Store Brands - March 2020 by ensembleiq

MARCH 2020 www.storebrands.com

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VOLUME 43 NO.2

38 COVER STORY

DEPARTMENTS

Lifestyle Brands Get Hot

Editor’s Note

Industry News

Viewpoint from CBX’s Todd Maute

Questions/ Answers with Thrive Market’s Erin Shulman

Questions/ Answers with Eagle Labs’ Michael Law

Dispatches: Store Brands in the Wild

Store brands are increasing their cachet by appealing to broader needs and delivering on both quality and consistency

FEATURES

Product of the Year

Drinking to their Health

Cheesy Rider

Retailers’ proprietary products among 41 winners shoppers want to buy

Consumers look for benefits from the RTD beverage category

Artisan and hand-wrapped cheeses gain ground alongside category staples

PLMA Hall of Fame Inductees

Opportunity that Sticks

No Paper Tiger

Profiling the five new additions to the Private Label Hall of Fame

Premium and organic demands drive growth for honey and syrup makers

Paper products adapt to eco-friendly and value-focused demands

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 2020 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

FOLLOW THE LEADERS THE PRIVATE BRAND SUPPLIERS LEADING THE INDUSTRY ARE THE ONES IMPLEMENTING COMPLETE, WELL-DEVELOPED MARKETING PLANS It did not take me long to learn what separates the leading suppliers in the private label/store brands industry from the laggards. From this angle, at least, and with less than two months on the job as publisher and editor in chief of Store Brands, it is clear that the leaders in the industry are those suppliers who are backing up their product lines with complete, well-developed marketing programs. That starts with instituting the proper research and development to ensure that the product is not only of equal or superior quality to the equivalent national brand, but offers something a bit different to an increasingly fickle consumer. It is much more than that, though. Everything from packaging to pricing and support must be discussed and developed to help your retail partners both differentiate the store brand products from the national brand, and educate the consumer on the difference and why they should try their merchandise. So far, I am not sure that a lot of suppliers are doing their part. In fact, in my desire to learn as much about this category as possible, I have quickly found that at least half of the companies I have contacted have little desire to develop marketing and support plans that will lead to long-term success. Some argue that they simply do not have the financial capital to develop such plans; others say that they just do not have the interest. Of course, not everyone falls into these groups. Some companies are actually eager to develop the strategies necessary to win over retailers and consumers, as well as compete with national brands. And, many of them seem to understand that this is an investment that might take a few years to pay for itself. Yet, the bottom line is that if you want to play in the big leagues with the big boys, you are going to have to cough up some cash. Store brands are becoming larger and larger parts of the overall mass retail business model. But, in the end, it will be the companies who want to be in the game for the long run — and are willing to invest in it — that will be the most successful. SB

Seth Mendelson Publisher/ Editor in Chief

I have found that at least half of the companies I have contacted have little desire to develop marketing and support plans that will lead to long-term success.

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8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631 Publisher/Editor-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, pwisser@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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F cus N U T R I T I ON

INDUSTRYNEWS

CBD-infused Chewing Gum Comes to Market

Cargill Enters Plant-based Meats Category The plant-based meat trend — arguably being led by retailer private label brands — has attracted a big name in meat. Cargill has developed plantbased patties and ground products for retailers and foodservice clients to roll into their own brands starting in April. The global food and agriculture company based in Minneapolis leaned on consumer research and a deep knowledge of plant proteins to create the plant-based meat product, which the company said offers a taste consumers are looking for, according to Elizabeth Gutschenritter, managing director of Cargill’s alternative protein team. “Cargill has a strong history of providing high-quality protein products to customers,” said Gutschenritter. “Producing plant-based products across our global supply chain is the logical next step to expanding our ability to meet consumer needs and bring new value to this category.” 8

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In the last five years, Cargill has invested $7 billion in animal protein products globally while also making investments in developing alternative protein sources. “We need to keep all protein options on the table,” said Brian Sikes, Cargill’s leader of global protein and salt business. “Whether you are eating alternative or animal protein, Cargill will be at the center of the plate,” Sikes added. Cargill is a major meat producer, employing 160,000 employees in 70 countries, so it is a big step for the company to also offer plant-based alternatives. Kroger and its Emerge and Simple Truth Plant Based line of more than 50 products, Albertsons, Aldi, Wegmans, Trader Joe’s and other retailers jumped out in front of the plant-based trend early. Cargill’s announcement will be another source to help retailers start their own plant-based meat lines or strengthen current lines.

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Focus Nutrition has introduced a CBD chewing gum for private brand consideration. The Salt Lake City-based company rolled out thee SKUs of the gum in peppermint, spearmint and fruit flavors. A 10-piece package will have a suggested retail price of $14.99. According to Scott Cunningham, Focus’ managing partner, each piece of gum will contain 10 mg of CBD, which, combined with the strong flavors, will create a unique product on store shelves. “We think this is a different type of product that consumers will not find anyplace else,” he said. “This is an extruded chiclet chewing gum, not a compressed tablet and that makes a big difference in the taste of the product.” Cunningham is confident his company’s reputation in the industry will encourage retailers to seek out this new product. Focus Nutrition has about 150 SKUs in the toothpaste, lollipops, low-calorie sweetener, Himalyan salt and chewing gum categories under its XyloBurst and Pure Products labels. “I think we have great relationships with retailers and we have proven to them how we can help build profits,” Cunningham said.

EF TOU

E HO U

IT H

INDUSTRYNEWS

Walmart’s Great Value Sells More Than $27B Annually

In an update from Walmart’s most recent earnings report, CEO Doug McMillan said the retailer is seeing huge success from its private brand business. “We prefer to sell brands for less, but we’re also improving our private brands, and they’re growing faster than our overall sales,” McMillan said. “Eighteen of them do more than $1 billion in sales and our largest private brand Great Value does more than $27 billion a year globally.” The retailer’s earnings call also highlighted that Walmart’s e-commerce business grew by 37% in the fourth quarter, and groceries and private label penetration helped drive almost 2% in U.S. same-store sales lift. According to presentation materials released by Walmart, “higher penetration of private brands, along with our expanded omnichannel offering,” contributed to overall stronger food and consumables sales at Walmart. “Grocery sales on a two-year stacked basis were among the best in the past 10 years,” the earnings report said. Total sales at Walmart’s U.S. stores division increased 1.9% to $92.3 billion and the division’s full-year sales increased 2.8% to $341 billion. 10

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Socati Intros Singleserve CBD-infused Coffee Brightener, Sweetener CBD company Socati is introducing a new private label offering for hot beverages. The Austin, Texasbased company has launched CBD Coffee Brightener and CBD Coffee sweetener, which offer dairy- and sugar-free CBD-infused products to be added to hot beverages. The water-dispersible powdered formulas are packaged as single-serve stick packs, and the level of CBD per serving can be customized. The CBD Coffee Brightener is a dairy-free, unflavored and unsweetened powder stick, and the CBD Coffee Sweetener features a vanilla brown sugar flavor that is sweetened naturally with stevia and monk fruit. “We’re very proud of these new private label products,” said Socati CEO Josh Epstein. “Co-developed by our world-class formulations team and partners in the food and beverage industry, they not only offer consumers a simple way to take high-purity CBD but also improve the taste and experience of their favorite premium, artisan coffees. With over 80% of millennials using additives in their coffee such as milk, sweeteners or flavorings, the addressable market for these products is significant.” Socati said it is planning to offer additional hot and cold CBD beverage products in the coming months.

Sprouts to Expand Private Brands, Adds TJ’s Exec to Board Alongside an upbeat fourth-quarter earnings report, Sprouts Farmers Market announced an interesting addition to its board of directors. Joining the board is Doug Rauch, a grocery veteran who spent 31 years at Trader Joe’s — including 14 as president — helping the value retailer sculpt its private label foods, strategy and personality, growing it from nine stores in California to its national status today. The move could be seen as one more toward Sprout’s growing focus on its private brands, given that the company noted in its earnings call that it plans to expand its store brand products. In addition, the Phoenix-based retailer expects to grow its total store count by 20. During the earnings call, commenting on the recent fates of Lucky’s Market and Earth Fare, two other natural and organic-focused retailers, CEO Jack Sinclair said, “I think some things we probably have learned from one or two of those [bankrupt] competitors is, if you

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INDUSTRYNEWS

Canadian Kitchen Product Supplier Headed to United States Labell, based in Henryville, Quebec, has more than 150 SKUs in the cutting board, serving platters, table top and butcher blocks category, as well as a track record in Canada that has shown increased sales and profits for its retail partners. Now they want to bring that expertise south of the border to the U.S. market and help retailers build a private label business in the cutting board category. “We want to show retailers our experiences and success in Canada and what we can do for them in the U.S.,” said Corey Sheepwash, managing director of Labell. “We have a very well-respected brand in Canada with a lot of retailers onboard who love what we do. We can help retailers build sales in this category and put their name on it, too.” He said that Labell products are 100% Canadian-made, strong and durable. Products can be easily cleaned and maintained with mineral oil, and are eco-friendly and non-toxic. “Our products are certified by retailers in Canada,” he added. “We do everything from the raw materials to shipping the end product, and that builds trust with our retail partners.”

Sprouts keeps sprouting: Nearly

spend too much money and too much capital and invest too much in labor in certain categories, and particularly in dairy and prepared foods, you can put yourself in a place where it’s very difficult to make the returns that you’d want to make.” Sprouts Farmers Market instead is focusing on a tighter promotional strategy, Sinclair said. “We focused our promotionsame-store sales al activity by responding to opportunities in the marketplace rather than reacting gains in two years to promotional pricing elsewhere, resulting in improved cost of merchandise. We focused on display and presentation of items that differentiate us in the marketplace and provide uniqueness to the customer.” Much like its private brands, the retailer is having success through differentiation. Fourth-quarter earnings reflected that: For the three months ended Dec. 29, Sprouts beat its guidance on net sales by posting $1.4 billion in revenue, an 8% increase from the same period in 2018. It also beat guidance on same-store sales, which grew 1.5%; the grocer posted two-year same-store sales growth of 3.8%. The company reported a fourth-quarter profit of $31.6 million.

