THE PULSE OF PRIVATE LABEL
DECEMBER 2020 www.storebrands.com
Pandemic Retailing’s
Secret Weapon Private brands played a critical role for retailers when consumers began stocking up on sought-after products like hand sanitizer, disinfectants and more
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HOT CATEGORY: SPICES & SEASONINGS P.18
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Changing times. Same level of quality.
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Online meetings and working from home have changed the way we approach our days.
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Delivering a quality coffee program to your customers is still as important as ever. Trust Massimo Zanetti Beverage to continue to deliver the brand support and coffee expertise to maximize your success. While this year’s PLMA trade show goes on virtually, the reality exists in the excellence that makes a difference.
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VOLUME 43 NO.9
06
Editor’s Note
10
Industry News
14
Questions/ Answers
20
Viewpoints
30
Dispatches: Store Brands in the Wild
22 18 Hot Category:
22 Cover Story:
Spices and Seasonings
Pandemic Retailing’s Secret Weapon
An in-depth look at the spices and seasonings category, which is seeing growth as more consumers cook at home.
Store brand pandemic products see huge gains that haven’t begun to slow down just yet.
26 C-Store Report
How convenience retailers are bringing healthier offerings and innovative products to shoppers via their private label portfolios.
Store Brands (ISSN-0190-9851; USPS # 0488-370) is published 9x a year by EnsembleIQ, 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631. Subscriptions: One year, $110; two years, $200. One year, Canada $130; two years, $235 One year, foreign $150; two years, $285. One year single US,$14; one year, Canada, foreign, $16. 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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ADVERTORIAL
Retailers prepare for TUTTOFOOD The TUTTOFOOD Milano International Food Fair is May 17-20, 2021, a trade show that exbibits the best of Italian food and beverages and more.
How do you recommend retailers best prepare for the trade show to be most effective? In recent years, TUTTOFOOD has evolved from an event taking place on a specific date and set location into a year-round provider of services. We support visitors from the HoReCa, Retail and LargeScale Retail sectors with marketoriented data, information and updates. For example, we offer a
comprehensive program of Englishlanguage webinars that delve deep into the most promising trends. We also suggest retailers to use our matching platform as soon as possible, in order to ensure they maximize the return of their contacts by meeting the most appropriate providers. We’re working to offer a completely safe and satisfying experience in 2021.
What do they do after the event is over to maximize their attendance at the event? The Covid-19 emergency has sped up a number of changes in our
behaviors that were already being practiced. A large share of our business relations are moving online. This is a great opportunity for all our visitors to improve the post-show follow-up. We have created the Fiera Milano Platform, a new platform that maximizes our digital services and adds new hi-tech features, both onsite and online, to further enable our visitors’ businesses: from web and social media contents to renewed digital catalogs and an application for real-time negotiation. For our visitors in the Retail industry, this is a great chance to bring the results from their visit to the next level.
www.storebrands.com
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An EnsembleIQ Publication
WHAT HAPPENS IF THE PANDEMIC SLOWS? AS A POTENTIAL VACCINE TO COMBAT THE SPREAD OF COVID-19 NEARS, THE WEEKS AHEAD WILL BE CRUCIAL TO HOW THE INDUSTRY REACTS Is December, and maybe the first three or four weeks of the new year, the bridge to somewhere or nowhere? We will find out soon enough and it all depends on a few very important factors, perhaps the most vital being when a vaccine to stop COVID-19 will hit the market and whether it will work well enough to end this terrible pandemic. What has become frighteningly clear to all of us is that without a reliable vaccine there is little chance that we can return to any state of normalcy any time soon. Even if transmission rates start to slow in the near future — and that is a big if — many Seth Mendelson consumers are simply too concerned and worried to return to Publisher/ regular shopping patterns. Editor-in-Chief And, while many private label products have done reasonably well during the pandemic, most industry observers say that a return to the pre-pandemic “good old days” is better for all of retail, including private label and store brands products. But, even if the vaccines work, it is going to take time to get people healthy and regain their trust. That means that the next few weeks, perhaps through the end of January, are extremely crucial to maintaining a sound and proper business The next few weeks, strategy to get through the pandemic and to get us perhaps through the ready for what should be strong pent-up demand for products and services afterwards. end of January, are I have no doubt that private label is going to play a extremely crucial big role throughout this process. Right now, retailers to maintaining a are counting on their private label suppliers to ensure sound and proper that they have enough product on store shelves to meet demand. Later, they will count on these same business strategy vendors to help them offer their customers a broad to get through the range of products at varying price points to meet pandemic. their budgets. That means that it is maybe a great time to sharpen your pencils and start planning for the future. It may be also the right time to start considering participating in the digital PLMA week, PLMA Live!, which starts on Feb. 1, as a way to start renewing ties with the retailers and suppliers that we have counted on for all these years. The pandemic will come to an end at some point. The questions you have to ask yourself are whether you can survive until then — what you are going to do once it does end? 6
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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 Marie Briganti (914) 309-3378, mbriganti@meritdirect.com
SUBSCRIBER SERVICES/ SINGLE-COPY PURCHASES contact@storebrands.com TOLL-FREE: 1-877-687-7321 FAX: 1-888-520-3608
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.
www.storebrands.com
12/4/20 10:38 AM
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ADVERTORIAL
CHOICES FOR TODAY’S COOKS La Doria offers a variety of products that help retailers boost the premium appeal of their private label offerings: • Tomato-based products, including chopped and peeled tomatoes and canned legumes for meals made from scratch • Prepared pasta sauces and pestos for simpler, faster meals
Where Passion Meets PRIVATE LABEL Just as the perfect tomato is grown with the right combination of nourishment, location and attention, it takes expertise and care to create authentic farm-totable ingredients. La Doria, a leading Italian producer of tomato-based products, canned vegetables and pasta and pesto sauces, provides a range of premium, convenient and high quality products that help retailers elevate and distinguish their store brands.
PRIVATE LABEL AT A PREMIUM The right assortment of high-quality private label products allows retailers to maintain or gain market share and strengthen their store brand loyalty.
• Premium tiers of privatelabel products now represent over 19% of sales. (Nielsen, 2019)
RIPE OPPORTUNITIES More people are cooking at home, experimenting with both familiar and new dishes. • 55% of shoppers are eating at home more often. (Acosta, 2020) • Almost ⅓ plan to cook at home even after the pandemic and only 7% say they plan to cook less. (Bloomberg News, 2020) Knowing where their food comes is important to today’s consumers.
• 81% say transparency is important or extremely important to them right now and the most important areas for transparency include ingredients. (FMI and Label Insight, 2020)
At a time of uncertainty, value is a priority. • 41% of all consumers seek good value, convenience and products and services that simplify life. (IBM, 2020).
A LEGACY OF CARE Whether ready-to-cook or ready-to-serve, La Doria’s products for private label
brands are made in an authentic, time-tested way. • All raw materials are processed in La Doria’s Italian facilities, with a “Made in Italy” guarantee. • Since 1937, La Doria has used the same authentic Italian recipes for its pasta sauces and pestos.
“I am extremely proud to continue this family history, and this source of continuous inspiration is enabling us to innovate and invest in our future while remaining firmly anchored to our roots. –DIODATO FERRAIOLI, La Doria Export & Business Development Manager
• ⅔ of consumers agree that store brand products are as good if not better than the national brand. (PLMA) • 4 in 10 consumers buy store brands “always” or “frequently.” (PLMA) • 44% of U.S. consumers say they would pay the same or more for the right store branded product.
