Data / Categories / Channels / Drug / Trend Features / Tactics / Spreads

Category Insight: Store Brand Spreads

Specialty products and attributes drive spreads sales.

August 1, 2014
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The Spreads category has begun to see more diversity, with a nice selection of products beginning to appear at drug and dollar stores, as well as the usually solid grocery channels. Spreads like peanut butter and jelly are highly traditional staples, and typically form a logical point of entry for non-grocery channels to capture more food dollars.

Peanut butter is an anchor, with unit sales up 8.98 percent for the 52 weeks ending May 18, 2014 per IRI—although aggressive pricing strategies contributed to a 5.29 percent drop in dollar sales for the period. Private label maintains about a 20 percent share of this nearly $2 billion segment.

The drug store channel in particular has been expanding further into grocery of late. In one example, CVS recently released a new grocery brand, Gold Emblem Abound, a line centered squarely on “natural” rubrics, and CVS includes a peanut butter in the mix. CVS notes that products within the Abound line are free from artificial preservatives and flavors, and contain zero grams trans fat.

 

Fresh Fruit Ideas

Spreads is a mature category for private label. “The core category is set,” said Rob Miller, president and CEO of Trailblazer Foods. “Formulations that are NBEs to Welch’s Grape and Smucker’s best-selling flavors are well rooted and accepted by consumers. It is important that retailers and their private label manufacturers continue to manage, promote and generally support these mainstream SKUs, since a majority of the sales volume is still found in these items.”

Specialization holds opportunity. “We see the best growth potential in newer product categories like organic and lower-calorie offerings, and our favorite is the premium and super premium segment,” said Miller. “These are products that are made with more fruit than a traditional preserve, are sweetened exclusively with sugar and contain fewer calories, since fruit replaces sugar. We’re having success in this segment now, and clearly see paths to future growth. We also like the ‘superfruit’ concept in the premium segment.

Miller suggests retailers select targeted phrases for messaging to align with formulation rubrics. “Claims and romance copy that contain messages like ‘more fruit,’ ‘sweetened only with sugar’ and ‘fewer calories’ continue to be popular with consumers, especially in the premium and super premium segments of the market,” he said. “Right now, we’re enjoying success with unique flavor combinations in the premium segment such as blueberry açaí, raspberry pomegranate, mango passionfruit and others.”

Jam, jelly and fruit spread diversification can also come from the fruit’s agricultural origins, such as the Pacific Northwest or a specific state. Target’s Archer Farms line includes Michigan Red Tart Cherry Preserves, Oregon Strawberry Preserves and Oregon Red Raspberry Preserves.

ALDI has made its intentions clear regarding product tier diversification with its Specially Selected line. The Specially Selected fruit spreads offer upscale product attributes like a high percentage of fruit—at 75 percent, as noted on the label.

Trader Joe’s Organic Super Fruit spread is made with sour Morello cherries, red grapes, blueberries and pomegranate—all highly nutritious, phytochemical-rich fruits. The jar’s cap proudly proclaims “Juice Sweetened,” adding further interest. Descriptors like “superfruit” will continue to capture shopper attention—and jams and jellies could use a bit of a helping hand, as performance was off by about 5 percent in dollars and units for the 52 weeks ending May 18 per IRI.

 

Alternatively Original

Specialty nut butters, with private label share currently valued at $27.5 million, have seen significant growth over the past year, with a rise of 66.16 percent in dollar sales and 59.08 percent in unit sales per IRI. Almonds and cashews are primary bases for nut butters, along with hazelnuts with chocolate.

ALDI now carries an almond butter under its Simply Nature label, a line marketed with descriptors like “simple,” “honest” and “natural.”

Nutella, the iconic chocolate-hazelnut spread, has enjoyed a major surge in recent years—and competition has intensified, with The Hershey Company and J.M. Smucker Company getting in on the act (see “Eye on the National Brands”). Now retailers everywhere—including Dollar General, Walmart, Safeway and Kroger—have added their own chocolate-hazelnut spreads. The market for chocolate-hazelnut spreads will likely diversify as more manufacturers experiment with variations on the theme, using different textures (think crunchy vs. creamy), chocolate types (dark vs. milk), sweetness levels and types of nuts (single-nut types like almond and pecan vs. hazelnut, as well as combinations of nuts).

Trader Joe’s has made waves with its sweet Speculoos spread made with the Dutch “windmill” cookies of the same name. Cookie spread, also known as biscoff in some circles, got its start in Europe. Trader Joe’s now carries three varieties of the spread—in creamy and crunchy, plus a Cookie & Cocoa Swirl.

The spreads category overall has seen some strong performances over the past year, with a diversity of products capturing attention. As the category continues to grow more crowded, retailers should look toward ongoing promotion of pivotal private label products that can become destination products, anchoring a sufficiently diversified set.


The Bottom Line

• Specialty spreads on the upswing

• Jam/jelly diversification ideas

• Sweet spread performance


EYE ON THE NATIONAL BRANDS

At the end of 2013, The Hershey Company released its take on Nutella with three varieties: Chocolate, Chocolate With Hazelnut and Chocolate With Almond.

The J.M. Smucker Company launched its chocolate spreads in 2012, under its Jif brand, offering Chocolate Flavored Hazelnut Spread, Mocha Cappuccino Flavored Hazelnut Spread and Salted Caramel Flavored Hazelnut Spread. Through 2013, it had reportedly already captured a 20 percent share of the market.

Ferrero’s Nutella, the product that defined the style, still rules, with a roughly 70 percent share in the United States in 2013 per Euromonitor. Nutella sales have reportedly tripled over the past five years to hit $240 million. A recent line extension is Nutella & Go, sold with breadsticks for dipping. The Nutella brand is celebrating its 50th anniversary during 2014.

Euromonitor anticipates that chocolate spreads in the United States will see 7 percent CAGR through 2018.


PLBuyer TV

 For more Spreads insight, watch the new “Private Label Spreads Insight” video on PLBuyer TV at www.PrivateLabelBuyer.com/TV

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Recent Articles by Douglas J. Peckenpaugh

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