Giant Food Stores Becomes The Giant Company Giant Food Stores has a new company name – The Giant Company — and new logos to match. The new moniker was revealed during the grocer’s annual business meeting Feb. 26 in Hershey, Pa. The company didn’t quite say to the extent to which the change would impact their store brands, such as a packaging refresh, but a spokesperson with the retailer did tell Store Brands they will integrate the logo and name into its operations and details will be shared accordingly. Per Giant, the name change highlights the important role the company, its stores and associates have played in the lives of families since the company’s founding in 1923. “For nearly a century, we’ve been a trusted part of the communities we serve, helping families come together to share a meal and create special memories,” said Nicholas Bertram, president of The Giant Company. The logo for each banner in the family of brands — Giant, Martin’s, Giant Heirloom Market, Giant Direct and Martin’s Direct — has been modernized, with the most notable characteristic of the new design being the leaf that’s part of the “A” in each banner name, signifying the company’s commitment to growth and freshness. Further, Giant said it will employ an upto-date color and design scheme, emphasizing the brand’s modern, fun and caring culture, along with its commitment to grow with its customers and associates. The new Giant logo already is in place on the exterior of The Giant Center, a 10,500-seat multipurpose arena in Hershey, and at the company’s headquarters in Carlisle, Pa. During the year, the company will integrate the new name and logos into its operations.

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VIEWPOINT

A NEW WAY OF THINKING FORGET ‘NICE TO HAVE,’ STORE BRANDS ARE A STRATEGIC NECESSITY

By Todd Maute, partner, brand strategy and design agency CBX

y Google News alerts are lighting up as never before, with such retailers as Macy’s, Walmart, Target, ShopRite, Dick’s Sporting Goods and Amazon all making store brandrelated headlines in recent weeks. But if store brands are growing by leaps and bounds across all channels of trade, the question is why? Over the past few years, the term “experiential” has been one of the biggest buzzwords in retail. The notion was that exciting, novel and social experiences were retailers’ best defense against direct-to-consumer competition. There’s truth to this. But how many chains can spend enough money to make their stores truly Instagramfriendly? Likewise, it’s great to stroll into Nordstrom and lock eyes with a smiling salesperson who knows your name. However, providing Nordstrom-quality service across a retail organization is especially expensive now that wages are rising. Here’s the key insight: Quite rightly, retailers increasingly see store brands as a strategic way to attract attention, differentiate themselves and minimize the need to make large capital expenditures. The likes of Kroger, Costco and 12

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Offering higher-quality, unique, differentiated and compellingly branded private label products gives you a reason to focus on the retailer, not the channel.

Walmart are relentlessly driving private label penetration with savvy approaches to branding, marketing and product development. They understand that this translates directly into customer loyalty — which is critical now that shopping patterns are so mutable. Just look at pets: First, people bought pet food and supplies at the corner grocery, then they shifted to category killers like PetSmart and Petco, and now they’re setting up auto-orders at Chewy and Amazon. It’s a dynamic that retailers can combat by ramping up their focus on store brands. Offering higher-quality, unique, differentiated and compellingly branded private label products gives you a reason to focus on the retailer,

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not the channel. It’s why Best Buy is winning loyalty with its Dynex, Insignia, Rocketfish and Geek Squad brands. That’s a little easier now that younger shoppers are agnostic about both national brands and channels of trade, and it means that retailers have every reason to invest more in the development, marketing and branding of private label lines. And when you think about it, retailers may have a leg up on the national brands when it comes to such strategies. For starters, top CPG companies with a global reach can find it challenging to launch new products and brands quickly given the need to integrate them into their massive and complex manufacturing, supply chain and distribution systems. Besides their faster speed to market, retailers control merchandising in their stores. That means they can collaborate with manufacturing, branding and design partners to put their expertly branded and packaged products front-and-center at shelf. In a bid to compete, the nationals are now keen on incubators and venture funds like Blu1877 (Barilla) and Evolv Ventures (Kraft Heinz), which promise to speed up product development in ways that are consonant with the process for store brands. So count on the battle to intensify, especially since Amazon and Alibaba are still in the beginnings of their strategies. Moving forward, we could see new iterations like Chewy or Amazon stores located close to the consumer and filled with private label brands. More traditional retailers should also double down on their owned brands. As they do so, they will need to stay connected to their original vision. Elasticity has limits: Stretch a brand too far and it will break. For those of us involved in producing, designing, branding and marketing store brands, it’s nice to see that they’re no longer just a “nice to have” — they’re rapidly becoming a strategic necessity.

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QUESTIONS/ANSWERS

SMART SOURCING HOW THRIVE MARKET FINDS PRIVATE LABEL PARTNERS IT CAN GROW ALONGSIDE

rin Shulman is senior food product innovator at Los Angeles-based Thrive Market, sourcing the retailer’s private brand products for the ﬁve-year-old company for almost a year. She spoke to Store Brands about using the RangeMe platform to connect with suppliers, and about trends she’s got her eye on.

STORE BRANDS: Tell us a little about Thrive Market. ERIN SHULMAN: Thrive is a newer company, 100% e-commerce focused. We offer a membership club for healthy living, offering access to a vetted lineup of every kind of household essential, from fair trade coffee to organic toothpaste, etc., at a guaranteed saving. We can go direct from our supplier to our member base — our membership fee is coupled with our purely online presence — giving us great control over our supply chain and our price points. Right now, we have about 600,000 members and counting. SB: What is your mission? ES: It’s making sure that our product line, and our whole portfolio from branded to private label, at the entry point, is non-GMO certified and then the quality goes up from there. Every order is shipped in a carbon-neutral, 100% recyclable package, and from a zero-waste warehouse. So it’s being sustainable and offering our members a high quality product. And, on another note, every paid membership sponsors a poor family, student, teacher, veteran, or first responder in need, really helping to 14

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provide access for all, one member at a time. So that's definitely one thing that I know drives me every day. Our paid members certainly support the revenue stream; however, with that, we are able to donate and be active in the community. SB: That's awesome. What’s the ratio between branded and private brand product? ES: To date, we've developed roughly 675 private label items, and that is across many categories, with food being No. 1. Under food, snacks are the number one subcategory. It’s amazing how the snack category just dominates. However, as a percentage of total sales, private label is roughly 25%. It’s great to see how active private label is, and really how much it’s supported within the company. I love it. I mean, just understanding how we operate alongside the brands, it’s such a team effort, and there's so much support back and forth. It’s definitely a very positive work approach. SB: How do you decide what new private label products get developed? ES: We build an innovation roadmap

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— that includes everything from industry trends, actual member recommendations and brand trends that we’re seeing — to identify if there are any gaps in our portfolio. Then we plug it in every step of the way, prioritizing a trend, flavor, format, any kind of diet that we’re seeing some traction in, and/or requests from our member base. It’s nice to have that main line of communication with our members, because we know exactly what they want and how they want it. It helps drive specific innovation. SB: What role do trade associations and other tools play in helping find suppliers? ES: Since I've previously worked in private label, of course I have my own Rolodex of contacts — suppliers, brokers, my own network to lean on. However, I love PLMA. It’s a great trade show for the private label industry. Fancy Food Show. Expo West. Expo East. So really utilizing

trade shows just to see what's out there, who’s out there. However, that's why I do like to use RangeMe, knowing that some suppliers aren't exhibiting a certain year or just truly can't afford it — because I understand it's very expensive to exhibit and bring your whole team out, and samples. Since technically I am buying for a smaller retailer, it’s great to see smaller suppliers out there. Going back to PLMA, a lot of the suppliers that exhibit there, thinking about the volume game, they want the bigger tickets. They want the bigger volume. They want the full truckload. But it's nice to find the smaller suppliers, especially who are willing to be flexible with us and grow with us at the same time.

shopping with Thrive because they are wellness driven, or diet driven, or allergy driven. So that’s what's really neat about our site, the fact that you can search by whatever your value is, whether it’s vegan or gluten free, so we need to make sure every single ingredient that's listed is there or can be replaced with something that applies to certain diets — or it needs to be reformulated.

of the efficiencies of e-commerce packaging. So, they showed us all the different types of packaging available. We started the conversation, and it was actually through the RangeMe messaging tool that I met my contacts. And now it’s great. The project is launching in a couple of weeks. I'm so excited. We went through the discovery phase, innovation phase, quality testing, all of it.

SB: Can you walk me through an example of how you have used RangeMe to find suppliers? ES: When I first started at Thrive, I took over my predecessor's roadmap, and we were looking for a gluten-free pasta. We already had a chickpea program in line, so I'm looking outside the box, trying to understand other types of gluten-free flours that could be used, and I just started a discovery phase: “OK, gluten free pasta suppliers, private label suppliers, who's out there?” And then going through the whole process of elimination, I identified a great quinoa supplier. It was great to be able to identify them on RangeMe, understand the different formats that they could pack in, because with e-commerce, we have to be cognizant of the type of packaging, whether its glass, PET, chipboard, film, understanding all

SB: What trends are you looking at now? ES: It’s really exciting to talk about, because it's something that certainly drives me in my day-to-day and keeps us motivated. It’s like we're on this treasure hunt. But, we definitely have a huge focus to find low-carb formulas, so catering to the keto and paleo diets. We're seeing a lot of requests for grain-free formulas and sugar-free ones, using the alternative sweeteners that do exist, like monk fruit. And then on the supply chain side, we have this huge push for regenerative, organic farming practices, and essentially raw material suppliers for that. That has been fun to learn about and to support, because these biodiverse farming practices, it’s fascinating. And you can truly taste the difference in the products. SB

SB: And you have standards to meet so you need to find companies that fit your mission. ES: Exactly. And speaking to that, we rarely take stock formulas just out of the box. Our member base is www.storebrands.com

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QUESTIONS/ANSWERS

NAVIGATING CBD SUPPLIERS MICHAEL LAW OF EAGLE LABS GUIDES RETAILERS TOWARD CHOOSING THE RIGHT PRIVATE BRAND CBD PARTNER

hen it comes to selecting a CBD manufacturing partner, retailers need to do their homework, maybe more than in other categories. Michael Law, chief commercial officer for St. Petersburg, Fla.-based Eagle Labs, a producer of CBD products, spoke with Store Brands on what retailers need to look for when teaming up with a CBD-based private brand supplier.

