Private Label Buyer

When City of Commerce, Calif.-based Smart & Final made the decision to undergo a private label consolidation effort in early 2008, the warehouse grocery retailer had a specific goal in mind. Smart & Final wanted the project to move it one step closer to its larger goal of evolving from a traditional “cash-and-carry” operation serving foodservice and business customers to a hybrid model that also serves “everyday household shoppers.”

Earlier projects completed with this goal in mind included remodeling of many retail locations and the introduction of Smart & Final Extra, a new store banner that serves the traditional business customer while increasing the offerings for household shoppers dramatically. But this next step in the game plan called for consolidating 23 private label brand/sub-brand portfolios, encompassing 2,400 SKUs and different quality tiers, into a handful of well-thought-out store brands, the retailer said.

Raymond Swain, vice president of corporate procurement for Smart & Final, said his company wanted to achieve two objectives through the consolidation effort: to pull the value tiers into a single brand that could be marketed as a basic value option for price-motivated customers, and to expand the existing First Street brand across the store to gain broader brand awareness.

For help with the massive private label rebranding effort, Smart & Final said it turned to Boston-based Marketing by Design (MBD), a firm with a wealth of experience in private label packaging design and more. MBD and Smart & Final also worked with Strategia Design, a branding and graphic design firm based in Fairfax, Va., to develop and fulfill the goal of creating a consolidated core brand strategy representing 80 percent of the retailer’s corporate brand sales dollars.

To complement the creative and strategic aspects, Smart & Final used online workflow tools developed by Workflow by Design, a sister company of MBD. The tools provided centralized tracking of vital project components and automatic routing of artwork for approval.

By spring 2009, Smart & Final began to introduce the rebranded products into the marketplace, beginning with Simply Value, the new brand that consolidated all of Smart & Final’s value-focused products. First Street — an existing brand that was vastly expanded to become the retailer’s new core line — soon followed, as did Sun Harvest, a new natural and organic brand. In addition, the retailer opted to keep a few national-brand-equivalent niche brands such as Ambiance and LaRomanella.

MBD, Strategia Design and Workflow by Design played critical roles in Smart & Final’s brand consolidation success, Swain said.

“These companies initially played the role of impartial third party in soliciting opinions from internal stakeholders,” he said, “and then helped in developing the strategic positioning of corporate brands at Smart & Final.”

From there, the companies helped guide the brand name-generation process, Swain added, and then the processes for conceptual design by category and actual production design.

“We used the MBD Web-based tool to manage the design process, solicit vendor input and approvals, as well as internal approvals,” he added. “This tool works extremely well in tracking all aspects of production, from an item level to a total brand perspective. MBD had the ability to flex its resources in order to handle our large volume of design products.” — K. Canning

Despite numerous warnings about the risks posed by cardiovascular diseases, Americans still are not doing enough to improve their heart health, according to “Opportunities in Heart Health: Consumer Attitudes & Behaviors,” an April 2009 report from London-based Datamonitor. In fact, only a third of Americans surveyed for the report admitted to paying a “high” or “very high” amount of attention to their own heart health.

Part of the problem, Datamonitor said, is that many people underestimate the threat of heart disease. In reality, cardiovascular diseases were responsible for 17.5 million deaths globally in 2005 alone — or 30 percent of all global deaths — the World Health Organization (WHO) estimated. And WHO said it expects that figure to rise to 20.5 million by 2020 if something is not done to reverse the trend.

Although functional food manufacturers have been attempting to rectify the problem by creating products that tout heart-health benefits, Datamonitor says American consumers remain skeptical about the credibility of such products, particularly those items that promise calorie-burning properties. Indeed, 33 percent of U.S. consumers Datamonitor surveyed said they considered such claims to be untrustworthy, while only 21 percent said the claims could be trusted.

Mark Whalley, a Datamonitor consumer market analyst and the report’s author, said consumers also are extremely price-sensitive right now, looking to cut back not only on “extravagant” purchases, but also on routine grocery shopping. For that reason, functional foods — typically pricier than “regular” products and considered a non-essential purchase by many consumers — are vulnerable.

Private label products would seem to be one answer to getting heart-healthy functional foods into consumers’ mouths. But Whalley advises a cautious approach.

“Although Datamonitor research has indicated that consumers are placing more trust in private label goods, this may not necessarily be the case with functional foods yet,” he told PL Buyer. “Many consumers are still learning about these types of foods, and are therefore far more likely to just go for a brand name because they will trust that the science behind the product is legitimate.”

But retailers can do much more to educate consumers, who generally understand much less about cardiovascular health than they believe, Whalley said.

In addition to increasing awareness of overall heart health, retailers can play a critical role in outlining the benefits of specific functional foods and other heart-smart food options. Such steps also could open more doors for private label functional foods in the future — and help retailers better manage their own employee health care costs.