LA DORIA S.p.A. Via Nazionale, 320 - 84012 Angri (SA) – Campania - Italy +39.081.5166111 www.gruppoladoria.it commerciale.estero @gruppoladoria.it
(Nielsen, 2019)
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FMI Report Highlights Pandemic Influence on Private Brands COVID-19’s impact on retailers and the supply chain is front and center in FMI — The Food Industry Association’s “2020 Power of Private Brands” report. The report found that 83% of food retailers expect to boost private brand strategies for online purchasing, and 97% of retailers are rethinking private brand assortments and supplier strategies due to the coronavirus pandemic. Additionally, 77% of private brand retailers expect to focus more on lowprice, value-oriented store brand items, and 73% are focused on items that support home cooking and meal preparation. All of those behaviors from buying online to cooking at home are clear indicators of COVID’s impact on households. This is a slightly different feeling compared with last year’s “Power of Private Brands” report, which discussed the strong growth of private brands going into 2020. Last year’s report noted that from 2017 to 2019 private brands were leading manufacturer brands in sales growth across multiple outlets including young consumers, with 54% of Millennials saying store brands were “very or extremely influential on store choice.” Though the focus on consumer needs throughout the pandemic has slowed some momentum, there still is energy behind private brands. This year’s report, citing IRI figures, said that private brand sales outperformed national brand sales early on in the pandemic (up more than 15%) but after May 31, national brands outperformed store brands by a little over 2%. IRI projects $15 billion to $20 billion in private brand sales growth overall in 2020, a 0.6% gain in share. Additionally, the latest report found that 33% of American consumers surveyed said they will purchase “more private brands than before the pandemic” and 13% said they will purchase “much more.” Executives at food retailers feel the same, with 93% of them saying they believe store brands to be “extremely or very important.” “Both economic and supply chain challenges have influenced the power of private brands during the pandemic,” Doug Baker, vice president of industry relations, FMI – The Food Industry Association, told Store Brands. 10
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of American consumers said they will purchase “more private brands than before the pandemic.” “Regarding the economy, we often witness upswings in private brand purchases during recessions, and the current state of the economy would suggest consumers are seeking out ways to expand their food dollar. In addition, COVID-19 has affected grocery prices more than nearly any other category of consumer spending, so food prices also play a significant factor for budgetconscious shoppers, supporting store brand selection. As a bright spot for brand owners during the pandemic, outof-stocks did encourage consumers to try brands that they might not have in the past, including private brands.” Looking forward, the report said more than 83% of food retailer executives said fresh foods, such as bakery and deli, represent a major opportunity for private brands. The report also said, to help grow private brands, nearly 70% of the retailers surveyed said they may “increase the number of suppliers” in order to diversify supply.
www.storebrands.com
12/4/20 10:17 AM
Italian Trade Commission Celebrates Food Heritage at Eataly Eataly and the Italian Trade Commission, or ITA, are joining forces to highlight Italian products at the specialty retailer. The worldwide joint project between ITA and Eataly — reached under the umbrella of the Italian Ministry for Foreign Affairs and International Cooperation — will go into effect in January 2021, with the goal of bringing Italian food and wine to the next level. The campaign will focus on the unique characteristics of Italian products — above all, their authenticity and singular traits that make them stand out. Eataly will highlight products already available in its stores, as well as new entries. Consumers will learn about Italian products through seminars and tastings held at Eataly locations, enjoy the country’s cuisines in Eataly’s restaurants, and ultimately purchase and bring home the foods
and wines that they’ve discovered through the promotion. An ITA representative told Store Brands that the assortment and promotions are still being worked out between Eataly headquarters and the association in Italy so it’s not known yet how many items will be exclusive to Eataly, under the Eataly packaged store brand or in its food marketplace. All activities will be organized with the public health crisis in mind, and in accordance with the strict official guidelines. The promotion is slated to run throughout 2021. Additional information on the campaign, products and activities will be forthcoming on Eataly's website, as well as in Eataly Magazine, which comes out during the holidays. Earlier this year, the retailer entered into a partnership with the Florence, Italy-based Chianti Classico Consortium to promote Italian food and wine in the autumn at Eataly’s U.S. stores. Alba, Italy-based Eataly operates more than 35 locations globally, five of them in the United States.
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TreeHouse Acquires Popular Pasta Brands TreeHouse Foods has bolstered its pasta business with the acquisition of the Prince, Creamette and American Beauty branded lines. The Oak Brook, Ill.-based leader in private label manufacturing and distribution of food and beverages has acquired the majority of Riviana Foods’ U.S. branded pasta portfolio for $242.5 million in cash. The most recognizable brands bought from the Ebro subsidiary are the Prince brand in the Northeast, Creamette brand in the Midwest and American Beauty brand in the West. The brands generated revenue reaching $200 million for the 12 months ended June 30 and TreeHouse will run the branded lines but also use them to build out its private brand pasta offerings. “Our existing private label and regional brand pasta business will be a natural complement to the acquired brands and will enable us to further optimize our production network, improve capacity utilization and deliver greater profitability and free cash flow,” said Steve Oakland, chief executive officer, TreeHouse. “The acquisition of Ebro's well-known regional pasta brands further strengthens our portfolio and expands our scale to better serve our national and regional customers,” Oakland said. Other regional branded pastas included in the deal are Skinner, No Yolks, San Giorgio, Light ‘n Fluffy, Mrs. Weiss’, Wacky Mac, P&R Procino-Rossi and New Mill. The deal includes a St. Louisbased manufacturing facility that employs 90 people. Excluded from the purchase is the Ronzoni national brand and its plants in Winchester, Va. and Fresno, Calif. With nearly 40 production facilities across North America already, TreeHouse Foods supplies retailer private brands in several categories including snacks, beverages, meal preparation, and refrigerated, frozen and fresh foods. The acquisition of these brands is subject to review and is expected to close in the fourth quarter of this year. “The work we have done over the past several years to strengthen our operating platform and realign our businesses into two distinct segments has positioned us well to execute this transaction and integrate the pasta business,” Oakland said. “We are confident this accretive acquisition, along with the significant progress we have made in generating free cash flow this year, will enhance our ability to drive shareholder value.” 12
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The Vitamin Shoppe Adds 2 CBD Private Brands The Vitamin Shoppe has unveiled two lines of private label CBD products under its Vthrive The Vitamin Shoppe and plnt brands. The Vitamin Shoppe, based in Secaucus, N.J., said the products were developed to meet growing demand for accessible, quality CBD from trusted sources. The products include tinctures and capsule formulas, available exclusively at The Vitamin Shoppe and Super Supplement stores, as well as the retailer’s website. “Bringing these new CBD products to market is a decisive milestone in the expansion of our private brands business and The Vitamin Shoppe’s commitment to industry-leading innovation,” said Sharon Leite, CEO of The Vitamin Shoppe. “The exceptional skill and knowledge of our product development and scientific and regulatory teams delivered a range of CBD formulas that are second to none in this dynamic product category. Our ingredient purity, unique CBD extraction methods, and rigorous testing guarantees the highest level of quality from farm to lab to shelf. This launch further establishes The Vitamin Shoppe as the trusted national destination for CBD innovation and as a leader in health-and-wellness solutions.” The private label products will be sold alongside more than 20 other brands in The Vitamin Shoppe’s CBD HQ section, which offers an assortment of CBD formulations — from tinctures and capsules to gummies and beverages, as well as beauty products and topical CBD. CBD HQ has rolled out to 582 Vitamin Shoppe and Super Supplement stores, with another 143 offering a CBD selection of topical and beauty products. The plnt and Vthrive The Vitamin Shoppe CBD lines offer three tiers of potency and blends. The products range in price from $24.99 to $69.99 depending on potency and added therapeutic ingredients.