STORE BRANDS: What should a retailer consider when choosing a CBD manufacturer partner? MICHAEL LAW: Retailers need to ensure that their potential partners meet some key criteria. They are: • Having an FDA-registered manufacturing facility — this is important because it helps ensure that the manufacturer is a legitimate operator and not just opportunistically mixing products at an unregistered facility; • Following current good manufacturing practice, or cGMP, guidelines — cGMPs provide for systems that ensure proper design, monitoring, and control of manufacturing processes and facilities; • Experience making CBD products — ideally a minimum of two years of manufacturing experience to ensure quality and knowledge with formulating products; • Certificates of analysis — from independent labs testing for potency, pesticides, microbials, residual solvents and heavy metals; • High-volume capacity — this will ensure best prices on raw materials and an ability to keep up with growing customer volume requirements; • Manufacturing flexibility and 16

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agility — the ability to turn around samples quickly as well as to do smaller batches if required to facilitate test marketing; • Experience in CPG with brickand-mortar retailers — this is important as the needs of brick-and-mortar retailers are often very different than pure e-commerce sellers (for example, the ability to do EDI transactions); • Fulfillment capabilities — ability to offer fulfillment for retailer online orders if requested; and • Other services — category management support, pricing recommendations, consumer research, graphic design, label design and printing are some of the additional capabilities that can add value to a relationship with a manufacturer. SB: Why should retailers choose Eagle Labs? ML: Our mission is to manufacture the highest quality and most rigorously tested nutritional supplements and skin care products in the United States. Eagle Labs checks all of the boxes listed above and has a very experienced leadership team, including 30 years of experience in CPG with brick-and-mortar retailers. We offer

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high-quality manufacturing of the most popular CBD product forms including tinctures, topicals, capsules, gummies, and pet products. SB: What do retailers need to do to maximize sales of private label CBD products in terms of merchandising? Marketing? ML: The first priority is for retailers to decide their strategy for the CBD category. Will it be a destination category where they want to gain disproportionate share or just a convenience offering that isn’t a strategic category? Consumer demand is already present, yet the category is in its infancy. A large percentage of Americans have still not tried CBD and they are thirsty for education on what to buy and from what source. While there aren’t any strong national brands, there is a tremendous opportunity for retailers to leverage their own trusted store brands to bring CBD to their customers. The most successful retailers will have in-store educators and, if that’s not possible, strong instore educational material. Also, we continue to recommend that retailers keep the category in one easy-to-find location, merchandised by brand. With the newness of the category, we don’t believe consumers are ready to go to separate categories to find different types of CBD. The possible exception would be to have two locations — one in health/wellness and one in skin care/beauty for appropriate products. Initial focus needs to be on simply promoting availability of the category. Promotional pricing is less important as it will erode category margin dollars and lead to price wars. Savvy retailers can use “Compare to” signage and product-bundling offers to convert consumers into the category and then to trade up to a broader product assortment. Different product forms can be combined to deliver stronger consumer benefits (e.g. tincture and a cream). SB

PRODUCT OF THE YEAR

NEW, NOW AND MAKING A DIFFERENCE WHY NEW PRODUCTS MATTER MORE THAN EVER By Gina Acosta

here are not many sure things in retail these days, but one safe bet is that product innovation and quality will be as relevant to shoppers in the future as they are today. No matter how well curated the assortment or how user-friendly the online technology, shoppers will not flock to any retailer unless it offers the possibility of discovering new, quality products. Every generation, from baby boomers to the highly coveted cohort of Generation Z, or Zoomers, is looking to retailers to offer the most innovative products inside their stores or on their websites and apps. Zoomers especially are on track to become the largest generation of consumers by the end of this year — responsible for as much as $143 billion in direct spending. And the vast majority of those sales will come from Zoomers actively on the hunt for innovative products. According to Intel Research, 73% of Zoomers like to discover and buy new products, especially in brick-and-mortar stores. Meanwhile, 42% of consumers across all generations said that they love trying new products. With a large number of consumers actively looking for product innovation and quality at retail, the risks for retailers and brands ignoring these trends have never been greater. These attributes are the key drivers of competitive advantage for brands and retailers, and this year’s crop of Product of the Year recipients shows why. Each year, Product of the Year — in collaboration with global research company Kantar TNS — surveys

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consumers in an attempt to find truly inventive products. This year, 41 winners have been recognized in their respective categories. The program accepts entries from consumer goods that demonstrate innovation in function, design, packaging or ingredients, and a category winner is selected through Kantar’s survey. “For Product of the Year, it’s always been about innovation; yesterday, today and tomorrow — that’s what we love, are laser focused on and champion. Coupled with that, our unique process of asking 40,000 independent voters means shoppers, retailers and manufacturers continue to genuinely trust the seal,” said Mike Nolan, global CEO of Product of the Year management. “2020 sees exciting new categories that reflect the ever-changing face of innovation in the U.S., delivering us another great group of winners.” This year’s winners were revealed on Feb. 6 at the annual Product of the Year Awards Show at the Edison Ballroom in New York. Store Brands’ parent company, EnsembleIQ, is the program’s exclusive B-to-B marketing partner in the United States in 2020. Several of the 2020 winners are representative of larger industry trends. For the first time, two cannabidiol, or CBD, products were winners

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in the health-and-wellness space — an emerging category in grocery stores and drug stores nationwide. As more consumers adopt plant-based diets or switch to private label products, it makes sense that plant-based meatballs, veggie bowls and a number of store brand products also made the list. What also is fundamentally evident from this year’s Product of the Year Awards is that consumers are drawn to novel, creative, impactful products that are exciting to share on social media. To drive deeper connections with increasingly adventurous consumers, retailers and brands must satisfy curiosity through product innovation, new experiences, and telling the story behind the product. Retailers and brands have an opportunity to generate excitement and drive sales by creating buzz around these new products. Fittingly, Product of the Year winners

2020 Winners Aunt Jemima Pancake on the Go and Mr. Clean Clean Freak went viral on Instagram shortly after launch last year. For retailers and brands of all categories, marketing these kinds of new products to consumers will continue to be a strong driver of sales and the lifeblood of the industries well into 2020 and beyond.

METHODOLOGY

Product of the Year is the world’s largest consumer-voted award for product innovation. Established more than 30 years ago in France and 12 years ago in the United States, it currently operates in 40-plus countries with the same purpose: Guide consumers to the best products in their market and reward manufacturers for quality and innovation. Product of the Year accepts entries every year from CPG products that demonstrate innovation and were launched within the previous year. Entries are then placed into specific categories, such as food, beverages, personal care and household care, with a product then being chosen as a winner in its category through a nationally representative online study involving 40,000 consumers, conducted by Kantar TNS. Winning products receive the right to use the POY seal in marketing communications for two years. SB

1. AIR CARE Renuzit Snuggle Henkel

15. FEMININE CARE Playtex Sport Odorshield Edgewell Personal Care

2. ALL-PURPOSE CLEANER Mr. Clean Clean Freak Procter & Gamble

16. FOOT CARE Dr. Scholl’s Stylish Step Scholl’s Wellness

3. BREAKFAST Aunt Jemima Pancake On The Go PepsiCo 4. CANDY BAR Baby Ruth Ferrero USA 5. CAR CARE Rain-X-Silicone Endura ITW Global Brands 6. CAT CARE Comfort Zone Calming Diffuser Central Garden & Pet 7. CBD SLEEP AID CBD PM cbdMD 8. CBD TOPICAL CBD Freeze cbdMD 9. CHEESE Aldi-Exclusive Happy Farms Deli Sliced Cheese Aldi 10. COFFEE Nice! Premium Vanilla Latte Cold Brew Walgreens Boots Alliance 11. CONVENIENCE MEAL Del Monte Veggieful Veggie Bowls Del Monte Foods 12. COOKIE Aldi-Exclusive Simple Nature Coconut Cashew Crisps Aldi 13. DISH CARE Cascade Free & Clear Procter & Gamble 14. DOG CARE Rachel Ray Nutrish Smoochies J.M. Smucker

17. FROZEN SNACK Contadina Pizzettas Del Monte Foods 18. GREEN CLEANING Art of Green AlEn USA 19. GUM Trident Vibes Mondelēz

30. SALTY SNACK Nice! Premium Cashew and Macadamia Nut Blend Walgreens Boots Alliance 31. SNACK CUP Del Monte Fruit Parfait Crunch Del Monte Foods 32. SNACK PACK Aldi-Exclusive Park Street Deli Snack Selects Three Pack Aldi

20. HAIR CARE Simply Color By Schwarzkopf Henkel 21. HEALTH SYSTEMS Omnipod Dash Insulin Management System Insulet 22. IMMEDIATE RELIEF Alka Seltzer Cool Action Heart-Burn Relief Gum Bayer Consumer Health 23. LAUNDRY BOOSTER Downy Wrinkle Guard Procter & Gamble 24. LAUNDRY PACS Tide Pods 2.0 Procter & Gamble

26. NATURAL PERSONAL CARE Carmex Comfort Care Lip Balm with Beeswax Carma Laboratories 27. OFFICE SUPPLIES Frixion Fineliner Erasable Marker Pens Pilot Corporation of America 28. PET CLEANING Resolve Urine Destroyer RB

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33. SPIKED BEVERAGE BuzzTallz BuzzBallz/Southern Champion 34. SPORTS NUTRITION Vega Sport Protein Vega 35. SPREADS Aldi-Exclusive Countryside Creamery Pure Irish Butter Aldi 36. SURFACE WIPES Mr. Clean Magic Eraser Sheets Procter & Gamble 37. TOOTHPASTE Crest Gum & Sensitivity Procter & Gamble

25. LIQUID LAUNDRY Tide Heavy Duty Liquid Detergent Procter & Gamble

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29. PLANT-BASED PROTEIN Aldi-Exclusive Earth Grown Meatless Meatballs Aldi

38. VACUUM Hoover Onepwr Cordless Cleaning System TTI Floor Care North America 39. VMS One -A-Day Fruit Bites Bayer Consumer Health 40. WATER Nice! Premium Icelandic Water 1.5L Walgreens Boots Alliance 41. WINE Aldi-Exclusive Quarter Cut Bourbon Barrel-Aged Cabernet Sauvignon Aldi

