance can be polarizing,” said Ess, who noted that the line was developed in response to consumer demand for products sans scent. She also freshened the packaging for the Fragrance Free line, making each bottle transparent — a move she also hopes will produce a gender-neutral image that will build sales among men and women. The range retails for under $15 and has names that include Soft Shine Grooming Cream, Detangling Tonic, Daily Cleaning Shampoo, Shine Enhancing Conditioner, Texturizing Paste, Deep Treatment Mask and Dry Shampoo Powder.

Amazon Extends into Private Label Skin Care Amazon launched Belei, a line of skin care products offering solutions for various skin types and featuring ingredients with proven effectiveness. The collection has 12 different items, including a retinol moisturizer and vitamin C serum, as well as products to address acne, fine lines and wrinkles, dark spots, dehydration, dullness and more. All Belei products are free of parabens, phthalates, sulfates and fragrance and are not tested on animals. Belei product bottles are made of post-consumer recycled resin and carton packaging is 100% recyclable. l

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Beach House Goes Cleen

Dollar General’s Beauty Push Dollar General launched Believe Beauty into more than 15,000 stores. Codeveloped by Maesa, the prestigeinspired line consists of 150 makeup items including foundations, lip and eye colors — all priced under $5. The lineup features custom packaging and a 3-ft. freestanding display that Maesa likens to the type of fixturing found in Sephora. “The formulas in this line are the equivalent of those that would cost up to $19,” said Scott Oshry, Maesa’s chief marketing officer. Besides the Believe Beauty launch, Dollar General has been pushing deeper into beauty, recently upgrading the department look.

Cleen Beauty is the latest Walmart-exclusive brand to hit the retailer with a focus on accessibly priced effective products. The line, which retails for less than $10, features powerful and premium formulas that omit parabens, phthalates, synthetic fragrances and dyes, SLS/ SLE, and mineral oil. Cleen Beauty includes 14 offerings targeted to cleanse, treat and moisturize the skin. The line is formulated with such ingredients as açaí, vitamin C, blue algae, eggplant, grapefruit and avocado, the collection includes the Rosehip Jelly Face Cleanser, Vitamin C Papaya Glow Serum, Cooling Eggplant Eye Balm and Lavender Chamomile Night Cream. All Cleen Beauty products are made in the USA, cruelty-free and vegan, as well as formulated for every complexion, gender and skin concern.

Maesa and Walmart Debut Hair Care Line Walmart is rolling out Hairitage, a range of hair care products for all hair textures. Produced by Maesa in collaboration with YouTuber Mindy McKnight, the 16 SKUs are at $7.94 each. The formulas are developed with natural ingredients and considered clean, and the packaging was developed as sustainably as possible. McKnight, whose channel is called CuteGirlHairstyles, is the mother of twin influencers, Brooklyn and Bailey McKnight. McKnight’s biological children are white, but she also has two adopted children who are black which has given her experience with various hair types. McKnight wanted a line where products could work for all and were marketed to people of all hair textures rather than having to make them purchase separate products.

Earth to Skin Focuses on Affordable Luxury

Cosmax introduces Earth to Skin — products with real ingredient and luxurious formulas that are clean and simple. Sold exclusively at Walmart, there are four collections: Super Fruits, Super Greens, Tea Time and Bee Infused. The entire collection is priced under $10. Products include cleansers, toners, serums and creams, “designed to layer weightlessly.” The Earth to Skin collection is featured in a special off-shelf display as well as in a new natural skin care area on shelves. “We’ve really tried to offer something that will bring shoppers who are going elsewhere for these products into Walmart,” said Ketan Patel, senior vice president of development at Cosmax. “People would pay much more for this quality in specialty stores.” www.storebrands.com

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DISPATCHES Vol. 1

Whole Foods teases a redesign of its Everyday 365 brand, plus a Publix billboard and interesting finds in drugstores Pivotal to anyone working in the retail industry is to get into stores and walk, see what’s out there, share the experience with others and be inspired. With that spirit in mind, Store Brands will visit stores every week and share what we’ve found in this feature called Dispatches. We’ll share every Friday in the daily

Whole Foods

Seen down the snack aisle of a Whole Foods in Chicago, aisle blades promoted a new packaging redesign and new logo for its 365 Everyday Value line that is on the way. Some items in stores like milk, etc., have been spotted with the new look but others like at this location are still transitioning. The snacks here still sported the older logo, which showed the green, yellow, orange and blue color blocks headlining the words 365 Everyday Value. The shelf sign seems to highlight a cleaner black-and-white logo with the words “365 Whole Foods Market,” perhaps signaling a new name for the private label line to go along with the packaging.

Publix

newsletter and online at StoreBrands.com (hit that subscribe button at the top left on the website to get the newsletter). And just as much as we like to share what we see, if you spot anything in the field and want to send it our way for consideration to be included, email me at: dochwat@ensembleiq.com. SB

Publix has recently been expanding its GreenWise store formats, a smaller organic specialty store that can be found in select cities in Florida, South Carolina and Alabama, and at the same time has been ramping up its GreenWise private brand in Publix stores, adding more than 100 products since its inception a few years ago. Continuing its promotion of the private brand, Retail Leader’s Mike Troy spotted a rare billboard promoting the private brand in Florida. For that matter, it’s rare to find any billboard promoting a private brand, so the company is clearly investing in its healthy, organic line.

Target

CVS Pharmacy

A brilliant move by CVS Pharmacy, this vending machine was spotted in LaGuardia Airport in Queens, New York, enticing travelers to pick up preventative medicines and of course other travel-based staples. Mixed with popular national brands, the display carries several CVS Health store brand product. Likely not a coincidence, the store brand offerings take up most of the top three shelves of the unit that are at eye level. The unit was found by an editor at The Path to Purchase Institute. The association has more than 3,000 images from CVS Pharmacy alone for members to learn from.

Early in the year, Target announced a new athletic gear brand called All in Motion (see story on p. 10), and stores are slowly rolling in the merchandise. While some stores have larger racks, this small-format Target in Chicago introduced the line with two small apparel racks. The header felt more like a placeholder, and likely it is, as a big splash will surely follow. The line includes apparel and fitness accessories for men, women and children, and is made for all body types. 46

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February 2020

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