www.storebrands.com
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Target Teams Up With Ulta
JCPenney Launches Women’s Leisure Line
Beginning next year, Target will be piloting Ulta Beauty concept shops in select locations, leaning on Ulta to curate a lineup of prestige brands not previously sold at Target. In 2021, more than 100 Target locations will debut the concept shop and then the experiential shops will be scaled to hundreds more over time. The Target stores that get the concept shops will be locations that complement Ulta Beauty’s current store footprint. An Ulta Beauty spokesperson told Store Brands that the retailer will curate an assortment of more than 40 established, emerging and prestige brands across all beauty categories. She couldn’t say yet if the products would include Ulta’s private label products. “These products are not currently available at Target and are typically only found at beauty retailers,” the spokesperson said. “In true Ulta Beauty fashion, we plan to inspire engagement through discovery and newness, so our goal is to offer a rotational assortment. While we are not able to share specific brands at this time, we look forward to sharing more as we approach launch.” The representative also said there currently are no plans for Target and Ulta to combine forces and co-create exclusive brands, “but it’s something we could consider in the future.” Target’s exclusive lines in the space now include Sonia Kashuk, Defy and Inspire nail polishes, and Kristin Ess hair products. “Ulta Beauty at Target reflects further evolution in our omnichannel strategy, rooted in unlocking the potential of our physical and digital footprints, creating more seamless shopping opportunities for our loyal guests and continuing to lead the beauty industry. More than ever before, now is the time for innovation in retail,” said Mary Dillon, CEO, Ulta Beauty. The partnership between the two retailers does expect to integrate their loyalty opportunities, saying between the two of them they have more than 100 million active loyalty program members across the Target Circle and Ultamate Rewards programs. “In partnership with Ulta Beauty, a company that shares our deep guest focus, we are able to expand our growing beauty business with new, exciting brands, an immersive experience, and loyalty benefits to transform how our guests shop for all their beauty needs,” said Brian Cornell, chairman and CEO of Target. The Target site and app will carry the feel of an Ulta Beauty experience when shopping the curated section, and those items will be available in the second half of 2021.Inside the concept shop itself, some of the experiential staples of the Ulta experience will be on display such as its GlamLab virtual try-on tool.
JCPenney just launched its own take on comfortable leisure-like apparel for everyday wear. The new own brand is called Stylus and is being billed as a “styleisure” line of comfortable clothes for women. The company said it’s not an athleisure line, though, noting that it goes beyond activewear to focus more on stylish clothing that can be worn all day in-home or at an office. However, the focus is on leisure, a trend no doubt spurred by more Americans working from home during the pandemic. Stylus includes cardigans, easy pants, jumpsuits and tees, that can be mixed and matched. The clothes launched in time for holiday shopping and were made available in 394 stores and online. “We began developing the concept of our styleisure line, which is exclusive to JCPenney, nearly a year ago to fill this unmet need as customers dress for their day,” said Michelle Wlazlo, executive vice president and chief merchandising officer at JCPenney. “The Stylus collection is a curated array of neutrals that make it easy to layer and swap pieces for a virtually endless combination of looks, representing true modern comfort and style.” The Stylus brand prices items from $26 to $89 across all sizes. Plano, Texas-based JCPenney is continuing to implement a transformation strategy, and Stylus joins recent own brand launches, which include a refresh of the a.n.a brand and Linden Street bedding.
www.storebrands.com
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QUESTIONS/ANSWERS
A WALK THROUGH PLMA WEEK PLMA’S ANTHONY ALOIA DISCUSSES HOW SUPPLIERS, RETAILERS CAN LEVERAGE THE EVENT
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he Private Label Manufacturers Association is gearing up for its virtual event PLMA Live Presents: Private Label Week, a weeklong event that will bring retailer, suppliers and industry leaders together over a proprietary online platform. The week, Feb. 1 to 5, 2021, will include virtual meetings, educational sessions and more. Anthony Aloia, corporate vice president at New Yorkbased PLMA, is excited about the association’s PLMA Live Presents: Private Label Week event and has been a cog in the development of the event. He talked with Store Brands about the upcoming event.
STORE BRANDS: HOW ARE THINGS IN THE MASS RETAIL WORLD? HOW IS THE INDUSTRY RESPONDING? ANTHONY ALOIA: Food and nonfood consumables were both upended in ways that were impossible to imagine at the start of 2020. For families everywhere, working remote and remote learning for kids, along with greater concerns for health and wellness meant restructuring a new normal around meals at home — including snack, comfort foods and beverages, and new interest in cooking and baking of all kinds. They’re taking healthcare and personal care more seriously, too, and maintaining a cleaner home environment. One big winner is pets. They never saw so much love and attention as the past months. Certain categories became more essential and some less so, and that led to supply challenges and scarcity on shelves. After an initial crisis mental14
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ity, consumers adapted, and the industry has had to adjust as well. For most of retailing and consumables everything we’re seeing now is a result of the demand patterns of consumers changing, and what shoppers are finding in stores. Changes came knocking and private label answered. SB: Take us through the thought process in developing PLMA Live Presents: Private Label Week. AA: Like many of our members’ companies and their customers facing unprecedented challenges in 2020, it was necessary for PLMA to make a number of incredibly hard choices and decisions. It’s not the first time PLMA has had to deal with adversity, however. Following our trade show in 2001, we presented PLMA Encore! which made PLMA exhibitors available online for the entire retail community and anyone else not able to make it to Chicago in the wake of 9/11.
When Hurricane Sandy struck barely two weeks before Chicago, putting half of Manhattan — where PLMA has headquarters — underwater in blackout conditions, the show still went on and the buyers came. The fact is that PLMA has been accustomed to having to pivot, and attendance numbers in both cases only served to demonstrate once again how important PLMA is to retailers. SB: Tell us about the platform and the many bells and whistles it has. AA: First of all, the entire trade show floor of exhibitors and products exists in the cloud and is therefore accessible from anywhere. All that’s required for anyone to attend is a reliable broadband internet connection and a computer with a webcam and speakers, which of course by now is every company’s standard equipment. No special software is required as the entire experience is delivered via a web-based browser. Exhibitors will be able to feature products within their online trade show booth, upload sales materials, and even present video promotions for their products and capabilities if they wish. Exhibitors will have the opportunity to make their products searchable and easy to identify by retail buyers. Products and exhibitors will not only be searchable by department and category, but by country as well as specific product attributes such as environmentally friendly, sustainable packaging or ingredients, dietary and health concerns, for example. Buyers will not just have the ability to search quickly and easily for specific products they want to find, they can then decide to initiate contact, make meeting requests, and connect instantly with exhibiting companies through video conferencing. In addition to face-to-face interactions, retailers can engage with suppliers using secure communication tools to exchange business cards, to make
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specific requests via a private chat function, to share images, file views or online content, and to send and receive documents in a variety of different forms as may be needed. SB: What should retailers expect from PL Week? Why does it matter to retailers? AA: As 2021 begins, everyone is looking for better solutions and formats to find new products, new suppliers, or conduct business meetings remotely. Zoom and other stop-gap methods only take the sales and innovation discussion so far. On PLMA’s new Digital Experience platform, retailers will have control throughout all five days, according to their own schedule, for setting one-onone video visits with exhibitors and potential suppliers, initiating private and secure communications, sharing and receiving information across the platform about products, packaging, and other requirements. In addition, buyers can choose to view video category profiles, watch special industry reports and speaker presentations on the latest trends and research, not to mention see what’s new and exciting in store brands on retailers’ shelves from PLMA’s Idea
Supermarket and the winners of PLMA’s Salute to Excellence Awards. The structure of the category shows allows for the breath and depth of attendance. Buyer personnel who never experienced a PLMA show in person may now attend the PLMA category show day focused for the specific products they are most interested in. SB: How should suppliers prepare for this event? AA: Most importantly, manufacturers need to sign-up early and begin setting up their digital exhibitor booth. This will allow them to familiarize themselves with everything the platform offers, with sufficient time to plan their best presentation, preview and make improvements. There will be several weeks for exhibitors to build their booth, create and upload supplemental sales materials like product catalogues, company brochures or promotional videos. Just as they invest in their booth for in-person events, suppliers should put their best foot forward, prepare sales and marketing materials for the digital booth, and choosing the latest, best and most innovative products to exhibit using high-quality product images.
