Retailer Constructs “See”-Worthy Ship

Price Chopper Supermarkets might not have held its annual fall trade show for management at sea, but we’re betting show attendees could almost hear the ocean’s roar. After all, the Schenectady, N.Y.-based retailer constructed a 32-foot-long, 15-feet tall ship for the event, held September 23 and 24 at the Connecticut Convention Center in Hartford.
The best part? This ship — christened the USS Chopper — was made up almost entirely of the retailer’s own corporate brand products, including 160 boxes of cat litter, 1,400 rolls of paper towels, 60 12-roll toilet tissue packages, approximately 300 boxes of ready-to-eat cereal, 118 boxes of oatmeal, 3,840 bottles of water, 16 boxes of diapers, and 97 12-packs of seltzer and black cherry soda. This “private label vessel” even sported lights, seagulls and working smoke stacks.
The project, which took 56 hours to complete between pre-fab and construction, fit in with Price Chopper’s 2008 show theme, “It’s Your Ship.” According to Regina Tator, director of corporate brands for the retailer, the theme was based on Navy Captain Michael Abrashoff’s book by the same name. The book describes how companies can adapt the author’s progressive management techniques at sea to transform their businesses.
“The basic premise is empowerment — getting to know your people and getting to know their strengths and listening to them,” Tator said.
The ship was a big hit with the department heads and store managers who attended the meeting, she added, and helped build excitement around Price Chopper’s latest store brand happenings. Moreover, the nautical empowerment theme also was carried out in other areas of the trade show floor.
For example, attendees were greeted with a huge entranceway that looked like a life preserver and sported a sign that said “Welcome Aboard,” Tator noted. And a booth designated as “Shore Leave Tattoos” offered temporary tattoos, including one with a ship graphic that read “PCCB (Price Chopper Corporate Brands) — the Biggest Ship in the Fleet.”
So impressive was the event that a local Hartford TV station featured it — and the product ship — in its newscast, Tator said.
And when it came time to abandon this ship, no rescue was required. Post-dismantling, Price Chopper donated all the “building supplies” to a local food bank. — K. Canning

New Headquarters Can Handle ‘Lots of Nuts’

Retailers might find it fairly tempting to “go nuts” with their store brand snack lines once they get a glimpse of John B. Sanfilippo & Son Inc.’s (JBSS) new headquarters. The state-of-the-art 1,000,000-square-foot facility, located in Elgin, Ill., not only boasts 76 peanut, tree nut and extruded snack lines, but also includes advanced roasting and packaging capabilities.
The PL Buyer staff had the opportunity to tour the mega facility in October. Opened in September 2007, the converted processing facility essentially combines five of the company’s Chicago-area plants and a distribution center into one highly efficient operation. Moreover, it offers the space needed to accommodate growth in both the company’s own Fisher brand and in retailer’s private label offerings.
CEO Jeffrey Sanfilippo told PL Buyer the plant was designed with input from customers. Key features include segregation of peanuts and tree nuts and state-of-the-art security and food safety measures.
Sustainability also is a big focus, both in the plant and for JBSS overall, noted Ron Williamson, vice president of sales and marketing. In designing the new headquarters, JBSS put green initiatives into place wherever possible.
And a highly sophisticated oil delivery system allows the company to oil-roast nuts at the highest possible quality.
As the number-one nut processor in the United States and the only vertically integrated major industry player, JBSS has a “good pulse on what’s happening in the industry” and can help retailers target growth, Sanfilippo said. The company, which also operates  plants in North Carolina, Georgia and Texas, currently serves more than 200 private label customers with products ranging from mixed and roasted nuts to custom trail mixes and snacks — and with high-speed packaging solutions that include cans, jars and flexible options.
Current high-growth areas for store brand programs include snack almonds — thanks to their health appeal — as well as trail mixes and unique flavor profiles, Sanfilippo said. To better help retailers meet these and other trends, JBSS plans on expanding its R&D capabilities to include partnerships with key flavor and spice suppliers, he added.
“What’s exciting is we have the infrastructure to do this now,” Sanfilippo said.
One thing’s for certain: JBSS has enjoyed tremendous growth since its beginnings in 1922 as a family-run pecan sheller in Chicago. And with a vision to be “the global source for nuts, committed to quality, expertise and innovation,” continued growth and success would seem to be a given. — K. Canning