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BEVERAGE REPORT

GET HEALTHY OR GET GOING BEVERAGE COMPANIES SEE SUCCESS WITH BETTER-FOR-YOU DRINKS, INSTAGRAM-WORTHY EXPERIENCES By Nora Caley

he trend toward health and wellness is fitting right in with beverages, and private brands are answering the call. As more adults drink less alcohol and soda, they are turning to alternatives that taste great and with more health benefits. No one wants to drink just water. Consumers are looking for drinks that provide energy, support the digestive system and sparkle enough to be Instagram-worthy. Manufacturers say retailers should look carefully at their private label assortments of ready-to-drink beverages, refrigerated juices and other items to appeal to these consumers. One area of opportunity for growth is refrigerated juices. “Consumers continue to shop the perimeter/deli section to seek out fresh, better-for-you options,” said Brad Key, retail business development executive for Universal Pure, based in Villa Rica, Ga. 20

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Key said many shoppers are looking for clean-label drinks, as well as for other more specific product attributes. That includes functional ingredients that promote better hydration, more energy and increased immune response. “This is accomplished by adding ingredients like caffeine, protein, vitamins, and other natural additives to increase the wellness factor without muddying up the label,” he said. Universal Pure provides high pressure processing, or HPP, services, which, Key explained, increases the shelf life of a cold-pressed juice from three to four days to 60 to 70 days, while maintaining the nutritional content of the juice. Cold-pressed juices have been around for a while, Key said, and now there are opportunities for growth in store brands in this category. “Retailers seeking to capture market share for their store brands are working with juice companies and co-packers to formulate their own unique

blends for healthy cold-pressed HPP juices for the deli, prepared foods and produce sections,” he said. In 2019, Universal Pure acquired Meriden, Conn.-based Stay Fresh Foods. Now Universal Pure has an expanded geographic footprint, and three additional HPP machines, bringing the total to 15, and the ability to blend and bottle 50 million bottles of juice per year. “The ability to blend, bottle, and HPP under one roof keeps costs down and helps retailers competitively price their private label juice lines to capture market share,” Key said. Shelf-stable beverages also are playing in the functional space. Lassonde Pappas and Co. makes juices that answer consumer demand for functional beverages. Over the past few years, Lassonde, which is headquartered in Quebec, Canada and has U.S. operations in Carneys Point, N.J., has launched several products that respond to current trends. “We were able to introduce new low-carb/low-sugar programs and many products with clean ingredient decks,” said Josianne Légaré, senior vice president of U.S. sales. “This trend was in its very beginnings.” Today, the hottest flavors are ginger, mango, passionfruit and tart cherry. “They all offer specific health-related benefits and are considered super foods,” Légaré said. “They are all growing rapidly in the juice category.” Tea long has been associated with wellness, and now consumers are looking for better teas, including in private label teas. “In the past, it was very simple, green tea or black tea at rock-bottom prices,” said Jason Walker, marketing director for Firsd Tea North America in Lyndhurst, N.J. “Now it’s fair trade, non-GMO, higher quality, greater range of flavors and wellness options.” Walker noted that oolong tea is gaining popularity, and the tea reportedly offers similar health benefits to green or black tea, from heart health to decreasing the risk of diabetes to boosting metabolism. Also, consumers are becoming more familiar with kombucha, a fermented tea that has a small amount of alcohol. Versions with more alcohol are getting attention. Firsd offers RTD, bagged and specialty tea blends, and iced tea blends. The company is developing a wellness line of teas available in brand and for private label. “If a store is not quite ready to launch their own brand, they bring in our packer label of teas,” Walker said. “They want that proof of concept.”

Other better-for-you trends include fermented foods, according to Mintel. Last year the research firm noted that consumers look for ingredients that not only contribute to a balanced diet but also play a role in relaxation, stress relief, and a healthy gut. As a result, sipping vinegars are growing. According to Euromonitor, in a blog post about last year’s Private Label Manufacturers Association show, other trends in private label beverages include flavored and carbonated bottled waters, packaging in recycled and canned alternatives to plastic bottles, and plant-based milks in RTD coffees. “There is lot of interest right now in ready-to-drink teas and coffees,” said Avihu Schumacher, CEO of Miami-based Oka Products. “Also people are not drinking milk.” The company offers several RTD coffee drinks under the Okafe brand and private label. The drinks are available in cappuccino, hazelnut, mocha latte and other flavors, and also are available with almond or coconut milk. People are turning away from sodas, so they are looking for RTD beverages that offer beneficial ingredients, Schumacher said. The company also makes branded and private label lines of alkaline waters, which have higher pH than regular drinking water, and infused waters, which have antioxidants. It also makes Rose Tea, available in such flavors as mango, apple and wild berries. Beverages can still be fun, and few things are more entertaining than color and carbonation. Maud Borup, which is based in Plymouth, Minn., makes Fizzy Drink Bombs. They are available in Very Cherry and Blue Raspberry, and when dropped into 24 oz. of water, the bomb fizzes and sparkles with edible glitter. President and owner Christine Lantinen said the bombs answer several consumer trends, among them the rise of the mocktail, as well millennials’ desire for experiences and an Instagram-able moment. “When people go to a restaurant they want more than good food, they want an experience,” she said. “In retail, it’s similar. They want to try something new, often.” In addition to offering entertainment for kids, adults can drop the product into champagne. The Fizzy Drink Bomb launched last year and is available for private label. Despite Maude Borup’s 100-plus years in business, it knows that digital word-of-mouth can be key. “People are sharing things on social media,” Lantinen said. “What they respond to is what they find amusing or cool or weird.” SB www.storebrands.com

March 2020

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STORE BRANDS l CHEESE

GOUDA, BETTER, BEST RETAILERS DIFFERENTIATE THEIR CHEESE SELECTIONS WITH A GROWING POOL OF QUALITY PRODUCT By Dan Ochwat

n recent months, the cheese category has seen a cramp in its growth, but there’s a lot to be excited about going forward, especially as retailers continue to look to smallbatch cheeses and better-for-you styles. Gourmet Foods International’s Nathan Aldridge, a traveling retail and cheese expert for the importer, said the introduction of tariffs and the coronavirus have created some confusion in the marketplace and slowed business. But prior to those factors, the cheese category had been growing rapidly the last three years, especially in terms of American artisanal cheeses. “As consumers have started to pay more attention to where their food is coming from and how farmers treat their animals, they are now noticing that many artisan and farmstead cheesemakers are making quality cheese with all natural and nutritional benefits, from humanely raised animals,” Aldridge said. Dairy Farmers of Wisconsin represents dairy farmers and some cheesemakers that produce branded and private label cheeses. The state produces half of all of the country’s specialty cheese supply, and Chris Kuske Riese, the organization’s senior director of channel marketing, said specialty cheeses are driving cheese growth. Echoing Aldridge, she said there’s a demand for transparency on where the cheese is coming from. “Today’s U.S. retail shoppers are looking for ways to connect with their food, the story behind it, who makes it and what drives their passion for the craft.” Similarly, Bob DiNunzio, director of category strategy, Daymon, said consumers are requesting healthier cheese options, as part of the overall health and wellness trend. “Cleaner-ingredient labels that embrace cheese’s natural reputation with offerings such as whole milk, grass fed and milk from free range cows.” There’s also a nudge toward more non-dairy cheeses. And while the artisanal trend has caused a decline in commodity cheeses over the past couple of years, it’s not all good news for retailers. “In this year alone, we have seen three grocery chains fold (Fairway Market, Lucky’s Market and Earthfare),” Aldridge said. “Is this due to the fact that most all-natural foods are more expensive while a majority of con-

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sumers are looking for value? Probably.” With that said, Aldridge said retailers rely on staples for their store brand cheeses — feta, brie, fresh goat logs, hand-wrapped mozzarella, cheddars, goudas and parmesans — and want to save on labor costs in their stores. “Working with a distributor that can offer hand-wrapped cheeses from a certified cut room can offer the best solution for both retailer and customer — cheeses cut fresh, sent to the store with a longer shelf life.” There are more than 600 different types of cheese out of Wisconsin, but Kuske Riese said retailers are getting into private label cheese to find premium versions of such staples as premium cheddars. Some standout flavors in Wisconsin though include hand-rubbed Fontina cheeses with globally inspired rubs like Harissa Fontina and Mayan Cocoa from cheesemaker Yellow Door Creamery. DiNunzio of Daymon said bold flavors are growth drivers. “This is particularly prevalent in the string/stick and shredded formats which have begun to incorporate bolder flavors to appeal to mature palates, such as unique peppers, smoked spices, alcohol-infusions, barrel and cave-aged varieties.” In Aldridge’s eyes, three retailers are doing it best with store brand cheeses: Kroger, Whole Foods and Trader Joe’s. “Kroger has seen great success with their three-tiered, ‘good, better, best’ store brand approach,” he said, and they’ve considerably grown the Simple Truth brand.

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COVER COVER STORY STORY

By Dan Ochwat

Private brands spice up their value proposition

By Dan Ochwat

rivate labels are no longer labels. They are brands. And in some cases, even more specifically, “lifestyle brands.” This is the term Mark McKeown, a principal with IRI, said his research firm, along with FMI – The Food Industry Association, devised to recognize the power of retailer store brands that cross categories, aisles and departments. “That’s a significant competitive advantage for the retailer,” McKeown said. “If they’re competing against other retailers, and let’s

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say Kroger can execute Simple Truth, and do that across multiple categories, then a consumer will trust that brand when they go into a new category because they’ve had a great experience with that brand in maybe eight or 10 other categories in the store.” Thus is the state of the private label industry. Even as private label becomes a permanent part of most mass retailers’ merchandising strategies — and grow to generate as much as 25% of total store sales — retailers and suppliers continue to dance around how they can do even more for the category.

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COVER STORY A NEW NICHE

As McKeown noted, the idea of private labels becoming lifestyle brands stemmed from retailers being first to offer organic, natural products across categories, such as Kroger’s Simple Truth, Albertsons’ O Organics or Whole Foods’ 365 Everyday Value. But to be a lifestyle brand it must also be a representation of a premium, trusted offering. He cited Target’s Good & Gather as a premium lifestyle label, and said Costco’s Kirkland has set the bar by successfully delivering on quality across categories. It is extremely clear — even to the casual observer — that the private label industry is becoming more sophisticated and complex. Consumers want more from private label. More importantly, perhaps, retailers are demanding more from the category, not only in prices and assortment, but in perceived sophistication of the product. For example, another trend growing within the lifestyle trend is a move away from private brands carrying the name of the retailer, but being more of a fully realized stand-alone brand, and simplifying those brands into a nonfood label and a food label. Wakefern recently introduced Bowl & Basket as its food line and Paperbird as its nonfood line in its ShopRite stores. In a recent Store Brands profile on ShopRite, Chris Skyers, vice president of private label and own brands for the banner’s parent company Wakefern Food, said consumer research pointed them to this separation. “That was a unique learning for us. We realized that diapers and milk didn’t go well together under [the same store brand] for many consumers,” he said.