At all times during the event, exhibitors can have any two of their personnel maintaining the booth and actively engaging with buyers. A total of six exhibitor personnel can register, enabling them to plan staffing for the booth accordingly. SB: What is PLMA doing to facilitate interaction before and after the event? AA: Exhibitors will receive a list of registered retail and wholesale buyers prior to the event to assist them in reaching out to invite visitors to their booth and schedule appointments ahead of time if they choose. Meetings within the digital exhibit booths will be able to take place throughout the entire time PLMA Live! presents Private Label Week is in progress, as well as afterwards. The platform will remain open for 90 days following the live component of the event. Similarly, PLMA Live! video programming will continue to be accessible at www.PLWEEK.com, offering an enormous range of insights and ideas, as well as reports about the show itself for everyone who has signed up to participate. SB
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QUESTIONS/ANSWERS
AHOLD DELHAIZE LAYS OUT HEALTHY FOOD STRATEGY
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n the coming year, Ahold Delhaize USA will be rolling out 1,500 to 2,000 new store brand items, and the company is specifically looking to focus on healthy foods. In fact, the retailer set a goal to have 51% of its own brand sales come from healthy products by 2022, and 54% of its 15,000 private brand products will specifically achieve a one, two- or threestar rating through the Guiding Stars nutrition guidance program by 2025, working with the Partnership for a Healthier America to achieve these goals. Store Brands spoke with Brittni Furrow, vice president of health and sustainability at Ahold Delhaize USA, about the new goals.
STORE BRANDS: CAN YOU EXPLAIN THE GUIDING STARS PROGRAM AND ITS IMPORTANCE FOR THE COMPANY? BRITTNI FURROW: Guiding Stars helps consumers choose foods with the most nutritional value through a patented formula that evaluates nutrition information and offers a rating system that is easy to understand. Many products tout single claims that may not fully inform shoppers about the overall nutritional quality of a product. Shoppers might see “whole grains” on an item and think they are making a healthier choice, but that 16
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claim doesn’t always tell the whole story. What consumers may not know is that the product they have chosen also has excessive amounts of added sugars. By providing a neutral evaluation of all products — on private brands and national brands — shoppers can make an informed, trusted choice. SB: When it comes to your store brands, what steps is Ahold Delhaize USA making to be more transparent around the health of the products it puts its name on? BF: Giving customers access to health-
ier, more transparent private brands options is important to all Ahold Delhaize USA companies. Our companies have taken several steps recently in this space, including a landmark commitment to remove all artificial ingredients from all private brand products by 2025 and new animal welfare and GMO policies, which both extend to private brand products. SB: What about sustainability, what’s the latest in terms of Ahold Delhaize USA’s commitment to making its private brand products more sustainable? BF: In addition to the items mentioned above, last year, Retail Business Services announced a commitment to sustainable chemistry for private brand products. Under this new commitment, Retail Business Services will restrict certain chemicals from products and packaging, work with suppliers to ensure products meet high standards for ingredients, beyond what’s required by law today and collaborate with suppliers to address the root causes of contaminants. SB: What are ways your store brand suppliers can get involved in these issues? BF: Store brand suppliers can reformulate or offer new products that meet criteria to earn a star through Guiding Stars. Products with higher levels of vitamins, minerals, fiber, whole grains and Omega-3 fatty acids and lower levels of saturated fat, trans fat, added sugars, sodium and artificial colors will score higher. Providing all nutrients in the product on the nutrition facts panel can also help the product earn a higher score. SB: Going forward, what else can consumers expect to see? BF: Across Ahold Delhaize USA companies, we are doing a lot to make improvements. We have committed to make our private brand products cleaner and more natural by 2025. What this means is that we will be removing all
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synthetic colors, artificial flavors, artificial preservatives, artificial sweeteners and high-fructose corn syrup from all of our private label products. We plan to produce more allergen-free products and will further strengthen its guidelines for Nature’s Promise, our free-from and organic brand. We have also recently announced our commitment to a new sustainable chemistry commitment. Under the new commitment, Ahold Delhaize USA companies will restrict certain chemicals from products and packaging, work with suppliers to ensure products meet high standards for ingredients, beyond what’s required by law today, and collaborate with suppliers to address the root causes of contaminants. This year we also
“What this means is that we will be removing all synthetic colors, artificial flavors, artificial preservatives, artificial sweeteners and high-fructose corn syrup from all of our private label products. We plan to produce more allergen-free products and will further strengthen its guidelines for Nature's Promise, our free-from and organic brand.”
announced new sustainability policies providing guidance on two key issues: genetically modified food and farm animal welfare.
We continually refine the approach and seek to improve sustainability and transparency within the food supply chain. SB
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As of November, more than
HOTCATEGORY
Seasonings Sales Heat Up It appears that COVID-19 is adding some excitement to the spices and seasonings category as consumers stay home more and seek out just about anything to make a meal more interesting and tasty. The result is a nearly 40% increase in category sales with private label items getting a big share of that growth as price points and product differentiation play larger roles. “Consumers have been home cooking and experimenting with flavors more than ever, and this has been supported by social media, cooking programs on TV and the innovative online ordering of ‘ready to make’ dinner solutions,” said Gerhard Martin, executive director of Cape Foods, a South African private label supplier. “We believe that the home cooking experience will be part of the new normal and will ensure that the sales of spice and seasonings will remain at these higher levels.” Martin added that the growth in plant-based food offerings is adding to the demand for innovative seasonings and salts, and this will drive further growth. Plus, he said, consumers are becoming more health conscious, and the high mineral content of pure sea salt and Himalayan salt is becoming more and more important to them. So how does the industry keep the momentum going in the right direction? Martin said that now, more than ever, consumers are looking for value — and retailers have been doing a stunning job in securing quality alternatives at great prices. “Private brands now cover the basics such as salts and pepper, and an increasing innovative range of seasonings,” he said. “There is no compromise on quality, but pricing is better because the consumer is not paying a premium for the traditional brand leader’s product.” 18
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consumers bought a private label seasoning or spice product, just behind 72 million for Lawry’s and 160.5 million consumers for McCormick & Co. — S TAT I S TA
The global spices and seasonings market is expected to grow from about $16 billion in 2018 to $23 billion in 2026. — N AT I O N A L S E A S O N I N G M A N U FA C T U R E R S A S S O C I AT I O N
Total herbs, spices, seasonings and extracts category sales increased by
during the 36-week pandemic period ended Nov. 7 compared to the same time last year. — NIELSEN
Consumption of spices, seasonings, marinades and rubs was up more than
for the month of July.