'Sin Stock' Markets Boom While Pocketbooks Go Bust

Considering the precarious state of the U.S. economy and ever-rising gas and food prices, one would expect to see Americans pinching their pennies when it comes to indulging. However, research from the Chicago-based Mintel International Group Ltd. finds sales of some “sin stock” products —chocolate, alcohol and cigarettes — are robust and show no signs of slowing down.
Mintel said the chocolate market is growing steadily, driven in large part by the premium and specialty segments of the category. In fact, the company said it expects to see a 4 percent annual sales increase in the chocolate market for the next six years.
In regard to alcohol consumption, Mintel noted Americans are dining out less because of high gas prices and expensive bar tabs, but might be drinking at home more. Mintel said the market for at-home alcohol purchases is expected to reach $77.8 billion in 2008, a 32 percent increase from 2003.
Mintel even said it expects sales of cigarettes and other forms of tobacco to grow 28 percent through 2011 — despite tax increases and pervasive health warnings.
Historians shouldn’t be surprised at these data, since sin stocks historically have performed well in recessionary times. When finances are rocky and consumers feel they are making sacrifices in other areas, they often cling to indulgent items as a small reward, Mintel reported.
Marcia Mogelonsky, a senior analyst at Mintel, said consumers might be reigning in other types of spending — switching to store or value brands for staple items, for example. Therefore, they are more reluctant to give up daily comfort items such as wine and chocolate.
“They don’t want to give up their bad habits,” Mogelonsky noted.
Some consumers, Mogelonsky said, have adjusted the channel through which they indulge. Instead of getting their daily latte at a Starbucks store, for example, they’ve switched to store-bought Starbucks products. And instead of an expensive dinner at a restaurant, some consumers are springing for a fancy bottle of wine and dinner at home.
Mogelonsky said retailers can help consumers splurge on a budget by giving their own private label sin stock products the premium treatment.
Mogelonsky pointed to her local Wegman’s store, where she bought some of the chain’s store brand premium chocolate, in part because of the attractive packaging. “Retailers should make their products look ‘sinful’ or indulgent. They could do this with packaging, by making a pretty arrangement on an end cap. They could cross-merchandise their chocolate with organic strawberries,” Mogelonsky said.
“To give up everything would be a terrible thing, but yes, they will switch to a value item as long as they see it as a quality item. We’ve seen it across the board in private label — people are switching in a lot of categories,” she added. — M. Gustafson

Partnering To Fight Breast Cancer

October was National Breast Cancer Awareness Month, and many retailers featured events aimed at increasing awareness about the importance of early detection. Many of them also contributed to or raised funds for programs centered on breast cancer research.
At least two grocery retailers, however, have taken efforts here to the store shelves — using key private label items to raise awareness and dollars to fight breast cancer.
This October and November, The Great Atlantic & Pacific Tea Company, Inc. (A&P), Montvale, N.J., is partnering with the American Cancer Society (ACS) to offer six America’s Choice store brand products with a special pink logo, as well as the ACS’s “Making Strides” logo. A&P said it is a proud supporter of the Making Strides Against Breast Cancer Walk, and these products were A&P stores’ “in-store items of the month” throughout October.
“The initiative is to show Own Brands’ support for such a worthy cause,” said Christine Oliveri, senior director, Own Brands for A&P. “We’ll have full dedicated end-cap space to really make a statement and raise awareness for this cause. … It’s an avenue that private label really hasn’t been down.”
For its part, Schenectady, N.Y.-based Price Chopper Supermarkets is offering specially marked private label items with the goal of donating $250,000 to fund a specific breast cancer research project.
“Breast cancer touches everybody’s lives,” noted Regina Tator, director of corporate brands for Price Chopper. “This year, instead of donating to a whole bunch of different breast cancer research causes, we actually funded a breast cancer research project where we’ll be able to track it to see if they make any inroads.” — K. Canning

Private Label: National Brand Threat, or Opportunity?

Private brands have a significant role to play in supermarket profitability — at least in the dairy, grocery and frozen departments — but do not necessarily serve as a detriment to strong national brand suppliers. Those were among the findings detailed in the September issue of Barrington, Ill.-based Willard Bishop’s Competitive Edge.
Jim Hertel, managing partner at Willard Bishop and the newsletter’s author, said the company developed a database comprising performance data for seven leading U.S. supermarkets — all of them traditional supermarkets and either divisions of top national chains or dominant regional retailers. In studying the data, Willard Bishop determined these retailers’ private brands use space very productively. In fact, private label movement and adjusted gross profit performance are significantly higher than that of branded products, per SKU and per square-foot facing.
“Category partners should acknowledge private brands’ importance to retailers and help integrate private brands planning with the total category planning exercise,” Hertel said in the newsletter. “These data also suggest that SKU rationalization should take a higher profile in category planning than it has recently.”
Hertel told PL Buyer that some national brand suppliers seem to believe private brands are adversaries in terms of sales. But that’s not really true.
“You’ve got to acknowledge as a national branded good supplier that private brands have a role, an important role, for retailers,” Hertel said. “And if you are a category partner, to drive total category performance as it contributes to the retailer’s overall health and vitality, you’ve really got to acknowledge it.”
Everybody can benefit from a solid private label program, Hertel added, including national brand suppliers, private label suppliers and retailers.
“A solid private brand program will drive more intense shopping of the store, which gets more people down the aisles,” he said. “And if you get more people down the aisles, automatically it means a more successful business for that retailer and that supplier.”
Hertel recommends that national brand suppliers collaborate with retailers to determine whether or not private brands are good for the category, the optimal share for private brands in the category, the right approach to private brands promotion, the right pricing approach, and the right category assortment approach for private brands and national brands alike. Private label suppliers, too, could potentially play an important role in such a discussion.
“I don’t know how many private brand suppliers have access to the data and the level of sophistication to be able to analyze and make fact-based recommendations,” Hertel said. “I think, ultimately, that’s going to turn out to be a value for private brand suppliers to invest in, and in fact, be required for retailers to get their due out of the brand planning side of it.” — K. Canning