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Similarly, as profiled in the February issue of Store Brands, 7-Eleven has defined its private brands in two lines: 7-Select for food and 24/7 Life in nonfoods. McKeown said, “absolutely, yes,” there will be more retailers following this trend, because it’s putting the focus on the consumer. “It’s all about the consumer,” he said. “It’s shopper driven, as opposed to product driven.” Chris Perry, vice president of education at Edge by Ascential, agreed with McKeown. “It’s critical to first highlight that private label is not defined by the brandless, value retail plays of yesterday, but increasingly manifesting itself as “private brand,” fully and uniquely branded, ontrend and exclusive offerings that meet consumer needs in value, equity and/or benefits not currently being met by the national brands,” he said. Karen Strauss, a principal with Cadent Consulting Group, also identified this change in identity as the leading trend in the state of the industry. “Shoppers go to specific stores for a private label brand,” she noted. “They have very strong equities, they have clear positioning, they deliver on tiers: high price, mid price, low price. The packaging is not that white label can anymore, it’s real packaging with real branding and real communication elements.” She said the success of discount retailers Aldi and Trader Joe’s, whose goods are majority private label, also have helped usher in the trend for lifestyle brands, and Millennials are shopping more at those retailers. In beauty, retailers like Ulta Beauty, Sally Beauty Supply and Sephora are having a similar impact.

COVER STORY

What Retailers Want

Perry said the “sameness” in store assortment is one reason for this change. According to a private label report from Daymon, “Winning in the Center Store,” 98% of the national-brand assortment in mass merchants and grocers is the same. Perry also noted that private brands help differentiate retail assortment and add a new motivation for shoppers to enter their stores. He said private brands also are seeing growth, including a compound annual growth rate that’s two-and-a-half times larger than national brands, per Nielsen, because retailers have more relationships with private brand suppliers that enable them to build quicker, more agile innovation cycles, and the expansion of private brands helps improve the retailer’s overall margin and growth.

Mark McKeown, principal for client insights at IRI said there are three things that retailers are looking for from private brand suppliers. 1. T R ACE AB ILI T Y

Particularly as retailers increase production of organic, non-GMO products, suppliers are going to need to be good about tracing product back from the farm it was sourced and so on. Ultimately, it’s the retailer’s product, the consumer will have questions, suppliers must help them ensure that the ingredients in the private brand product are commensurate with what the label says;

THE STATE OF SUPPLIER RELATIONSHIPS

With this success though, what kind of stress is being put onto the relationship between retailer and private brand supplier? McKeown says the first thing suppliers need to do is to start thinking more like the brand they represent, admitting that it’s tough to change when a supplier has been using the word “label” for 30 to 40 years. “That’s the first change, is getting the private brand suppliers to start talking about their customers brands and thinking about them the same way,” he said. “They are a brand.” After that, there is a big issue over supply and demand. Retailers need to work with multiple manufacturers to keep up with the demand for products in their private label lines, especially those that fall under the clean label, fair trade, organic and sustainable categories. “I think you might find a different contractual and partnership agreement between the supplier and the retailer in those tiers,” he said. Steven Howell, a consultant with Solutions for Retail Brands, a software and consulting company that works with private brand manufacturers, said the suppliers are the true experts in their

2. M OR E S UP P LY

Again, especially in the area of organic foods, there is not enough supply to meet demand for retailers so they’re being forced to forge agreements with multiple suppliers to outﬁt one private brand product. Suppliers need to ﬁnd a way to increase supply; and 3 . IN N OVAT IO N

If a retailer is going to market its private brand as a brand, then it must innovate like one. Suppliers can bring ideas, ﬂavors, and new, diverse packaging sizes and options.

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categories and retailers should lean on them more for insights. A lot of the company’s work is with retailers whose private brand missions include organic, premium, fresh and sustainability. Solutions for Retail Brands recently did a survey with FMI called “The State of Retailer and Private Brand Supplier Engagement,” which found that attitudes between suppliers and retailers has shifted considerably. “Retailers that can systemize the creation of efficient and effective collaborative retail and supplier partnerships at a large enough scale to impact the bottom line will develop more successful private brand products,” Howell said. One improved way to build the relationship was for more retailers to work with suppliers as one team to increase engagement and challenge innovation. He said the survey showed that retailers that put more importance on a one-team strategy that centers on collaboration, accessibility and openness — rather than focusing on pricing pressures — see less strain in the relationship. According to the study, 98% of respondents “strongly agreed” with the statement: Improved retailer and supplier engagement would help to further drive private brand performance. “Suppliers believe there is a tremendous opportunity to drive private brand growth

by having retailers and manufacturers form true partnerships,” Howell said. “This means they share the risks and they share the rewards, and both are in it for the long haul.”

THE GPO THREAT

Just before the New Year, Walgreens Boots Alliance and Kroger shook the industry when it agreed to form a group purchasing organization that essentially empowers the two retailers to buy together and source jointly for their store brands products. To some suppliers, this could be seen as a scary trend. “I could only imagine that most suppliers are likely displeased about this development,” Howell said. “When Carrefour and Tesco joined buying power in a 2018 alliance, suppliers [said in a Reuters report] that the move threatened their survival.” Through the GPO, Walgreens and Kroger will be able to buy from private label suppliers at a higher volume and negotiate discounts. In addition, the companies can leverage resources from one another, including Kroger’s 37 manufacturing facilities (where it manufactures some of its own brands) that Walgreens can potentially use, and WBA’s sourcing company in Hong Kong that Kroger can leverage. “Through this unique joint venture,

Walgreens and Kroger have the opportunity to use our collective resources to create efficiencies across our supply chains,” said Alex Gourlay, co-COO of Walgreens Boots Alliance when the announcement was made. “This collaboration will also enhance our ability to drive innovation for customers, including both of our private label brands, to further meet their evolving needs for value and convenience.” Howell said hotels and foodservice firms tend to enter similar agreements, as do small and mid-sized buyers within specific product categories. McKeown is interested to see how the GPO will play out among suppliers, as it’s still very early, questioning whether the retailers teamed up to create scale for their own businesses or did they team up to get scale to put pressure on a supplier trying to decide on who to do business with. “That supplier will say, I’d rather do business with those two rather than to have to do business with 10 separate retailers to try and get that same share of market,” he noted.

AMAZON, DIGITAL

With Amazon rolling out its first 10,000-plus-sq.-ft. cashier-less grocery store called Amazon Go Grocery, and preparing to introduce full-scale gro-

cery locations in Woodland Hills, Calif., and Naperville, Ill., there are questions on how the retailer will present a private brand advantage. For the supplier community, it’s more opportunity. Perry said suppliers, if not doing so already, may want to consider launching their own private brands on the Amazon marketplace as both another revenue source, a capability development opportunity, and as an investment for potential future exclusive brand partnership. Strauss said it will be interesting to see what happens with Amazon in the year ahead, how it will impact its Whole Foods operation, but mostly how the company utilizes digital and brick-and-mortar. “They want to be where the shoppers are, and they know that at least in the near-term future, brick-and-mortar and online shopping are going to coexist.” In this scenario, Strauss added that a larger opportunity for private brands will be leveraging the company’s omnichannel presence. He noted that retailers no longer can garner awareness simply through a TV ad or a famous spokesperson. They now must effectively use social media tools — Facebook and Instagram, as well as influencers — to get in front of shoppers with private brands. Beyond marketing on other sites, getting seen on Amazon is another challenge. Edge by Ascential’s Perry said that on Amazon, 64% of clicks go through the top three search results and 81% go through the first page. Private brands need to win that search. “Where an Amazon and other retailers on their respective retail marketplace sites have the advantage is that they have all the shopper and sales data and control the merchandising placements,” he said, adding that retailers can use this information to get their private lifestyle brands to lead on category pages, in searches and in targeted marketing or digital promotions. “They know what the shoppers want and buy, as well as what helps convert those shoppers.”

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HALL OF FAME

PRIVATE LABEL HALL OF FAME 2020 FIVE INDUSTRY CHAMPIONS WERE NAMED TO THE PRIVATE LABEL MANUFACTURERS ASSOCIATION’S HALL OF HONORS, INCLUDING AN EDUCATOR, CONSULTANT, JOURNALIST, RETAILER AND SUPPLIER By Seth Mendelson and Dan Ochwat

elcome to the club — the Private Label Industry Hall of Fame. The Private Label Manufacturers Association and Store Brands have selected five industry officials to join the Private Label Industry Hall of Fame, an elite group of people who have made a major difference helping the private label industry grow into what it is today. This year, Jeff Needham of Perrigo, John Stanton of Saint Joseph’s University, Bill Bishop of Brick Meets Click, Peter Berlinski of Private Label 30

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Magazine and Private Label International, and Dieter Schwarz of Lidl are being recognized for their service to the industry and the initiatives they have implemented. The winners will be recognized at a Hall of Fame breakfast on Saturday, March 28 at the PLMA annual meeting and leadership conference at the Hyatt Regency-Scottsdale at Gainey Ranch in Arizona. More than 65 individuals have been named to the Hall of Fame since its start in 2006. Qualified nominees should be career private label professionals who have contributed to the

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growth of store brands in the consumer marketplace in several ways. That includes having served as a leader in store brand product development and innovation; helped advanced the growth of store brands through creative marketing, merchandising and promotions; and have contributed significantly to store brand technology in terms of manufacturing, packaging, label design and quality assurance. Also, people can be nominated if they have served as a champion of store brands within their own companies and business communities, as well as the consumer marketplace.