— NPD GROUP
Global seasoning and spices registered as a $13.8 billion category in 2019. — GR AND VIEW RESEARCH
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VIEWPOINT
THE BRANDSWITCHING OPPORTUNITY Jean Ryan, senior director, brand strategy and design, Daymon
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he COVID-19 pandemic has underscored something that more and more shoppers learn every day: the benefit of private brands. At the height of the pandemic, units flew off shelves as consumers stocked up for the unknown future ahead. This contributed to out-of-stocks across all categories, forcing consumers to substitute their typical preferences with available options. In addition, with the pandemic affecting nearly one-third of U.S. families financially, income constraints presented further challenges for shoppers. These conditions presented the perfect opportunity for private brand trial — traditionally one of the largest roadblocks towards growth and loyalty for private brands. With shoppers turning to retailers to provide cost-effective and alternative solutions, private brand growth outpaced national brands with 19%, compared with 17% national brand growth during this time. In fact, 70% of shoppers reported purchasing a different brand than they had preCOVID, with nearly 30% reporting positive experiences from brand switching and plan to permanently commit. Our research shows that once private brand trial is initiated, consumers will continue to shop at specific retailers for their private brand offerings.
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However, consumer affinity towards private brands is not a new trend. Even before the pandemic, only 6% of shoppers were exclusively purchasing national brands. Our research shows private brands were already well positioned for growth, as 86% of shoppers viewed private brand quality as equal to or better than the national brand. The pandemic accelerated this growth with increased trial, providing room for retailers to gain loyal shoppers. Retailers have the opportunity to capitalize on this increase in trial by encouraging consumers to continue shopping within the portfolio. In addition to educating consumers on the value proposition and assortments within private brand, there are key consumer needs driven by the pandemic that present crucial areas for retailers to showcase private brands as solutions. Three of these key areas are continuing to innovate against consumer needs, providing meal inspiration and education, and establishing a borderless online to in-store experience. First, retailers should continue to innovate within their private brands to encourage additional trial within the program. Even with the increased focus on value, our research shows that consumers are still looking for differentiated solutions that match their lifestyle, such as within health and wellness. For example, 80% of con-
sumers are currently focusing on what they consume as part of taking care of themselves, with 77% looking to lead a healthier life than pre-pandemic. Retailers should prioritize continued new product development against these and other consumer needs, and focus on educating shoppers via merchandising, marketing, and promotions about these new items. This will allow shoppers to branch out to new products in your portfolio while accentuating the solutions that private brands offer beyond savings. Another way to proactively reach consumers is by providing meal inspiration that leads with private brand offerings. Initial dining out restrictions from the pandemic has altered eating behavior, with consumers eating at home more frequently and nearly 6 in 10 expecting to continue this trend into the future, especially as restaurant restrictions persist. The increase of home cooking has consumers seeking meal inspiration to keep mealtimes exciting, as well as looking for education on how to expand their repertoire. Retailers should also enhance meal solutions available to purchase by addressing various skill sets; combinations of ready-to-eat, ready-to-heat, and meal ingredients can help consumers integrate new items and ideas even if they are first-time cooks. As the pandemic continues, retailers must consider how to expand this inspiration and engagement to stay continuously relevant, such as through online cooking classes, expert partnerships, and incorporation of seasonal needs. Finally, concerns over health safety and maintaining social distancing measures has consumers shopping in less stores in favor of e-commerce purchasing. In fact, our consumer research among private brand buyers shows that 7 in 10 will continue the increase of online purchasing. Given this shift to online, retailers should ensure their private brands are represented and elevated via this platform the same way they would be positioned as solutions in-store. SB
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VIEWPOINT
3 KEYS TO KEEPING PRIVATE LABEL SUPPLIERS COMPETITIVE Kevin Cyr, director of retail sales, Catania Oils
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n August, Daymon released its Private Brand Intelligence Report, which found that 9 out of 10 consumers trust private brands as much as they do national brands. Those statistics are not surprising based on the trends we have been monitoring in our own business — Catania Oils — a leading processor and packager of plant-based oils in the United States and provides private label olive and vegetable oils to retailers across the country. Consumer behavior has been significantly altered by the pandemic, and it’s hard to predict whether that behavior is temporary or permanent. With online shopping increasing, and customers focused on more price-conscious options, private label brands are emerging the winner in this race for customer brand loyalty. However, building and maintaining that loyalty creates tremendous pressure on private labelers to deliver an equal or higher quality product than their national counterparts. There are other hurdles facing private brands too, like competing for shelf space with national brands — whose penetration rates are higher than their private brand competitors — and bearing full responsibility for all marketing and advertising costs to bolster brand awareness as a trade-off for receiving dead net pricing from suppliers.
How can suppliers help private label brands succeed in this new environment? Here are three important factors: Diversification: Because our business model incorporates three distinct divisions — bulk, retail and food service, we have the ability to fulfill orders that other suppliers, for example, those who focused solely on retail businesses, can’t. This diversification can be a key differentiator for store brand suppliers. During the pandemic, for example, the slowdown we experienced in our food service business was offset by the increased demand among our retailers. As customers began quarantining and cooking every meal at home, they began hoarding products — resulting in empty supermarket shelves. National brands that set their budgets for the year at the end of 2019, could not possibly have anticipated what was to come in 2020, and as a result, could not keep up with the growing demand for specific products and struggled to
fill the growing number of orders. Flexibility: One of the benefits of diversification is the ability to be flexible with customers whose orders may have changed dramatically from pandemic shopping. While deliveries were slow to move on the food service side of our business, and payment restructuring discussions were happening, it afforded us the opportunity to extend greater flexibility to the retail side of the business, which required additional shipments or to break up the order by the truckload with several different oil products. Like other suppliers, we had more product on hand but could be flexible and handle custom orders based on the new level of consumption. One-stop Shop: Make it easy for retailers. One way Catania can offer dead net pricing to customers is through an investment in a printing company that works directly with us to help our customers design labels for their products or modify their packaging as needed. We have also invested in vertical integration of packaging and blow molding to create a quality bottle that’s more attractive than those offered by standard oil packaging. Packaging innovation can be a major factor in staying ahead of national brands. For retailers that are concerned about lowering the carbon footprint, we also developed a “Bag in Box” technology which is made of 100% recyclable cardboard and contains an airtight bag to keep the oil fresher longer. But more than innovation, the key is being able to fulfill the entire process in one place. It ensures a smoother process for the retailer versus some national competitors. Private brands have come a long way from the stigma once associated with ’80s generic brands (remember the stark white box with black lettering). We concur with Daymon that private brands are growing — and suppliers that offer flexibility, diversification and a one-stop-shop will see their business, like ours, double by 40% to 50% compared with 20% to 30% in prior years. SB
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COVER STORY
Pandemic Retailing’s
Secret Weapon Private brands played a critical role for retailers when consumers began stocking up on sought-after products like hand sanitizer, disinfectants and more BY DAN O CH WAT
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As 2020 — a year that will go down in history as one of the toughest for the retail industry due to the global significance of COVID-19 — nears its end, some product and shopping trends impacting the private label and store brands segments are expected to bleed into 2021 and beyond. One of those trends is a continued increase in supply of such pandemic-related products as hand sanitizer, disinfectants, OTC medicines and personal protective equipment like face masks. However, as a result of shoppers buying in bulk and panic shopping, some products that may not seem like a “pandemic product,” per se, saw unprecedented levels of growth worth noting, too. Products like meats, alternative meats and even oat milk (both branded and store brand offerings) sold at unprecedented levels and continue to do so heading into the new year. According to Nielsen figures, shared with Store Brands, sales of pandemic products from January into late October skyrocketed during the first round of COVID-19. It’s a reflection of just how turbulent 2020 has been. And no category saw a bigger impact than hand sanitizers. For the 34 weeks ended Oct. 24, hand sanitizer sales were up nearly 700% compared with a year ago. In the May and June months, early pandemic, hand sanitizer sales were up 1,280% and 1,339%, respectively, dipping down to a 986% increase in July. Total sales for the 34 weeks were well over $1 billion. With numbers like those, product supply was clearly an issue in stores and some retailers even began carrying new own brand hand sanitizer to keep up with demand. Delivery service Instacart developed its own brand of hand sanitizer to help keep its staff safe. Additionally, some manufacturers not normally producing sanitizer began developing it for private label, including regional food and alcohol supplier LiDestri Food and Drink, based in Fairport, N.Y. Producers in the category such as Clenova, headquartered
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in Troy, Mich., upped production lines of hand soaps and hand sanitizers to 160 million uses a week. And then there were companies like Perrigo that produced hand sanitizer products to help keep hospital staff and front-line workers safe. “Given our close ties in the communities where we live and work, we became aware of a hand sanitizer shortage at local area hospitals,” said Murray Kessler, president and CEO of Perrigo. “Our team in New York sprang into action and developed a formula, quickly scaled production, and donated 1 million bottles of hand sanitizer within an extraordinarily compressed timeframe to local hospitals and first responders.”
