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Walk Down the Aisle: Drinking in the beverage aisle

March 28, 2012
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Food retailers need a more consistent approach to in-store marketing for private label beverage items

Retailers show an inconsistent strategy in marketing their private label beverage aisle offerings, report PLBuyer’s secret shoppers. Of the six stores chosen throughout the country for our secret shopper visits, no one element of in-store marketing was present in all the stores.
PLBuyer sent six of its secret shoppers to check the beverage aisle of food retailers in Missouri, California, Texas and Colorado during the third week of October, 2011, and asked them to evaluate how their local stores market and merchandise their private label beverage items.
In addition to looking for in-store merchandising, shoppers also recorded prices of comparable private label and national brand bottled water, tea, cola and drink mixes and conducted their own taste tests. The goal of our walk down the aisle is to provide you with market intelligence and insights you can use to increase your sales.
VARIED APPROACHES
Private label marketing in the beverage aisle varied widely from retailer to retailer, according to data reported by our secret shoppers. Of each of the marketing elements observed by our shoppers, only placing private label items next to national brands was seen consistently. Five of the six retailers surveyed did side-by-side displays.
The only retailer to incorporate all the in-store marketing strategies sought out by our secret shoppers was the H-E-B in Corpus Christi, Texas. “Both signs are prevalent, however small and yellow. But the shoppers are accustomed to this marketing,” explains shopper Andi D. of the retailer’s approach to on-shelf price tag comparisons. She also noted that H-E-B chose to place national brands directly next to private label brands in several locations throughout the aisle.
On the other end of the spectrum, shopper Michael G.’s Walmart in Kansas City did not show use of the in-store marketing tactics sought by our shoppers. The retailer did not have in-store private label beverage ads and no side-by-side price comparisons of any kind, according to our shopper.
Each of the other four stores surveyed showed varying degrees of in-store marketing, many with two out of three marketing elements being presented. On-shelf price comparisons were seen the least by our secret shoppers; the only retailer that used it is the H-E-B in Corpus Christi. 
TASTE TESTS
Shopper Irene W. tried Dierbergs’ private label spring water. “It tasted like average bottled water,” she says, noting no difference between private label and national brands.
Shopper Michael G. had the same reaction with the Walgreen’s brand bottled water. “It tastes okay, about what I would expect and want in this category,” he said.
Not everyone had the same reaction. Shopper Andi D. tried the H-E-B’s private label spring water and was not pleased. “The H-E-B spring water has a distinct after-taste. I am a stickler for how water tastes, if it tastes like it is coming from dirty pipes, I won’t buy it again,” she explains.
Shopper Kelly M. tried the Schnucks cola and found “Schnucks diet cola was no comparison, too sweet and not enough fizz,” she says.
As the only shopper to try the drink mixes, Synnora R. thought Safeway’s Shake n’ Run brand was way too sweet. “I do not drink mixes so these tasted very sweet to me.  I think if I were to actually drink this, I would have to water it down,” she explains.
OBSERVATIONS
There are certain products not represented in all of the retailers studied by our shoppers. For instance, neither the Schnucks nor the Dierbergs in Manchester, Mo., carries private label drink mixes.
Private label teas seemed to be the most unavailable product of those sought out by our shoppers. Of the six retailers surveyed, only two had any private label tea on their shelves. Spring water was much more prevalent, showing up at all the retailers. 
Based on our secret shopper data, there seemed to be only small price gaps for the products surveyed, with at some notable exceptions.
Private label cola seems to show the widest gap where, in cases like the Schnucks in St. Louis, the price of national brand cola is more than twice that of private label.
In other locations throughout the country, the gap is not as wide. In the San Diego Safeway, for example, there was only a 74 cent difference between private label and national brands; at Schnucks there was only an 11 cent difference.
Different products showed different price gaps as well. The most noticeable being between national brand Crystal Light and Safeway’s private label Shake n’ Run which had a nearly $2 difference in price. This was the widest price gap among all the products surveyed by our secret shoppers.
EXPERT INSIGHTS
Taste is a key factor in the success of any private label in the supermarket beverage aisle, experts agree.
“The beverage aisle is a fairly dynamic category that changes about every three weeks which makes it challenging for companies, both private label and national brands, to keep up with the changing trends,” explains Jim Wisner, president of the Libertyville, Ill.-based Wisner Marketing Group. “The trick to the beverage category is to get the flavor profile and packaging right.”
“The growth in private label sales expected to occur between 2011 and 2016 will be driven in part by demand for tasty, better for you beverages priced below similar options marketed by national brands. The weak economy and continued low level of consumer confidence will also help to drive gains in private label beverage sales in 2011,” explains Chicago-based Mintel International Group in a recent report on the category.
Consumers have trouble identifying which products are private label and which are national brands in the beverage aisle, according to the report. “Half or more of shoppers surveyed were able to properly identify 12 of the 15 supermarket private labels included in the study as store brands. However, only 41 percent of those who are aware of the Wild Harvest Organic label by Supervalu properly identified it as a store brand while 29 percent said it was a name brand. Similarly, only 46 percent of those who had heard of the Central Market Organic label identified it as a private label while 20 percent mistakenly indicated it as a name brand.”
“These findings suggest that private labels that are closely associated with health and wellness in the minds of consumers are less likely to be identified as store labels, at least within the context of supermarkets,” explains the study.
Milk, 100 percent juice drinks and noncarbonated, unflavored bottled water are the categories of private label beverage most commonly purchased. The popularity of these categories relative to others can be explained by the fact that consumers often view these beverages as essentially commodities and hence name brands are often not viewed as being of superior quality or taste, notes Mintel.
“Private label faces intense brand competition and promotion in the beverage category. When private labels can establish a meaningful price differential, of about 30 percent or so, it does well. It does struggle at times against promotional intensity from brands. But, since this is such a large dollar category in retail, it also makes it a big money category for private label,” explains Neil Stern, senior partner with Chicago, Ill.-based research firm McMillan Doolittle LLP.

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