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HALL OF FAME

Peter Berlinski FORMER EDITOR IN CHIEF, PRIVATE LABEL MAGAZINE (NOW STORE BRANDS) AND PRIVATE LABEL INTERNATIONAL

“My dad happily took his work home with him and showed our family exactly what he was writing about and how it worked.” That is how Michael Berlinski, the son of Hall of Fame honoree, the late Peter Berlinski, remembers some of his dad’s interaction with the private label category years ago. Not only did Peter Berlinski serve as a great father to his three children, but he took the time to show them what he did at work and used that knowledge to make his family more aware of alternatives when eating at home or shopping for groceries. “Private label and store brands were a very big part of our lives,” said Michael. “My father would tell us about the projects he was working on at work and the many companies he was working with. We came to know the trends in the industry before most people would know. We would buy a lot of store brand and private label products. They were a big part of our pantry at home.” Of course, Peter Berlinski learned about the category from his years as the influential editor in chief of Private Label Magazine — now known as Store Brands magazine — and Private Label International magazine. During his tenure at the publications, Berlinski helped to keep the growing private label/store brand industry aware of the various trends and topics that helped to drive sales and build profits from the category.

“Professionally, I think he would want to be remembered as a person who was extremely committed to his work and his job.” — MICHAEL BERLINSKI, SON OF HALL OF FAME INDUCTEE PETER BERLINKSKI 32

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He became one of the founders of the Private Label Hall of Fame in 2006 when he called up executives at the Private Label Manufacturers Association and suggested starting the hall. He also was extremely involved with the founding of the Women’s Foodservice Forum. Later, Berlinski became a freelance journalist, contributing many articles to various magazines about the private label industry. “He wanted to be involved, and he was extremely proud of his work with the Women’s Foodservice Forum and its role in helping women reach their full potential,” Michael Berlinski said. “I think he really wanted to help other people succeed.” Peter Berlinski died in April 2019 at the age of 72. He grew up in Bloomfield, N.J., before moving to Clifton, N.J., in 1970. A 1964 graduate of Seton Hall Prep High School, he continued his education at Seton Hall University receiving a degree in English. Afterwards he honorably served in the U.S. Army during the Vietnam War. “How would my father want to be remembered? Well, professionally, I think he would want to be remembered as a person who was extremely committed to his work and his job,” Michael Berlinski said. “As for the private label and store brand categories, I think he always treated what he did as more than a job. The food category and private label meant a lot more to him than just doing his job. It became his passion. “I also remember him as a great dad, who did wonderful things for his family and loved to cook and taught us how to cook and how methodical he was in cooking.”

“To be recognized by an organization as important as the PLMA is a big deal for me.” — PLMA HALL OF FAME INDUCTEE BILL BISHOP

Bill Bishop

CHIEF ARCHITECT AND CO-FOUNDER, BRICK MEETS CLICK Today, there seems to be a retail thought leader around every corner, but Bill Bishop was one of the first — and one with integrity and objectivity. “I’ve really tried to do my homework to keep me right at the top of the pack,” said Bishop, who currently is chief architect at Brick Meets Click. “Everybody has some experience with grocery, and in today’s world it’s awfully easy to have an opinion. I still work really hard to be sure that we do our studies, and know what we’re talking about.” As the founder and leader of Willard Bishop and now Brick Meets Click, his goals have been the same. When he enters a subject to study in retail, he must go deep into that area, be clear with the results (as retailers hate jargon, he said), and do it honestly and objectively. His research over the years in private label included several projects with Daymon, FMI and a few at Topco that he’s very proud of. Over a two-year period, he worked with Topco to establish best prac-

tices in merchandising for their private label products based on extensive research. Another project with Topco studied sales of private label products at Albertsons’ Jewel-Osco banner to compare with Topco’s private label velocities and growth. He said that was at a time when private labels were considered generics, and he’s amazed at the evolution of private brands today, noting how far hard discounters like Aldi, Lidl and Trader Joe’s have come. “One of the things that I think amazed people with Aldi was how quickly they moved completely into what we call ‘clean products.’” Bishop also praised Kroger’s Simple Truth and how private brands are leveraging “lifestyle branding.” Bishop first got into retail when he attended Cornell University in the 1960s and got involved with its Department of Food Marketing, studying early computer modeling of supermarket site selection. After college, while in the U.S. army, he routinely would check in with the National Association of Food Chains to entertain himself, which later led him to joining the Supermarket Institute for five years while it transitioned into the Food Marketing Institute (it is now FMI — the Food Industry Association). In 1976, he started Willard Bishop, and for three decades would be one of the industry’s preeminent thought leaders. In 2012, he started Brick Meets Click, again ahead of the curve, to study the tremendous impact digital would have on retailing. He calls this new company a “demanding hobby,” as he is slowing down and working with his son David Bishop, a partner in the company. Bill Bishop joked that he and his son may be the only father-son duo interviewed on the PLMA’s videocasts. Bishop has presented at PLMA over the years, as well, most recently on the impact of digital on private brands. He’s tremendously honored by this induction, and perhaps more importantly, he said his wife liked it. “I’ve been in the grocery business for virtually my entire career,” he said. “So to be recognized by an organization as important as the PLMA is a big deal for me. It’s a wonderful recognition.” www.storebrands.com

March 2020

Store Brands

HALL OF FAME

Jeff Needham PRESIDENT OF CONSUMER SELF-CARE AMERICAS, PERRIGO

One of his many admirers said recently that Jeff Needham has been involved with private label before there was private label. While that may be a stretch, it really is not that far from the truth. In reality, Needham, who is retiring this month, has spent the last 36 years working for Perrigo, a publicly-owned company that is one of the nation’s largest private label manufacturers of OTC products, including pain relief, cough/cold, allergy, nicotine replacement and digestive health items. “I came to Perrigo from Amway and was one of the first marketing people that Perrigo hired,” he said. “They wanted to invest in this market, to take private label from what it was to what it is today.” Needham, who is president of Perrigo’s consumer selfcare-America division and a company executive vice president, said that when he started in the business, store brands were essentially a controlled-manufacturing business. “People at Perrigo realized that they needed to treat store brands like a true brand if they wanted to compete on shelves with national brands,” he said. “So, our job was to help retailers understand the market and give them the tools to help them compete with the national brands. We realized that to be successful, we had to win on store shelves. And to make that happen we needed to do a better job of marketing our products.” Among other things, Perrigo colleagues will remember Needham for how he helped them grow at the company. “In my 17 years with the company, Jeff has always been our rock of knowledge within Perrigo and our ambassador to senior management to our customers,” said Troy Pelak, a vice president of regional sales at the company. “From his early development in the store brand OTC industry with educating customers on the benefits of national brand alternative products, to navigating the sometimes-confusing FDA regulatory approval processes, to heading up CHPA on behalf of all OTC manufacturers — store brands and national brands — Jeff has always been the greatest source of knowledge. He has been a trusted advisor by all.” Pelak continued: “Many times, customers will call him simply asking for advice or his opinion on a cer34

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“In my 17 years with the company, Jeff has been our rock of knowledge within Perrigo and our ambassador to senior management to our customers.” —TROY PELAK, COLLEAGUE OF PLMA HALL OF FAME INDUCTEE JEFF NEEDHAM tain topic. He helped pave the way for store brand OTC products over 36 years ago when store brand share started in the low single digits and now enjoys store brand shares consistently in the upper 20’s to near 30% of total sales for retailers.” How would he liked to be remembered? “One of the things I am most proud of in my career is what we have done with store brands in so many different categories here,” Needham said. “I am also very proud of the strategic relationships we have built with retailers over the years. To be successful with this category, we knew we needed the commitment of the retailers. They know they need private label to grow their business, and we plan to grow with them.”

to reach 100 by 2020. The U.S. stores are a reimagined Lidl, nearly twice the size of its European counterparts, carrying a much deeper assortment of products, but as it finds its way is most definitely having an impact on the store brands industry stateside. Lidl seems particularly popular in the U.K., where it has more than 700 stores. The Schwarz Group also owns the hypermarket chain Kaufland. As for Schwarz himself, he is almost famously private. At 80, he lives in Germany and a story in The Daily Mail said there are only two photos of him that exist and that he’s called “the phantom” in his hometown of Heilbronn, Germany. He’s also famously giving, donating hundreds of millions of dollars through the Dieter Schwarz Foundation to support health, science and educational initiatives locally.

Dieter Schwarz CHAIRMAN AND CEO, LIDL

Lidl is the second-largest discounter in its home country of Germany, just behind rival Aldi, and a giant in Europe and globally, running more than 11,000 stores in 32 countries. The store prides itself on stocking its stores with more than 90% private brand and has helped make Dieter Schwarz, chairman and CEO of Lidl, and his Schwarz Group more than $100 billion in revenue. Dieter Schwarz is the face behind this retail chain of considerable importance to private label around the world, and he joins such global retail leaders as David Nichols of Loblaws, Terry Leahy of Tesco and Theo Albrecht of Aldi in the Private Label Hall of Fame. Lidl opened its first store in 1973 with Schwarz; four years later he would become Lidl’s CEO, ushering in further expansion and a culture of smaller footprint stores, with around 1,500 quality products stocked, notably its Preferred Selection own brand. In 2017, Lidl would enter the United States, operating around 75 stores primarily on the East Coast, with expectations

John Stanton PROFESSOR OF FOOD MARKETING, ST. JOSEPH’S UNIVERSITY

You may want to call John Stanton a visionary. Way back in the mid 1980s, Stanton, along with fellow Saint Joseph’s University professor Rich George, wrote a book called “21 Trends in Food Consumption for the 21st Century.” One of those major trends, they forecasted, would not only be the rise of private label products but also the fact that there would be more variety and better quality from products in the category. “Since that time, I like to think that I have been an extremely strong advocate for the category,” said Stanton, who is a professor of food marketing at Philadelphia-based Saint Joseph’s. “I realize the important role that private label plays in the [mass retail] industry and how important that we help to build the category up even further.” Stanton joined the Saint Joseph’s food marketing department about 35 years ago after running the Institute for Food Nutrition & Health at nearby Temple University. Since then, he has become one of the most widely known and widely admired experts of food marketing across the country and has been much sought out for speeches and columns throughout his tenure. www.storebrands.com

March 2020

Store Brands

HALL OF FAME

“I would like to be remembered as a person who always believed that private label should be a viable alternative for consumers.” — PLMA HALL OF FAME INDUCTEE JOHN STANTON “I see the benefits of private label,” he said. “I see how it can offer consumers a legitimate choice when they go shopping. I would like to be remembered as a person who always believed that private label should be a viable alternative for consumers, as any branded product.” But Stanton also has words for the private label industry. While he is extremely impressed with how far the category has come, he strongly suggests that suppliers do

all they can to help retailers transition to a greater percentage of private label products and, eventually, sales. “Instead of focusing on coming up with products that are identical to brand product, private label suppliers need to become the product research arms of the retailers they work with,” he said. “They need to make it clear that retailers can call on them for new ideas, research and development — and even packaging. They need to be an adjunct of the retailer.” Joe Bivona, executive director of the Academy of Food Marketing and the Food Marketing Educational Foundation at Saint Joseph’s, called Stanton an industry leader. “John is both the cornerstone and keystone of our food marketing program,” Bivona said. “With his knowledge and passion, he has made the program what it is, the premier food marketing program throughout the U.S. He is the glue to this program. “He has spoken to many, many retailers and suppliers and consulted with many others. He has done a spectacular job getting them through this tough business environment, which includes private label.”