PPE Products and More
Hand sanitizer was not alone. Not traditionally a store brand product, the popular category of masks sprung up during the
pandemic and some retailers responded. Walgreens, for example, sold its own brand of masks that could be customized via the retailer’s photo department. The service joins what the photo department has been doing for quite some time with apparel, books, gifts, ornaments, and more, said Heather Hughes, group vice president and general merchandise manager of seasonal, general merchandise and photo, who heads up Walgreens Photo. “As we know that masks are becoming more prevalent in society, we think you should have a little fun when wearing your face mask,” Hughes said. The masks are two-ply with an inner lining that is 100% cotton and the outer shell is 100% polyester. The masks feature a pocket to add an optional carbon filter and two silicone fasteners to adjust black elastic ear straps for a custom fit.
Nielsen Total U.S. Top Growing Categories
A look at how some of the top categories sold during early months of the pandemic Dollar sales for the 34 weeks ended Oct. 24
Percentage change in dollar sales vs. previous year for the 34 weeks ended Oct. 24
Hand sanitizers
$1,090,981,173
Hand sanitizers
699.9%
Thermometers
$213,364,579
Thermometers
240%
Oat milk
$180,935,251
Oat milk
204.4%
Aerosol disinfectants
$431,859,180
Aerosol disinfectants
154.9%
Multipurpose cleaners
$2,360,570,288
Multipurpose cleaners
63.5%
Fresh meat alternatives
$167,575,457
Fresh meat alternatives
114%
Fresh beef
$23,149,311,226
Fresh beef
29.6%
Fresh chicken
$10,584,354,717
Fresh chicken
20.5%
Popcorn
$1,734,248,223
Popcorn
19.2%
Pretzel
$754,760,548
Pretzel
18%
Soft drinks
$14,941,316,151
Soft Drinks
16.5%
Dollar sales for calendar year 2019 Total private label
$154,725,184,909
Total traditional branded
$686,897,806,660
Percentage change in dollar sales vs. previous year for 34 weeks ended Oct. 24 Total private label
14.3%
Total traditional branded
15%
Dollar sales for the 34 weeks ended Oct. 24 Total private label
$114,119,275,735
Total traditional branded
$513,525,829,093
Percentage change in dollar sales vs. previous year for 2019 Total private label
4.5%
Total traditional branded
1.4%
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COVER STORY Amazon offered private label masks and many from third-party suppliers to help meet the demand during the pandemic, but the retailer primarily stepped up to try and serve hospitals and front-line workers with face shields and masks. Bill Kopitke, head of healthcare for Amazon Business, said PPE producers in general had to overcome a multitude of challenges to keep their own operations safe and meet the demand from businesses, healthcare systems and government operations. “These were truly desperate times for buyers for their front-line responders,” Kopitke said. “For many PPE manufacturers, identifying and reaching these organizations who needed supplies was incredibly frustrating, as government and healthcare procurement can be a complicated process rife with time-consuming barriers. Without the right resources and tools, getting supplies into the hands of essential workers can take weeks and sometimes months.” Another category that hit serious demand hurdles were disinfectants. Nielsen showed that at their highest points in March, aerosol disinfectants and multi-purpose cleaners were up in sales year over year 294% and 141%, respectively. Sergei Baranoff, operations executive at Los Angeles-based Purple Antimicrobial, said he saw shipments of his cleaning products grow 100x since the early part of March. “In general, no one could really predict what was going to occur during the early months of the pandemic. As a sense of the ‘new normal’ has emerged, manufacturers have been able to have a better sense of outbound forecasts,” Baranoff said. “However, what we have learned from this is the need to manage and in essence own supply chains and rely less upon outside variables.” Perrigo, a leader in branded and store brand self-care products, prioritized production of its essential products during COVID-19, including acetaminophen, famotidine, and infant formula electrolytes to meet massive demand in late February and early March. “At one point, demand for our acetaminophen spiked to five times normal levels,” Kessler noted.
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For several months during the pandemic, Perrigo prioritized products that were deemed most essential for consumers in lieu of more profitable items, Kessler said. Count sizes of products were deprioritized on some products so others like infant formula could be maxed out in production, for example. Kessler said the company has once again began producing many SKUs that were once deprioritized, but the entire exercise helped show just how quickly Perrigo’s plants can successfully adjust to a dynamic environment. Working with retailers on store brand items in need, Kessler said it was a matter of communicating weekly to maintain stock levels and manage surges. “We have embraced the philosophy of ‘overcommunication,’ during these unprecedented times.” The company still is looking to develop new products in the year ahead, too, aiming to produce a new store brand infant formula, a naturals line of products with a branded partner and other innovations within OTC. “Also, the pipeline of Rx-to-OTC switches seems to be reemerging as an opportunity to increase access to needed remedies and we are eagerly mining this area for attractive new products,” Kessler said.
