THE FUTURE OF Private Label

from August 2023 Grocery Insight

CATEGORY LEADERSHIP AWARDS FUDGE

As inflation has continued to spread throughout the industry and consumers are looking for ways to tighten their belts, leaders in the private label section realize that while consumers are looking for cost reduced products, they are also looking for quality household products and flavorful beverages and snacks and meals they can count on.

In a previous interview with Grocery Insight, PLMA acknowledged the start of 2023 took off on the right foot as the association's hard work during the previous year set its members up for success. “We’re coming off a tremendous 2022, where private label smashed all previous records in both sales and units,” said Peggy Davies, President of PLMA. “In fact, store brands accounted for about 30 percent of all new dollar sales flowing into the US retailing industry last year. All indications are pointing in a continued positive direction for this year.”

“Regarding initiatives, PLMA’s members will continue to strive for consistent quality, innovation and value in their store brand products as they expand across all categories and channels. As an association, we are constantly looking for ways to add value to being a member of PLMA through our executive education programs and conferences and professional networking opportunities as exhibitors and attendees at our annual trade shows and by holding events and conferences throughout the year.”

Taking a closer look at the main forces driving the category, PLMA has recognized that the category has continued to evolve after the pandemic. “The pandemic influences a change in so many areas within consumers’ personal and professional lives,” explained Davies. “The lock down has come and gone and there’s still a rippling effect in retail and CPGs. And of course, we can now add economic uncertainty into that mix.”

The PLMA's leading tradeshows, ‘World of Private Label’ International Tradeshow which was held in May in Amsterdam and its annual Private Label Tradeshow in Chicago, coming up in November, is "where we expect to see many new products and packaging reflecting the rise of consumers’ desire for sustainable, eco-conscience products as well as those products that support the work-from-home lifestyle and need for

“We are seeing more and more consumers start to shift to the private brands looking for that lower price option from the [national] brands. Those consumers are realizing that the quality gap from brand to private label has closed over the years as more and more retailers have taken the time to build strong quality private brands. Inflation and the impact it has had on consumers’ wallets has not been good, but in the long run it will be good for private brands as a whole as more people will continue to buy the private brands even after inflation starts to ease.”

— Kevin Cyr, Catania Oils

convenience," Davies said. “The pandemic really influences the health and wellness category, and that trend shows little signs of slowing down. Self-care— whether it’s health and beauty products or snacks as a small, healthy indulgence—is a huge area of opportunity for private label.”

Catania Oils Corporation has several development initiatives planned for the year with partnerships at the top of the list. “This coming year our major initiative is to focus on strengthening our strategic partnerships with our current customer base and developing new ones with new customers,” said Kevin Cyr with Catania Oils. “Over the past three years we have seen so many issues with supply chain and out of stock issues that we have been fielding calls from existing, potential and past customers looking for us to help fill product shorts they had been experiencing. While we want to expand business and take on potential new business, we had to have a hard look and make difficult decisions on what was best for our true partners, and would we be hurting them if we tried to help someone that might be a transactional sale and go back to being a stretch to sell once things settled down.”

“This year we want to really build on that with our customers who have been our strategic partners and start to build stronger partnerships with those customers who may have teetered on being a transactional account,” he explained. “By doing this we hope to look at opportunities that make sense for us and our partners that may require significant investment in things like production lines and new packaging for both of us to build on. As an example, we have just made significant investment in two new bottle types—5 quarts and PET gallons—with two separate customers willing to make long term commitments with us. We want to do more of this in the coming year and look to bring on some new customers we have strived to get in the past with this type of philosophy.”

Alongside strengthening partnerships during inflation and supply chain issues, Cyr mentioned the company has been trying to keep costs down. “We are working hard to keep our costs as low as possible,” shared Cyr. “We are looking for multiple vendors for our raw materials where we never really did in the past. We are doing this to ensure supply and find the best possible pricing we can. Oil markets are still at the highest levels we have ever seen, but we are working closely with our customers to educate them on the right times to buy and find those dips in the markets to help keep their prices as low as they can on the shelf.”

There are several trends that are driving the category, but Cyr has noticed that private label offers a lower price that consumers appreciate. “We are seeing more and more consumers start to shift to the private brands looking for that lower price option from the [national] brands,” he continued. “Those consumers are realizing that the quality gap from brand to private label has closed over the years as more and more retailers have taken the time to build strong quality private brands."

•National brand equivalent extra virgin olive oil