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STORE BRANDS l HONEY & SYRUP

A SWEET OPPORTUNITY NATURAL AND ORGANIC DEMANDS ARE DRIVING GROWTH IN PRIVATE LABEL SYRUP AND HONEY By Debby Garbato

uring its lifetime, the average bee produces just one-quarter of a tablespoon of honey. Honey — along with maple syrup — is harvested manually in a labor-intensive process. And syrup is only produced in one corner of North America, with each tree yielding about 20 gallons of sap per season. Roughly 40 gallons are needed to produce one gallon of finished product, which sells for around $60 per gallon. These scenarios make maple syrup and honey two of the most expensive center store products. Their prices become even heftier if they are natural, organic or part of a special formulation. But consumers’ growing interest in natural and organic foods, coupled with mainstream retailers’ launch of private label natural/organic lines, has paved the way for traditional chains to increase proprietary offerings in such premium seg-

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ments as honey and maple syrup. Prices normally are about 20% to 30% less than for branded goods. As a result, natural and organic merchandise is attracting both specialty store customers and health-conscious consumers who cannot afford the higher prices of chains like Whole Foods. According to officials at retail consulting firm Daymon, roughly 20% of private label sales growth now is coming from premium, trendy and organic items. And the total organic food market continues growing. The Organic Trade Organization reported that 2018 organic food sales hit $47.9 billion, an increase of 5.9% — more than double the growth rate of the general food market. “New business is being driven by center store organics,” said Arnold Coombs, executive director of sales and marketing at Acworth, N.H.-based Bascom Maple Farms, which produces private label organic maple syrup. “While most big

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STORE BRANDS l HONEY & SYRUP retailers have a private label organic line, they’re looking at what else they can do. Thirty years ago, there were two SKUs of maple syrup on the shelf. Now, there’s different brands, sizes and flavors in both branded and private label.” Target, for example, is offering organic maple syrup under its Simply Balanced brand at $7.69 per 12 oz. And H-E-B Organics features a 12-oz. private label maple syrup for $8.98. On the branded side, Whole Foods sells a 12.7-oz. bottle of Doc’s Organic Maple Syrup for $15.99, while Kroger features Shady Maple Farms Organic Maple syrup at $14.75 for the same package size. The price differential in honey is similar. A 16-oz. jar of Target’s Simply Balanced Raw Organic Honey is just $7.49. But Target’s price for a 16 oz.-bottle of Nature’s Nate Pure Raw Unfiltered honey is $10.29. Growth of premium products is good news for the slowturning categories, in which performance of both branded and traditional private label has been flat. According to Nielsen and the Private Label Manufacturers Association data, retail sales of all breakfast syrups increased just 0.4% to $703 million during the 52 weeks ended Dec. 28. Sales of private label breakfast syrups grew 2.4% to $249 million, representing 35% of total category sales. Total honey sales declined 1.5% to $619 million. Private label honey, which represented 47% of category sales, fell 1.7% to $291 million.

SLOW CATEGORY EXPANSION

Traditionally, private label syrup and honey has revolved around processed products. While many retailers launched proprietary organic offerings over the past decade or so, growth of private label organics and other high-end segments of honey and syrup began just five years ago. “Processed honey still represents a significant portion of the category, said Tony Landeretti, CEO of Rice’s Lucky Clover Honey in Greeley, Colo. “But consumers are buying more raw and organic honey. Raw is the smallest part of the category, but it’s growing the fastest in both private label and branded. Some retailers are on the front end of the curve in that shift.” Consumers’ expectations of private label have changed, opening the door for more premium offerings — not just opening price points. “While private label’s number one mission is to save consumers money, consumers expect more than basic items,” said Stephane Vachon, principal sales director of Citadelle, a Canadian supplier of honey and maple syrup. “Organic was a fringe item in private label; now it’s moved into the mainstream.” Organics have strong appeal among young adults, with about 20% of Millennials and Gen Zers saying they buy organic food “all the time” versus 8% of Gen Xers and 7% of Boomers, indicated a study by organic food supplier Earthbound Farms. Young adults value food transparency. “Over the past 10 years or so, the importance of a short, clean ingredients list has accelerated,” Landretti said. “Younger con40

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sumers are very interested in cause marketing. We support our local American bee keepers, which is a point of differentiation in food transparency.” Consumers’ desire to reduce processsed sugar consumption is also driving the shift into more premum private label honeys and syrups. “With the war on processed sugar, maple and honey are great alternatives,” said Vachon. “More consumers are recognizing that they’re healthier. Maple tastes good in everything you want to sweeten.” In a survey by food search engine Spoon Guru, 55% of respondents said they are eating less processed sugar. Twenty-nine percent use honey as an alternative; 19% use maple syrup. In addition to maple syrup, some companies, among them LB Maple Treat, offer other alternative sweeteners like maple sugar and maple flakes. “Consumers appreciate choices in sugar and sugar alternatives,” said Jinny Lik, marketing director at LB Maple Treat. “With increased product assortments, the sweetener section is growing as well as the number of choices, including organic/natural maple syrup.” Bascom Maple Farms also offers maple sugar, which Coombs said is “growing.”

BEYOND BREAKFAST

Some organic and natural private label honeys and syrups are moving beyond the jelly and breakfast aisles and into dessert, baking, cocktail mixes and other sections. Sioux Honey Association Co-op, for example, markets honey flavored with natural fruits that can be used as a topping on various foods. “It’s a small segment, but it’s growing quickly,” said Alex Blumenthal, executive vice president at Sioux City, Iowa-based Sioux Honey. The company also makes a honey formulated for baking. Runamok Maple, based in Fairfax, Vt., specializes in flavor-infused organic maple syrups, including cinnamon, vanilla, smoked and bourbon barrel aged. Some work well

Leading Natural and Organic Private Labels * Kroger: Simple Truth ($2 billion-plus) Albertsons: O Organics ($1 billion-plus, offered across multiple banners)

Costco: Kirkland Signature Organics Walmart: Great Value Organics Aldi: Simply Nature Organic Publix: Greenwise H-E-B: H-E-B Organics Target: Simply Balanced, Good & Gather *List is not intented to be comprehensive.

with savory dishes or cocktails while others lend themselves to desserts, ice cream or coffee, said Curt Alpeter, Runamok president. To date, Runamok has developed 25 private label flavors, including custom formulations. It has also created combo packs, including fancily packaged fourth quarter gift boxes for seasonal promotions. “In food, there’s an insatiable demand for what’s new and different,” he added. “Maple was a ‘conventional’ product and that’s changing. Starbucks has maple lattes, while trendy bars have maple-based cocktails. Consumers see that maple isn’t just for pancakes.” Broader packaging choices are another focus. Bascom Maple Farms offers organic syrup in conventional 8- and

12-oz. bottles and in sizes up to 32 oz. Bascom also features a syrup spray can, which prevents children from wasting the product. With the introduction of PET bottles, Coombs said retailers can stack cases higher, fit more on a truck and reduce breakage.

CONSUMER EDUCATION

Today’s consumers are willing to shell out more money for natural and organic private labels. Maximizing the potential of these products, however, requires more visibility and education. But these industries traditionally have focused more on beekeeping and sap tapping than marketing. “People who came up through the processed foods companies think more about marketing and how you can have 20 SKUs and flavors and ways to differentiate,” said Blumenthal. “But honey was seen as an agricultural product rather than one that could adapt to what consumers want and need, although sales per square foot of honey far outpace those of jelly.” Categories have not always received prominent placement. But today, Blumenthal said he sees a “steady uptick” in the number of retailers putting display shippers on the floor. Growing use and acceptance of PET bottles facilitates this, added Coombs. PET bottles can even be merchandised on freezer doors near categories like ice cream or waffles, he added. Endcap use is growing, too. In the New York market, Fairway’s honey endcap involved a 4-by-6-ft. Metro shelving unit filled with myriad varieties of branded and private label honey. Another Metro endcap showcased private label organic maple syrup. To educate shoppers, some private label companies are placing recipe tear sheets in stores and on websites. Recipes include everything from desserts and cocktails to balsamic salad dressing and maple glazed salmon. Since millennials and Gen Zers are prime targets, Bascom works with online influencers to “get the word out” regarding maple syrup’s many applications. “It’s not necessarily about brand and product itself but about what you can do with it beyond breakfast,” said Coombs. “We also see dieticians discussing maple as an alternative sweetener.” Kroger, Publix and some other retailers work with both private label and branded suppliers to stage food demos involving honey barbecue recipes or ice cream serving suggestions, said Blumenthal. And Runamok funds in-store sampling events involving its highly specialized products. Retailers also use its products in food demos and promote suggested uses via social media and bottle hangtags. “It’s hard to educate consumers with anything new like this,” said Alpeter. “But people instantly understand it.” Overall, though, product education is minimal, particularly in private label, which often lacks promotional funding. “More could be done on social media to generically promote product benefits,” Citadelle’s Vachon said. “We do it to the level that we can. But it’s costly if you want to generate a massive impact.” www.storebrands.com