Pandemic-impacted Products
While not COVID-fighting products, many other categories also saw large increases in sales during the pandemic, according to Nielsen. Fresh meat alternatives, for example, saw sales increase 114% for the 34-week period and oat milk has spiked more than 204% for the same period. Todd Maute, partner at New York-based brand strategy and design agency CBX, said that as much as six months into the pandemic, products like paper towels and frozen foods still were hard to find on grocery shelves and those store brand suppliers needed to adjust allocations per customer,
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consolidate offerings to create manufacturing efficiencies and extend lead times to better manage their ability to fulfill. “Other suppliers actually stopped packing retail brands altogether,” he said. “They wanted to avoid having to start and stop their manufacturing lines, which reduces their efficiency. By making their own packer’s label, they could keep their lines running and better meet the enormous increases in demand.” Private brands as a whole did very well during the pandemic, according to Nielsen, reporting total private label sales of $114 billion for those key 34 weeks — a 14.3% rise in sales that came close to matching national brand growth, which was 15% for the same period. Jason Stull, vice president of sales and marketing for Chicago-based Mold-Rite Plastics, saw a huge increase in sales in its specialty food category, where they develop closures for spices and seasonings, condiments, dressings and sauces. But the biggest sales growth came from closures and products it produces for its health and wellness clients such as vitamins and supplements, OTC items and personal care products, which grew by 70% during those peak pandemic months. This trend isn’t going away, either. Stull said sales of items like hand sanitizer and vitamins and supplements should remain high. “People are adapting to more of a healthy lifestyle, and they’re going to probably implement that as part of normal behavior,” he said, adding that a continued need to help supply to front-line workers will stay high.
A Look Ahead
It’s true that even with news of potential COVID-19 vaccines on the way in 2021, America won’t be healed overnight and sales of pandemic-related products should grind on. “For the rest of 2020 and heading into 2021, we remain focused on improving our service levels and continuing to fully replenish our U.S. supply chain,” Perrigo’s Kessler said. “Some raw materials continue to see high demand and we are working hard to return Perrigo and retailer inventories to normalized levels. We remain confident that Perrigo is well-positioned to capitalize in the ‘new normal world’ where self-care, value and e-commerce are more important than ever before.” Maute echoed the increase in e-commerce sales going forward, while Kopitke of Amazon Business stressed how
sellers over e-commerce should be looked at as a way to support the supply chain. “For e-commerce stores, they should stay on the pulse of scarce supply and backorder needs to be a ready consistent source for customers unsatisfied with traditional channels,” he said. “The impact technology will have on the procurement process will only be more pervasive in 2021. Selling supplies through an online store provides suppliers with more direct access to thousands of new customers, streamlined purchasing processes and analytics into buying patterns that can help determine inventory needs,” Kopitke said. “These features have allowed many PPE manufacturers to respond to record-high spikes in demand and supply issues. There will be both small and big opportunities alike in the future for suppliers.” Maute said retailers and manufacturers will embark on a brand- and SKU-rationalization process to ensure that they can meet consumer demand going forward. “The distinction between need-to-have and nice-to-have will prevail,” he noted. As for product trends adding to those directly impacted by the pandemic, Maute said to look at meal-kit solutions, as cooking from home has increased as an overall consumer behavior. Indeed, retailers like Giant launched a new meal-kit called Cook-in-Bag, and Albertsons expanded its free-from own brand Open Nature’s meal-kit offering with a dozen new meals called Open Nature Savory Skillet Meals. ShopRite has begun piloting a complete meal-solutions concept shop in select stores that includes delivery of meals and a focus on its store brand products. Kroger has been strengthening its Home Chef meal-kit solution, too. It’s an example of retailers innovating to meet shopper needs around the pandemic, and how they innovate with private brands will need to continue, too, helping consumers adjust to life in “the new normal,” as often referred to above. “Store brand sales grew significantly over the past year and so did online shopping,” Maute said. “Retailers will continue to scurry to make sure their e-commerce chops are up to the ‘new normal.’ They will need to continue to manage high demand for the foreseeable future.” www.storebrands.com
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C-STORE REPORT
INNOVATING CONVENIENCE CONVENIENCE STORES ARE MAKING DRAMATIC STRIDES IN THE PRIVATE LABEL SPACE — WITH NO PLANS TO SLOW DOWN By Dan Ochwat
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he image of the convenience-store channel has historically been tied to teenagers popping in for a Mountain Dew and a bag of Doritos, maybe toss in some gummy sour worms and, of course, a Slurpee and some smokes. However, retailers in the channel seem to be on a health kick going into 2021, as well as on a path to build out their assortments overall, and they are leveraging their store brands to do it. Casey’s, for example, is undergoing a complete overhaul of its private brand portfolio, more than doubling its store brand SKU count this year already. Eric Long, the chain’s director of private brands, said they have upped the assortment of private brands in the center store to more than 100 and 26
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plan to have more than 150 items by end of the year. The Ankeny, Iowa-based chain of more than 2,000 stores across 16 states is undergoing a brand refresh, too, having unveiled a new store look and logo in October that will be added to the new private brand packages. The retailer said the logo gives the chain a modern feel to reflect its more modern approach to retailing with its growing assortment, popular fresh pizzas, and its digital shopping capabilities with curbside service and more. Yet Casey’s is not the only c-store chain that embarked on elevating its brand image or began expanding its store brand assortment. Regional chain Kwik Chek, a touch shy of 50 stores, is underway renaming and rebranding stores to TBX, also
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Derek Gaskins, chief marketing officer, Yesway/Allsup’s
Wayne Bennett, SVP, retail, RangeMe
known as Texas Born. Executives at the retailer said the change was to reflect its hyper-local focus, bringing in artisan products, and it will include new private brand products starting with staples like jerky, trail mix, coffee and water but aiming for a localized assortment in the future. Yesway, based in Des Moines, Iowa, added Allsup’s Convenience Stores’ footprint last November with the aim of growing its private brand potential. “We are definitely building our private label program,” said Derek Gaskins, chief marketing officer for Yesway and Allsup’s. The chain, which operates largely in the Midwest and Southwest, carries more than 300 SKUs in its own brands from packaged beverages, foodervice, snacks, center-store grocery, auto supplies and more, representing about 10% to 20% of the total SKUs carried in the stores, depending on size and format of the store. Both Yesway and Casey’s leveraged the San Franciscobased platform RangeMe this year to help source new products for its stores as well as suppliers to partner with on private label. RangeMe in general though has seen more involvement from c-stores in 2020 than ever before, according to Wayne Bennett, the company’s senior vice president of retail. While 7-Eleven has been a partner for its Brands With Heart program, this year GoPuff, WaWa, Kum & Go and Fareway joined Casey’s and Yesway, as well as hundreds of smaller independents, Bennett said. Bennett said based on buyer engagement data and their relationships with key retailers the biggest product focus was on “better for you” confections and snacks, as well as lowsugar and keto-inspired drinks. “Sourcing for own brand ini-
tiatives has seen a lift as c-stores continue to contribute to the growth of the store brands sector,” he added.
