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Getting a chance to talk about private label at trade shows is always a plus. In early November, PLBuyer Editor Chris Freeman had the chance to sit down with five attendees at the ECRM Fresh and Frozen Foods and Foodservice at Retail shows in San Antonio, Texas.
Federated Group’s Colin Rafferty and Lora Watier, Price Chopper’s Paul Gillis, and Safeway’s Cindy Ono-Lam were joined by a Harris Teeter representative, who participated on the condition that they would not be quoted.
Over a Mexican lunch of fajitas and refried beans, the group talked about finding unique products, packaging ideas that they liked and disliked, and some trends for the industry that may be visible in 2013. Here’s an edited version of the discussion:
PLBuyer: We recently visited the Expoalimentaria trade show in Peru to see what U.S. buyers might be looking for in private label from South American companies. What kinds of things are your companies looking for to put new and unique products on the shelves?
Lora Watier: We are seeing a lot of Spanish and Hispanic purchases.
Colin Rafferty: The demographic of the customer base has to be taken into consideration. To a store in Texas, having an authentic Mexican flavor is very important. In that same market, it’s not as important to have an authentic Italian flavor. You need to keep the trends following the customer base.
Paul Gillis: At one point, we used to talk about first-generation Hispanics, and I’m talking specifically about Mexican Hispanics, they make tortillas with lard and flour from scratch. Second generation would buy the premade tortilla mix that you add water to and make them by hand. Now the third generation buys the package of tortillas. That does tell part of the story. You have to be very specific about Hispanics. Are you talking about Mexican Hispanics or Caribbean Hispanics? Mexican Hispanics eat a certain group of foods, and Caribbean Hispanics eat different types, and they’re very differentiated. Goya covers much of the Caribbean, or Puerto Rican Hispanics, so you have to know your customer, too. We are revisiting our sets to be more specific, instead of throwing in just traditional Hispanic offerings. Who’s making it, and who are we making it for?
PLBuyer: So outside of ethnic foods or flavors, what kinds of things do you see that can help find the differentiation in private label that we all seem to talk about today?
Cindy Ono-Lam: We try to be innovative, to find flavors and unique items before the brands get there. Our Open Nature and Eating Right have been able to capture different things and stay at least in the same time frame with the trends as the national brands. I’ve been doing this 25 years, and back then, from the time somebody started a new product to the time it would launch in private label, it would be five years later and the timing would have passed. Now we’re speeding up because you have to ride the ride when it happens. The quality has to be there. The packaging has to make sense. The flavors always will be changing with the times, but you always have to be more reasonable as far as price and offer a gap with the savings.
Watier: The timing of it was right. A few years ago, you couldn’t get consumers to try something different in private brands.
Gillis: One challenge is that most of the items are NBE, and it’s the other 10 percent that are new and innovative and different. Most retailers don’t have the patience. The only folks that are trying that are the Trader Joe’s and Wegmans, that truly capitalize on unique and differentiation, where many of us are challenged to hit sales budgets. And talking the space of something that’s doing more (sales), you don’t have the ability to put in an item that’s nice to have, because it’s replacing something that sells.
Rafferty: Different stores have different customers and different targets. We have customers that prefer pillow pack frozen potatoes rather than the standup packaging. It’s an added cost, and is that important to the customer? There, packaging is not a differentiator. In a standup package, it’s more cosmetic and looks great on the shelf, but steamable packaging, THAT was innovation. If you get packaging where there’s an added benefit to it, that’s where there’s the potential. Then I think there’s a lot of room for growth, and for us to have a moment of reflection.
Gillis: It all depends on the value to the customer. A resealable bag, or soup. The first few times they went through a standard can, now it’s the easy flip can. You could see where it appeared that the national brand had an advantage. To (change cans) you had to close the price gap, and you could do that, but you have to be very careful. If you do go with it, that closes the gap, and how can you make more money with it?
Watier: And that’s where some (companies) that go to it have gone back to (the original packaging).
Ono-Lam: Cheese clam shells. They looked great, they were so much easier, but then the customers did not like them. We were one of the first to get out of it. Nobody wants to pay that much extra for something that seemed to add not much to it.
Watier: When you look at the cost and see the cost opportunities, you see the natural and organic products have it a little higher than the rest.
PLBuyer: Packaging can help be a differentiator for private label. What ideas or packaging styles are appealing to you?
Ono-Lam: I look for innovation, something new, something different. Part of it is the packaging. Is it ahead of its time? I personally think, how can I work it into a private label item?
Gillis: I want really good graphics. I want the customer to know what it is without having to think about it. It’s got to catch their eye. I had someone present an item, I know we’ve all had this, an absolutely outstanding item, and the packaging was just terrible. You want to give them advice and say, you have a great product, and you’re not big enough to do a lot of advertising, but if you had a little better packaging and some sampling, you could really do great. I don’t think you can underestimate the impact of good-looking packaging.
Watier: With all of the add-on information that regulations will have to put on the front panels, will adding all that information deter from the packaging or give something to the consumers they want?
Ono-Lam: There was a milk carton design that had a peek-a-boo window, so you’d know how much you’ve drank, but it added something significant to the amount. And it was too much. Nice idea, but cost too much.
Rafferty: Graphics are important, but not just nice crisp clean graphics, I like graphics that give a private brand, give it its own personality.
PLBuyer: And so the last one is a catch all of sorts. What do you see picking up momentum as we head into next year?
Gillis: Better-for-you food, lower calories, higher fiber …
Gillis: Gluten-free, yes, lower sodium, more protein per ounce. Portion control, single-serving sizes. Most grocery retailers are reluctant to push single-serving sizes, but more people want them.
Colin Rafferty, Federated Group, category development manager
Lora Watier, Federated Group, category development manager
Paul Gillis, Price Chopper, director of grocery-food
Cindy Ono-Lam, Safeway, category director-dairy