“Retailers need to ensure that consumers are fully aware of the perils of poor heart health,” Whalley said. “The rising levels of obesity and the number of people leading a sedentary lifestyle indicate that, in fact, heart health is not at the forefront of consumers’ thoughts on a day-to-day basis. Ensuring that they know as much as possible about the subject is imperative to encouraging growth.” — K. Canning

Frugal American consumers have given up their favorite national brands for food, household, health and personal care products, but are far more reluctant to switch to store brands on purchases for children and pets, according to the latest research from ICOM, a division of Dallas-based Epsilon Targeting.

ICOM’s May survey of 1,530 American consumers shows the threat of exodus to store brands varies by category, with the percentage of consumers switching ranging from highs of 59 percent and 48 percent, respectively, for food and household products and health products, to lows of 23 percent and 12 percent, respectively, for pet care products and child care products.

The less-risk-means-more-switch trend revealed itself as well in the category of over-the-counter medicinal healthcare items. ICOM said its survey responses show a direct correlation between severity and specificity of ailment and the openness to switch. Although 42.2 percent of respondents said they’ve switched to less expensive store brands for general pain relievers, only 21.5 percent made the same move when it came to heartburn medication.

“Perceived risk, that’s what is driving these key consumer decisions,” said Warren Storey, ICOM marketing director. PLB

FullBloom Baking Co., Newark, Calif., said it is celebrating its 20-year anniversary as a producer of fresh, frozen, par-baked and pre-packed baked goods for private label and wholesale. To mark the occasion, the company debuted an updated logo and packaging.

Although the company currently employs 220 people and offers more than 200 varieties of wholesale artisan baked goods to thousands of businesses throughout the country, its beginnings were quite humble. In 1989, Karen Trilevsky, founder and CEO of FullBloom, decided to break the cycle of “restaurant gypsy life” and move to the San Francisco Bay area to set up her business, armed only with an oven and a mixer. But starting up wasn’t a piece of cake.

According to Trilevsky, a typical day back then consisted of baking from 3 p.m. to 3 a.m., then delivering products to customers for the next five hours. And since she wasn’t able to pay for certain necessities during that time, she had to rely on the barter system.

“Prior to moving into my original 1,000-square-foot space, I slept on flour sacks and traded baked goods for gas, haircuts and showers at a local gym,” Trilevsky told PL Buyer.

As she recalls, her big break came when Starbucks opened its first San Francisco location. The company already had picked its pastry vendors, but Trilevsky was persistent — she believed her goods were the perfect fit for Starbucks, which shared her core values of fair business practices and sustainability.

After receiving rave reviews from one of Starbucks’ buyers, she was told to ship product prototypes to the company’s Seattle headquarters to seal the deal. She shipped the prototypes on the cheap — by driving the samples to San Francisco International Airport and bribing a Seattle-bound college student to take the boxes and hand deliver them to a contact at Seattle-Tacoma International Airport. With that, she won the company’s partnership.

Business began to flourish, Trilevsky said. To meet growing demand, FullBloom moved to a larger manufacturing facility every few years. In 2007, the company began operations at its current 95,000-square-foot facility, where it handles large-scale, large-volume production of artisan baked goods. Today, FullBloom is the name behind some of the more successful store brands on the market.

As for the next 20 years and beyond, Trilevsky said the company will keep doing what it has been doing all along: actively seeking the right partners who share the same values, can use the production efficiencies FullBloom offers, and are committed to quality all-natural ingredients. — R. Hofbauer

Culinary Destinations, a Toronto-based manufacturer of national brand and private label premium-quality frozen hors d’oeuvres, announced its relocation to a new facility in Toronto. Company President Keith Chen said the move was completed in mid-July, and the new building is substantially larger than the company's previous facility. As of press time, the company was waiting for approval of the facility by the Canadian Food Inspection Agency.

Chen said the reason for moving was plain and simple — the company needed more room to expand its operations.

“We have a lot more space,” Chen told PL Buyer. “We also have a lot more equipment.”

Although the company already makes all sorts of ethnic cuisines for store brands — from Asian foods such as samosas and spring rolls to European foods such as mini quiches and puff pastries with salmon — it is looking to get into other exotic items, Chen said, including steamed Chinese buns and spanakopita.

The new facility also boasts several “green” initiatives, including:

• T5 lighting, which Chen said uses 40 percent less energy than a typical metal halide lamp.

• A computerized system that maintains efficient ventilation.

• A Capture Jet Hood from Halton Indoor Climate Systems Ltd., Ontario, in the test kitchen and production area, which offers improved air quality but uses less energy. Chen said it costs more than a typical hood system, but vents out only what needs to be vented out.

Chen added that Culinary Destinations is pursuing Forestry Stewardship Council (FSC) approval for its packaging. FSC certification denotes compliance with the highest social and environmental standards on the market, according to the not-for-profit council. — R. Hofbauer