PRIVATE BRAND UPGRADE For Casey’s and its new private brand plans, the retailer is bold about its new focus and strategy. “We have had private brand products in a handful of categories that you would expect to find in a convenience store like bottled water, candy and automotive, but quite frankly we didn’t put any energy behind them,” said Tom Brennan, the retailer’s chief merchandising officer. “We didn’t have any dedicated resources to develop and grow the brand, and it showed in our dated packaging and underdeveloped assortment.” Going forward, the retailer made store brands a core part of its strategic plan as communicated to its investor community and tapped Long, its new director of private brands, in March. “He has done yeoman’s work in the subsequent months that our guests are beginning to see the results of now in our stores,” Brennan said. Long said that Casey’s previous assortment of private brand product was the traditional bagged candy, bottled water and automotive products but the new center-store focus includes packaged snack cakes, snack foods, and packaged beverage, carbonated drinks, juices, teas and lemonade. He said the products are national brand equivalent or better and a way for guests to save money. “Our guests have been used to high-quality Casey’s products coming from our strong food service operation, including our made-from-scratch pizza and other fresh food ofwww.storebrands.com
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C-STORE REPORT
ferings. We are building on that equity to bring that brand deeper into center store,” Long said. For Yesway, the company’s private label program develops as consumer needs evolve. “We started with packaged beverages and foodservice initially, but have expanded the past few years into an array of sub categories to drive growth,” Gaskins said. “Quality and value have always been core, and we look to improve our portfolio as it is directly correlated with improving our consumer engagement.” The company’s Allsup’s stores innovate with own brand items in the Mexican food category that complement its popular burrito. Irving, Texas-based 7-Eleven has been a leader in the convenience store space, especially in private brands, leveraging its 7-Select food and beverage line and 24/7 Life nonfoods products into a $1 billion business. In total, the retailer produces more than 1,500 store brand products. Amy Werth, senior product director of private brands for 7-Eleven, said current consumer trends “make it an ideal time for retailers to be investing in private label offerings,” adding that consumers are spending less time and money on dining and entertainment, and there is an uptick in cooking, baking and consumption of take-out and delivery that c-stores can leverage. “Additionally, more customers are focused on value and are open to switching brands more than ever before based on what is easily available in stock,” she said. 28
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Werth noted that in the last year, the retailer saw “significant growth” in its beverage portfolio, launching new products in dairy, isotonic beverages (such as its sugar-free energy drink Triton), while doubling down on staples like water and juice. It also has looked toward convenience, doubling its delivery footprint and adding a pickup option to its 7NOW app, making it easier to purchase its private brands, as well as any other items.
INNOVATION Brad Van Dam, CEO of Marich Confectionery in Hollister, Calif., said looking at the food category, c-stores are pushing toward premium healthy, clean-label foods to be a destination beyond convenience, but they’re not shying away from indulgence either. “With a long history in private label coffee, cold beverages and prepared foods, c-stores have expanded private label rapidly over the past several years and not just in their dominant categories,” Van Dam said. “The range has broadened to include more indulgent products in premium bottled coffee beverages, juices, salty snacks, confectionery and even ice cream, beer and wine.” Altoona, Pa.-based Sheetz, a chain of 432 stores, has been collaborating with local breweries to launch exclusive craft beers infusing some of its popular store brand items. In time for the holidays, the retailer just launched
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C-STORE REPORT
“Private brand manufacturers consistently lead the way in innovation and aren’t afraid to try new things, especially in the c-store channel, where impulse is king.” — Josh Sowell, SunTree Snack Food Project Happy Hole-idayz, a holiday beer that infuses its store brand vanilla donut holes. Previously, the company worked with other brewers on a beer that added its store brand coffee into an IPA and it launched a beer that had Sheetz’s own brand hot dogs tossed into the brew kettle. Similarly, for the last three years, Wawa has been collaborating with a neighboring brewer in Delaware County, Pa., to create a line of beers that infuse the retailer’s Wawa’s Winter Reserve Coffee blend. Marathon Ventures, based in Bellevue, Neb., works with retailers on unique flavors of nuts and snacks, and director of marketing Krista Daly said many of the firm’s clients are interested in growing their private brand positioning. “The c-store buyers we talk to are really excited about the ability to create and maintain consumer interest through innovation,” said Krista Daly, director of marketing at Marathon Ventures. “While we can’t share specifics, we know they want items that take it to the next level in terms of quality, flavor and originality. Exclusives that are ‘only available here’ are also high on the wants and needs list.” Daly said the convenience channel has been hurt in volume and in-store traffic due to the pandemic but the retailers they work with are resilient and have been creative in finding ways
to serve customers through digital technology. “I feel that private brand manufacturers consistently lead the way in innovation and aren’t afraid to try new things, especially in the c-store channel, where impulse is king,” said Josh Sowell, senior vice president, chief customer officer for SunTree Snack Food. The company works with retailers to produce peanuts, cashews, almonds, trail mixes and some dried fruit, and some recent trendy flavors have included dill pickle, sriracha, and variations on ranch and chile limon. But he said healthier concepts “that still scream delicious and are snacking oriented” are the products c-stores are looking to add. Van Dam of Marich Confectionery echoed and said there’s a push for better-for-you products and “treasure hunting” where consumers can find the latest on-trend items. “We’ve been supplying grab-n-go ‘healthy snacks’ as private label items,” said Kayden Lee, executive director for Daily Nuts and Fruit, based in Palmdale, Calif. “As c-stores are getting more traffic, they’ll want to expand their selection with unique, healthy-driven items, since not only consumers are now visiting c-stores for small grocery shopping, [they] are tired of waiting in long lines at traditional retail/grocery stores.”
FUTURE POTENTIAL Because c-stores can work under a franchisee model, carry a limited assortment and have less shelf space, the channel presents its challenges compared to other channels. However, Sowell believes that as c-stores grow and more consolidation occurs, the need for a consistent private brand strategy is paramount. “It is very important that c-stores market themselves both on the outside but also within their private brand strategy,” he said. “Many of these retailers know that this is where true growth lies and creating that destination of products drives customer loyalty and engagement.” Lee said unlike supermarkets, c-store channels have previously not been a destination for shoppers looking to “treasure hunt” for unique items and have been more conventional but that’s where it’s changing. “There is so much upside for growth,” Daly noted. “Over time, we will increasingly see cstore private brands owning more and more of the snack set. It will be really exciting to see what they do with the space.” Van Dam said as private label grows across all channels, particularly among younger shoppers, c-stores are poised to grow. “Retailers at all levels have continued to shift toward upgraded, creative, well-positioned products and — current generations (particularly Y and Z) have had a completely different experience with private label and as such they are very open to — and in many cases — prefer private label,” he said. “Given c-store’s agility and intimate data on product performance and consumer preferences, they have an incredible opportunity to drive focused assortments, develop and differentiate and truly be market-leading innovators,” Van Dam added. “This isn’t your grandfather’s private label.” www.storebrands.com
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DISPATCHES Vol. 8
Innovation in the Southwest In line with the convenience channel report on page 26, c-stores are moving private brands more than ever before. For example, Allsup’s, a chain recently acquired by Yesway, with more than 300 stores across Texas, New Mexico and Oklahoma, has a unique assortment of private brand products — the retailer is known for its Mexican fare and has positioned store brand offerings right in line with its identity.
Elsewhere in New Mexico, the Commissary on Kirtland Air Force Base showcased its store brands — aptly named Freedom’s Choice (food) and Homebase (nonfood). The shelf tags invited consumers to compare store brand prices to national brands and used digital pricing on the shelf.
An endcap in a store in Santa Fe, N.M., proudly put on display a large assortment of Allsup’s brand products including tortilla chips, a line of innovative taco sauces, nacho cheese chips, hot pork rinds and more. 30
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A closer view of the endcap showed a smart shelf sign that called attention to a brand new product added to the assortment — Hot Nacho Tostadas.
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Solving Big Problems, Inspiring Bold Ideas EnsembleIQ is a premier business intelligence resource that believes in Solving Big Problems and Inspiring Bold Ideas. Our brands work in harmony to inform, connect, and provide predictive analysis for retailers, consumer goods manufacturers, technology vendors, marketing agencies and service providers. EnsembleIQ’s integrated suite of solutionsbased, total-market resources give you all the tools you need to achieve a strategic market advantage, giving you the insights, positioning, focus, and access, along with a team of dedicated strategic consultants to help you bring it all to life.
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