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When the private label industry gathered in Chicago for the Private Label Manufacturers Association Trade Show, more than 4,500 visitors filled the halls to discuss products old and new.
Two months earlier, in the capital city of Peru, more than 30,000 visitors from nearly 60 countries came to the Expoalimentaria 2012, the largest commercial food and beverage show in South America.
And what was on their mind? Overwhelmingly, the answer was the private label industry.
“Nearly every company I spoke with was interested in discussing private label,” Supervalu Sourcing Manager Keith Winters said. “Several exhibitors commented on private brand growth in the U.S., as well as expecting private brand market share to continue to grow in the U.S. Several companies mentioned establishing/growing private brand business in the U.S. as a significant objective for their company.”
So with all the opportunities for manufacturers and suppliers in the U.S., why are retailers looking outside the country’s borders to find their next private label partner?
As it turns out, the global private label industry is getting larger each day. As consumers become more knowledgeable and adventurous with their food choices, retailers are expanding their horizons to find unique flavor profiles and unique products to set their private label products apart from the competition.
And although that has meant more regionalization of certain foods, it also has meant a look at expanding the international flavor of brands in store. Whether that’s in specialty retailers such as Whole Foods Market and Trader Joe’s, or supermarkets such as those operated by Supervalu and Safeway.
Differentiation today means unique. And to find something unique, sometimes you have to travel to the hills of Peru.
NEW MARKET, FAMILIAR FEEL
In just its fourth year, more than 2,000 international buyers made their way to Expoalimentaria. Although much of the large show floor – laid out in a converted airplane hangar space on a military air base – was filled with exhibitors from Peru, there were more than 20 countries represented at the show.
“The (Peruvian) food industry is $5.5 billion dollars. And it’s continuing to grow, whether it’s fishery or frozen, growing fruit, grapes, avocados,” said Beatriz Tubino Bardales, central export manager for the Association de Exportadores (ADEX) that helped promote the show. “I think as it continues to grow we’ll see more gourmet, more organic growing. For me to see Mexico (exhibiting here), I’m very proud that these countries choose to promote here because they know the quality of visitors we have, and they can find that quality of product in Peru.”
The scale of the event was immediately noticeable. The wide, expansive entrance to the show was preceded by a large map, detailing the positioning of exhibitors throughout the space. Some were grouped by category – Agroindustry, fishery, machinery, packaging, services – while others were part of larger international pavilions.
“I was impressed by the attendance, both the number of attendees as well as how many countries were represented,” said Winters, who was attending the show for the first time, although other Supervalu representatives previously attended the show. “I thought the Business Round portion was highly effective, to have an opportunity to have an in-depth discussion on business opportunities, and ask questions as well. Having translators available was beneficial, as they facilitated
The settings reminded Winter of a large private label show closer to home.
“There were distinct similarities to PLMA but exhibitors were all from Peru and other South American countries,” he said. “I was also impressed by the number of plant facilities with SQF level II certifications, or BRC grade A certifications.”
The show featured dignitaries from Peru, including President Ollanta Humala and General Secretary of the Agriculture Ministry Ana Dominguez. It was a showcase for the country and its producers, Bardales said.
“Our economy is growing, our GDP will be up about 6 percent this year, we’ve got free-trade agreements with 16 countries, and this is an opportunity to take advantage of our unique climate,” she said. “Crops can be grown and harvested all year long.”
It’s also a chance for Peruvian companies to bring the country’s image and history to a much wider audience.
“People like (Peruvian Embassy Commercial Assistant Moises Huerta) and like Prom Peru helped bring more than 2,000 buyers,” Bardales said. “I’m very surprised and happy to see what already is done. And I’m proud of Peru, of each booth that has someone talking about our story. We have a very nice story behind the people and the products.”
A chance for the world to hear stories such as Inka Crops.
EXPORTING INKA AROUND GLOBE
Fifteen years ago, Ignacio Garaycochea’s family founded Inka Crops, a Peruvian based company that produced giant roasted corn and potato snacks for the local market. After about five years, the company was presented the opportunity to look outside the Pervuvian borders to bring its products to new markets.
“Because we were based in Cusco (Peru), we thought it was a good idea to explore the national market,” said Garaycochea, the head of sales and marketing for Inka Chips. “And then this company came to us that had contacts in the U.S. and France. We had this exotic, unique product and it all came into place. We had the contracts … and Trader Joe’s started us with a purchase order.”
The company has grown to a mid-sized supplier focusing on private label exporting, doing about $7 million annually of business, Garaycochea said. It has moved beyond simple corn and potato chips to offer plantain chips, cassava chips, and sweet potato snacks.
Its first entry into exporting came with Trader Joe’s, and Garaycochea said the retailer helped bring the small Peruvian company into a much larger world along the way.
“Trader Joe’s liked our product and said we want to have it in our banner,” he said. “At that time, it was (difficult) to promote our own brand. Trader Joe’s was very instructive in the ways of learning about private label. We were able to bring our quality to your brand.
“We began to sell in Kuwait, and we’re in more than 10 countries now. It provided a broad scope and alternatives when you’re dealing with the private label sector.”
Winters said that companies who wanted to get into private label relationships while dealing with exports could find some advantages in the process.
“One key advantage of supplying private brand is the suppliers would not have slotting fees attached to the establishment of business,” he said. “Since there is already a good base of private brand business for globally sourced products, a system is in place to efficiently order, ship, and receive private brand product coming into the U.S., and on to the Supervalu distribution center network.”
As Inka Crops continued its work in private label, it found that the retailers it was dealing with began looking for more from the company. More input, more feedback, more certifications, more work.
“The way we approach to retail companies is importing to companies that offer unique and different products,” he said. “They like to hear, see, try different products, and they’ll be willing to listen to what we have.
“It is our duty to provide customers with innovative products every year. We have a product development area, and our clients expect us to provide new ideas.
We’re partners in trade, not merely suppliers.”
And as partners, Garaycochea said Inka Crops does its part to bring a personal touch to the products and services that it can provide.
“It’s not just our clients, but the whole industry cares about products and where they came from,” he said. “They like to hear our history. How do (the products) relate to our society? That’s magic. It’s a very powerful marketing tool.”
THE HUNT CONTINUES
As retailers continue their search for unique items to fill their shelves and private label programs, they will look to countries around the world for partners and suppliers. And they will find items such as the Papas Nativas produced by Grupo Gloria, snack chips made from sweet potatoes unique to Peru.
“Our snacks are not common snacks,” Grupo Gloria Regional Manager Miguel Angel Arteaga said. “Peru has more than 500 types of potatoes that grow here, from the highlands in particular, called nativas. They are sweet potatoes with unusual colors, and we leave them as they are. This is one of our top products.”
It is also the process of suppliers looking to the past to find innovations for the future that will satisfy retailers’ desire for differentiation, and consumers’ desire for food adventure.
“You’re talking about the Andeans growing grain and quinoa, very high value crops. They were eaten by the Incas, and now you go to Whole Foods and see quinoa in salad bars,” Bardales said. “People are buying these kinds of products from countries like ours, places where some can only be harvested at 3,000 meters altitude.
“If we continue to grow crops and push quality of life for all in the (supply) chain, that will go directly to the people. You see the combination of flavors changing, we are innovating crops and packaging, focusing on developing packaging and value-added aspects for the whole chain.”
Spanish link: A la búsqueda de marcas propias nuevas y únicas