After Multi-Year Decline, Coupon Use Rebounds

With the price of gas and the general cost of living going nowhere but up, consumers once again are looking to coupons as a means to save money on consumer packaged goods. In fact, the lousy economy is working to turn around what’s amounted to a 15-year decline in coupon redemption rates, said Matthew Tilley, co-chair of the Promotion Marketing Association’s (PMA) Coupon Council in New York.
The peak year for coupon redemption was 1992, Tilley said, when consumers redeemed just shy of 8 billion coupons. After 1992, however, coupon redemption rates fell between 3 and 6 percent each year, reaching the low of 2.6 billion in 2006.
For 2007, however, the coupon redemption rate remained steady at 2.6 billion, he said, and is on track to do the same for 2008.
“On its own, the performance is really not that notable,” Tilley said. “But in the context of the 15-year decline, it’s meaningful.”
Retailers might want to consider a coupon program for their private label brands to reach the now-growing group of bargain-seekers, Tilley said, but they need to develop a strategy that’s right for their brand and their product.
“The Checkout Coupon [from Catalina Marketing] is going to be good for a situation where you know you’re going to have a pretty hardcore buyer of a national brand,” Tilley said. “[It would be issued when] a consumer buys brand X, encouraging them to come back and buy store brand Y, and offering a dollar off if they do that.”
For categories awash in competition and frequent consumer brand-switching, Tilley advises retailers to use coupons at the shelf or on the package to attract the shopper to the store brand. And for instances in which the retailer has a fairly strong private label, he advises using store circular ads or even free-standing inserts to pull consumers into the store.
Tilley also notes that redemption rates vary by coupon distribution channel, with out-of-store media placement in circulars or FSIs generating the lowest rates (1 to 2 percent), and on-shelf and on-packaging placement generating the highest (potentially double-digit percentages).
“It all depends on what you’re trying to accomplish — whether you’re established in the category or a brand-new player,” Tilley stressed. “But broadly, in-store is the battlefield I would pick if I were a private label retailer.” — K. Canning

Coffee Roaster Moves to ‘Greener Grounds’

Coffee Bean International (CBI), a specialty roaster and wholesaler, announced the opening of its new “green” headquarters and roasting facility in Portland, Ore., on October 7. With the move, CBI said it became the first coffee roaster in the Pacific Northwest to be headquartered in a LEED (Leadership in Energy and Environmental Design)-certified building.
CBI said it made the move to the new facility to accommodate continued growth. The new location, situated in northern Portland near Portland International Airport, boasts a repurposed building with a custom layout designed to improve efficiencies and production without increasing environmental footprint. Among the building’s environmentally friendly features are energy-efficient technologies, a bio-swale for rain collection, and paint and carpets with a low volatile organic compound content.
“The building is 20 percent more energy-efficient than what code requires and uses half the amount of natural gas as did our previous facility,” Patrick Criteser, CBI’s president, told PL Buyer. “The lighting is motion-detected and automatically turns off with no activity. The main downspout is disconnected; water goes to an on-site filtration system of planters that clean the roof water.”
In addition, the facility’s carpet tiles are fashioned from recycled materials, while dual-flush toilets save water, Criteser said. But green initiatives aren’t limited to the physical building — the surrounding grounds also feature native plantings.
Equally important, the new facility will allow CBI to expand its roasting capacities for private label buyers. Since 2002, the company has expanded from 70 employees producing approximately 2.5 million pounds of coffee to 150 employees expected to roast more than 13 million pounds of coffee this year.
“The new facility will enable Coffee Bean International to maintain its artisan-style of roasting and to produce delicious coffees for private label buyers,” Criteser said, “with better product development and QA labs, process efficiency and shorter lead times — all while maintaining our small-batch artisan style of roasting.” — K. Canning