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Increasing brand promotion and advertising have eroded PL gains in the category
Data from Chicago-based SymphonyIRI show that although sales were up by 1.47 percent in the overall pickles/relish/olives category for the 52 weeks ending July 10, 2011, private label sales were slightly down, as was the case in nearly every sub-segment.
After private label condiments posted impressive dollar and unit sales gains just a few years ago, what accounts for the slight downturn in this period?
Mintel suggests that after consumers turned to private label condiments during the economic crisis, name brands responded by combining discounted pricing with promotions. Not to fear, however, as Mintel also predicts that growth in the category will exceed 5 percent annually through 2012 and that the market should top $7 billion by 2015.
Retailers can cultivate successful growth within their private label condiment lines by capitalizing on overall category trends, namely quality, variety, innovation and, of course, price appeal.
Two-thirds of consumers place importance on having a large variety of condiments in their pantries, Mintel finds in surveying consumers for its report. According to 57 percent of consumers polled, name brands “just aren’t worth the extra cost” and 41 percent see private label quality as equal to that of name brands.
Price-conscious consumers, in other words, are able to enjoy the variety and high-quality of name brands at private label prices without sacrificing a sense of indulgence.
Dan Kelly, vice president of sales at Musco Family Olive Co., Tracy, Calif., agrees the current trend towards a greater variety of offerings is growing. “Most of what is new in table olives has been in the specialty segment with greater variety and, in some cases, improved flavor on stuffings, such as various cheese-stuffed olives like blue cheese, feta, and white cheddar. I think there has been a big push towards differentiation within brands where possible.”
Innovation is another area where private labels are outpacing name brands, according to Mintel’s report. According to their monitor, of the top 10 companies with new product introductions from 2005 through 2010, only two were national brand producers (Heinz and Kraft Foods). A third, Stonewall Kitchens, is a niche gourmet producer, while the remaining seven innovators were all retailer private label lines.
Innovation plays a large role at Castella Imports, Hauppauge, N.Y., says Patty Echeverria, marketing manager. “Setting the trend in olives is done by adding creativity with extreme benefits,” she says.
For example, inspired by the lighter wines of Napa Valley, Castella’s Vineyard Collection infuses olives with California Chardonnay, Pinot Grigio, Sauvingnon, and Merlot. “The wine infused olives are a must-have when entertaining,” says Echeverria.
Retailers should take note that more health-conscious consumers in general are paying attention to nutritional labels, with 44 percent of consumers reading labels regularly, up from 31 percent, according to Mintel. Private label retailers should position their products to take full advantage of the consumer interest in better-for-you choices.
Ted Kranik, senior marketing director, Bay Valley Foods, Oakbrook, Ill., notes, “ health and wellness continues to be a key trend in the category. We’ve seen the brands launch more reduced sodium products, use sea salt in selective products and launch all natural pickles.” Bay Valley offers a range of low sodium and all natural products for private label.
“Olives have the added benefit of being heart healthy, no cholesterol, and gluten free,” says Jennifer Fuchs, consumer marketing manager at Lafayette, Calif.’s Bell-Carter Foods.
Echeverria agrees, “Gone are the low-carb diets, and in are the back-to-the-basics whole, healthy foods. Merchandising fresh, better-for-you choices is the key.”
Castella Imports is on-target with the healthier olive trend marketing Castelvetrano Olives. Grown in Sicily and harvested young, with a distinct bright green color and a mild flavor, Castelvetrano olives do not have any additives and are lower in sodium, explains Echeverria.
Thoughtful packaging, merchandising and promotion provide other pieces of the puzzle for private label condiment growth. Echeverria suggests cross-promotion.
“The best way to promote olives is to know your products and to be passionate about them, offer unique items, and cross-merchandise with related Mediterranean products. Rotating new olive selections keeps it inviting and exciting. It is optimal to have both the olive jars and the olive cups in an effort to cater to both the at-home chef and the on-the-go healthy lifestyle,” she says.
In packaging, Bay Valley Foods launched PET bottled relish and hamburger chips a few years ago and is expanding into sweet pickles. Compared with glass products, the PET containers are lightweight, easier to display and easier to open.
“In the summer, we recommend merchandising hamburger chips and relish,” says Kranik. “The winter holidays are a great time to advertise and display sweet pickles. Cross merchandising with appropriate categories (ketchup, buns, etc.) and gaining secondary placements in the store are other excellent ways to drive store brand sales.”
Kelly’s company has created modular display and shippers for products such as pitted ripe and sliced olives. “We have also created a rack program that many of our customers are utilizing to cross merchandise sliced ripe olives outside of the traditional olive department with other related products to a meal solution.”
Kranik encourages private labels to follow their own paths. “Following the traditional NBE fast follower model is not the right way to drive store brand sales in this category,” he says. “Store brands have the leading share and the brands have been focused largely on price promotion. Store brands have a unique opportunity to lead this category with true product innovation as well as merchandising.”
Eye on the national brands
Mt. Olive’s snack-sized portions declined in sales and share, although Vlasic’s small-portions pickles in a large jar have done well, presumably because snacking from the jar makes more sense to recession-conscious consumers when snack pack pricing is high.
While name brand pickle producers fine-tune their products and packaging, Mintel points out that of all the condiment companies, only the pickle/relish manufacturers use mascots. A lack of media advertising against the brands, their nostalgia-based mascots, couponing and expanded distribution are likely reasons why brands like Mt. Olive saw success in the segment.