March 2020

Store Brands

STORE BRANDS l PAPER PRODUCTS

THE PAPER CHASE ECO-FRIENDLY OPTIONS AND VALUE PACKS ARE DRIVING SALES IN PAPER PRODUCTS By Nora Caley

ears ago, experts believed consumers mostly wanted paper products that were durable. It mattered how much food a plate could take, or the size of the coffee spill a paper towel could hold. Times have changed, and consumers are looking for paper products that score high in sustainability, design and value. Retailers have responded by expanding their sets, including boosting their private label offerings in a wide range of paper products. Take paper towels. According to the Private Label Manufacturers Association and Nielsen, for the 53 weeks ending December 28, sales of all brands of paper towels totaled $5.4 billion in all outlets combined (food, drug, mass, Walmart, club, dollar and military stores) — an increase of 4.2% compared to the same period a year ago. Sales of private label paper towels, which accounted for one third of those sales, increased 7.7% to $1.8 billion. “The state of private label paper is as strong as ever, and getting stronger,” said Jeff Leaf, director of U.S. sales for Edgewood, N.Y.-based U.S. Alliance Paper. “Retailers 42

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across all channels continue to support their private label paper programs as a key destination category in their stores.” One way retailers are driving sales in private label paper is by offering tiers of products. Among the household and tissue products that U.S. Alliance manufactures, the tiers are value, mainstream, ultra and green. Retailers that allocate enough shelf space to merchandise the wide selection of features and price levels can attract consumers who are looking for more than just less expensive paper towels or napkins. “The growth of the category is being driven inherently by the consumer who is more educated about private brands now more than ever, thus making decisions at the shelf about value and quality much more apparent,” Leaf said. “Today private brand paper offers the same quality and choices as the national brands, making it much easier for the consumer to see the built-in value every day.” Retailers should keep up with other trends in the marketplace, and become fast followers, which means to react quickly and offer the same in a private brand. One specific trend,

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STORE BRANDS l PAPER PRODUCTS Leaf said, is that pack sizes are increasing in all segments. That demand for value packs also is occurring in paper plates, which is a key segment within the disposable dishware segment, said John Schaefer, vice president of sales for Aspen Products, based in Kansas City, Mo. “Tabletop has been growing significantly, driven by paper, specifically printed paper,” he said. “So paper is driving the category, printed paper plates and bowls are driving the segment and value packs are driving the volume within it.” Schaefer, citing Nielsen figures, said that in dollars sales, plates account for nearly 65% of total disposable dishware. Paper plates have a 71% dollar share of the disposable plate segment, and 85% of paper plate volume is from printed products. Also, reflecting a phenomenon of many private label categories, while sales of paper plates are up 3.5%, sales of private label paper plates increased nearly twice that rate, 6.8%.

GREEN PLATES

Sustainability has become a noteworthy sales driver, as consumers demand alternatives to plastic and polystyrene. “There has been more of a shift to paper of late,” Schaefer said. “Some retailers are removing foam plates completely from their sets.” He added that large retailers are often first to demand biodegradable and compostable plates and bowls, and then other retailers follow the trend. Fort Wayne, Ind.-based Kanak Naturals offers a line called Sustainables, whose offerings are tree free, made from sugarcane, and compostable. “The biggest growth we’re seeing is in that eco-responsible arena,” said David Niles, director of new product development. “It’s now reaching critical mass.” Niles added that it helps that the cost of manufacturing compostable plates has decreased, making it easier for retailers to include the items in their private label sets. The company also manufactures products for foodservice, and that industry is influencing how consumers view plates and other food containers. With the explosion of delivery and takeout, foodservice establishments increasingly are packaging these orders in eco-friendly containers, and retailers are following that example by selling, for example, multipacks of compostable coffee cups with lids, for people to use at home. Legislation also has driven some innovation. Vermont has banned plastic straws statewide, and various municipalities and restaurant chains have implemented plastic straw bans. As a result, manufacturers are building out paper offerings. “The paper straw trend came quickly,” Niles said. “The younger generation saw what was happening, and people reacted.” Kanak also makes Sustainables paper straws. 44

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The state of private label paper is as strong as ever, and getting stronger. — J E FF LE A F, U. S . A LLI A N C E PA PE R Some retailers that offer large selections of private label organic and natural items also offer eco-friendly paper items in private label. Kroger, for example, has its organic and natural Simple Truth brand, which partnered with TrueChoicePack to launch a six-SKU line of eco-friendly disposable plates, bowls and other items. “Private label is where the growth is,” said Rakesh Rathore, COO and chief scientific officer of Mason, Ohio-based TrueChoicePack. “Everybody now is moving toward private label brands.” Even aluminum has its detractors, and consumers are looking at parchment paper as an alternative. “Nothing sticks to parchment paper, and you can use it in the oven, microwave, and freezer,” said Bill Benson, director of sales for PaperChef. “As people use parchment paper, they become more aware of its versatility. It’s not just for baking cookies.” PaperChef, which is based in Ontario, Canada but soon will move to the Nashville, Tenn. area, offers several SKUs of parchment paper. The roll is the most widely recognized format, but the baking cups are gaining sales momentum as home bakers want their presentation to match their efforts. “Why would you buy the cheap baking cups, with the cost of all the ingredients, and the love and tender care you put into baking, if you open your cupcake and it falls apart,” Benson questioned. Sustainability is important not just in private label paper products but also in packaging of store brand items. This is particularly true among younger consumers who want packaging to be sustainable, too. “Millennials are very conscious of the environment and of their health,” said Rathore. “If they want to

buy organic foods, they want the food to be in packaging that does not have harmful chemicals. This generation does not want organic eggs in a plastic or foam carton.” Memphis, Tenn.-based Evergreen Packaging offers PlantCarton packaging, 70% of which is made from renewable material, specifically paper made from trees grown in forests where responsible forestry practices are used. Recently a major retailer in the Northeast decided to use PlantCarton packaging for its private label juice line. The new cartons are recyclable and use about 80% less plastic than the previous package, which was a comparably sized PET juice package. Officials at Evergreen, citing research from the 2019 EcoFocus Trends Survey, noted that a majority of U.S. shoppers said healthier foods and beverages should meet healthier and more sustainable packaging standards. That is especially true among millennials, and 71% agree that foods and beverages with healthier ingredient lists should use packaging materials that are healthier, too, and more than half of millennials (57%) say they try to buy products in packaging that is made with plant-based materials. “For store brand and category managers, it may be useful to know that a majority of shoppers feel positive toward compa-

nies whose packaging is recyclable, and/or made with recycled materials, made with renewable resources, biodegradable, compostable, or plant-based,” said Katie Simmons, marketing director for Evergreen Packaging. “Evergreen Packaging is seeing that leaning into plastic reduction, renewability and recyclability are very relevant for retailers who want to connect with consumers who are increasingly sensitive to environmental concerns,” she added. Retailers are merchandising PaperChef’s brand and private label parchment in the food storage as well as with baking items, especially during the fall and winter holiday baking seasons. PaperChef recently partnered with Costco Wholesale to offer Kirkland Culinary Parchment Paper by PaperChef. “People don’t walk into the store thinking, I need parchment paper, but if it’s there and in its natural place, connected with all the like items, chances are you’re going to get a pickup,” Benson said. Other experts note that with paper products, other visual cues also can boost sales. It helps to have on-trend, updated graphics on the products. “Our mindset is: ‘Keep that design fresh,’” said Aspen Products’ Schaefer. “If you’re tired of it, the consumer is tired of it.”

U.S. Alliance Paper Offers Flexibility, Reliability In the past few years, U.S. Alliance Paper has invested heavily in fully-computerized converting lines to accommodate all paper grades, from ultra-premium quality to traditional and recycled, and to offer the flexibility to customize sheet sizes, sheet counts, packaging and even pre-loaded display units with the push of a button. The same state-of-the art manufacturing lines also give U.S. Alliance Paper the flexibility to help its private label customers identify opportunities for private label alternatives to topselling branded SKUs in different quality tiers and product segments. Its computerized ‘flex manufacturing’ lines allow for a wide range of product customization to help its customers execute multi-tiered shelving and pricing strategies to appeal to both their brand-loyal and value-conscious consumer - from “supersized” rolls, custom sizes and pantry-loading bundles, to pre-packed displays and end caps. That flexibility extends to offering an alternative to retailers who don’t meet the volume requirements for their own private label program – “control brands” that are attractively packaged

A D V E RT O R IA L

and ready-to shelve. Ultra-Premium Azure paper towels and bath tissue give those retailers the opportunity to enhance their margins with value products in premium quality tiers. The Daisy line of kitchen towels, bath tissue, napkins and facial tissues was developed for the discount and dollar store segment. The Delicate Touch line offers consumer-tested packaging for grocery, club and mass. The specialty line of Earth First kitchen towels and bath tissues that are manufactured from 100% recycled paper with a minimum of 80% post-consumer content, (which would otherwise end up in landfills) and is whitened without the use of chlorine bleach. “What really sets us apart, however,” says Steve Saraf, Vice President of Sales, “is 100% reliability. Each product is tracked through our manufacturing and warehousing facilities from parent roll to converting line, final packaging, shipping container and customer loading dock. We deliver anywhere in the country – exactly what, when and where needed.”

www.storebrands.com

March 2020

Store Brands

DISPATCHES Vol. 2

H-E-B Touts Best of Texas San Antonio’s H-E-B made quite a few industry headlines recently, grabbing the top spots in data science company dunnhumby’s Retailer Preference Index and the American Customer Satisfaction

H-E-B

With a popular, regional TV spot showcasing its own brands during this year’s Super Bowl, H-E-B was also prepared in-store. The retailer had this endcap (at right) set up days before kickoff in a San Antonio HE-B touting its own brand of tortilla chips and cheese sauce. The products were also named one of the retailer’s “Primo Picks,” which is what H-E-B uses for its choice products for shoppers that week and to highlight local ties. For example, two aisle blades were found touting 2019 winners of the “Primo Picks Quest for Texas” contest (at right and below), where winning local companies find their products on shelves. The retailer just launched a call for 2020 entries. The blades found in a Missouri, Texas store highlighted a pancake and waffle mix using spent grain from a microbrewery, and a cilantro sauce from a local company. They’re exclusive to H-E-B. Store Brands leaned on its friends at the Path to Purchase Institute for this venture inside H-E-B. Members of the association have access to more than nearly 2,000 images covering the chain. 46

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March 2020

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www.storebrands.com

Index. The dunnhumby report even mentioned H-E-B’s store brands as one of the reasons why it jumped from fourth to ﬁrst in their third annual consumer survey. SB

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* Source: Consumers prefer steel cans for sustainable food packaging: report PKBR Staff Writer, Published 19 November 2013; research study conducted by MindClick Global for Steel Market Development Institute (SMDI).