- Baby Non-Food Products
- Baking/Cooking Staples
- Household Products
- Kitchen Products
- Paper Products
- Personal Care
- Pet Products
- RESEARCH & AWARDS
Although private label products are showing rapid growth, new analysis from The Nielsen Co., New York, maintains that the growth is driven by rising commodity and food prices, not by consumers' abandoning national brands.
The analysis, presented last week at Nielsen's Consumer 360 Conference in Phoenix, found that private label sales of consumer packaged goods (CPG) products grew almost 9 percent in supermarkets during the 52 weeks ending April 19, 2008, reaching $50 billion in dollar sales and accounting for a 17.5 percent share of supermarket dollar sales. In the combined supermarket, mass merchandise and drug store arena, private label sales rose 9.1 percent, accounting for $77 billion in dollar sales and a 15.9 percent share of stores' dollar sales.
However, unit sales were down slightly during the same timeframe, Nielsen said, indicating that higher unit pricing is the main growth driver in the private label arena.
"When private label dollar share started to spike, it appeared that shoppers were shifting to store brands in order to save money," said Tom Pirovano, director of Industry Insights at The Nielsen Co. "That's always been the conventional wisdom during economic downturns.
"Digging beyond the numbers, however, it's clear that private label unit share is essentially flat," he added. "Higher prices in commodity categories like eggs, milk and cheese are driving private label dollars, not consumers deserting traditional brands."
Top-selling private label items, Nielsen said, tend to be products with limited profit margins that are most impacted by an increase in shipping or raw materials. Top-selling food items include eggs, milk and cheese, while best-selling non-food items include aluminum foil, paper towels, paper plates and toilet paper.
Nielsen added that the popularity of private label products varies throughout the country. The San Antonio market, for example, has the highest private label share of store, at 25.6 percent, while New York enjoys only a slightly more-than 10 percent share of store. Meanwhile, Nielsen said the strongest growth opportunities can be found in the organic and natural food categories, health and wellness products and in products customized for store customers' wants and needs.
"As prices continue to rise, private label products can be leveraged by retailers to entice consumers into the store and increase sales," Pirovano said. "Knowing what your consumers want is essential for developing your private label strategy.
"Do your customers want to save money with in-store brands? Are your customers willing to buy higher-end and more expensive private label products? In a challenging economy, private label products can serve as 'destination' products that truly differentiate your store from competitors," he added.
Our Take: Even in unfortunate economic times, a lower price isn't always enough to guarantee a sale. More important to private label sales growth: offering the right products for your customers at the right price. How well do you know your customers?
A new report says most consumers are more concerned about the safety of the foods they eat today than they were five years ago.
You say tomato; I say salmonella. ... OK, the song lyrics might not quite read like that, but certain types of tomatoes are now being linked to a salmonellosis outbreak.
In a June 9 release, FDA said 145 cases of salmonellosis caused by Salmonella Saintpaul - an uncommon form of Salmonella - had been reported nationwide since mid April. At least 23 hospitalizations also had been reported. FDA recommended that consumers stay away from certain raw red plum, red Roma, and red round tomatoes linked to the outbreak, as well as products containing these raw red tomatoes.
The tomato is just the latest food favorite in what's become a long line of items associated with a major food safety scare. It should come as no surprise, therefore, that consumers are becoming more and more concerned about the safety of their food purchases.
In fact, more than half of American consumers (57 percent) responding to a recent survey admitted they actually have stopped eating a particular food - temporarily or permanently - because of a recent food safety recall. The survey - commissioned by Deloitte Consulting LLP, New York, and conducted online by an independent research company in April - comprised a nationally representative sample of 1,110 consumers.
What's more, 73 percent of surveyed consumers said they believe the number of food-related recalls increased during the past year, while 76 percent said they are more concerned about the foods they eat than they were five years ago.
The survey found that concerns are especially high around recalls of meat products. Consumers said they are most troubled by beef recalls (78 percent), followed by chicken recalls (67 percent), fresh fruit and vegetable recalls (53 percent) and dairy product recalls (53 percent).
"The results of the survey indicate that over half of today's consumers may drop your product if they believe you are not doing what it takes to protect them and their families," said Pat Conroy, Deloitte LLP's vice chairman and U.S. consumer products practice leader. "Food manufacturers may consider taking a total approach to ensure the safety of their brands, all the way from the farm to the supply chain, the store shelves and even the consumer's pantry."
Our Take: One of the advantages of a central food supply is the year-round availability of certain foods. A major disadvantage, however, is the increased likelihood that a foodborne illness will spread nationwide. Recent food safety scares certainly enhance the argument for sourcing produce locally.
The Green Scene
New research suggests that corporate sustainability messaging is not breaking through the clutter in consumers' lives.
Expanding on its "2007 LOHAS Consumer Trends Database," the Natural Marketing Institute (NMI), Harleysville, Pa., predicted that the future of the green movement will require a new level of sophistication and clarity, as consumers increasingly try to differentiate between those companies that are truly sincere from those who are not. (LOHAS, an acronym for lifestyles of health and sustainability, describes a rapidly growing market for goods and services that appeal to consumers who have a "meaningful sense of environmental and social responsibility and incorporate those values into their purchase decisions," NMI said.)
"While numerous companies are attempting to gain credibility as good corporate citizens, consumers are so overwhelmed by the myriad of communications and are, at times, unable to distinguish the legitimacy," said Steve French, NMI managing partner. "Some companies who are doing relatively little with respect to [corporate sustainability] are perceived as just as responsible as those spending millions of dollars incorporating sustainability into their business."
At the same time, many consumers remain "contemptuous" about the sincerity of corporate action, looking for credible third-party proof of the claims companies make, NMI said. Lack of credibility and trustworthiness will continue to confuse consumers, and could undermine the "LOHAS revolution" currently underway. Corporate sustainability messaging, therefore, must be more meaningful, memorable and relevant to consumers if it is to have an impact, NMI added.
Our Take: Environmentally conscious consumers are becoming familiar with greenwashing - and they don't appreciate companies that attempt to pull the wool over their eyes. Retailers that want to gain consumers' trust will make meaningful changes to private label products and packaging, validated by third-party experts.
Bits and Pieces
Among the most notable retail and private label news:
- The Private Label Manufacturers Association said it would devote a section of its 2008 Private Label Trade Show to industrial ingredients, including raw materials, flavors and fragrances that make up today's store brands.
- Safeway Inc, Pleasanton, Calif., announced a partnership with Warner Bros. Consumer Products, Burbank, Calif., to create a better-for-you line of food products for children. Through a licensing agreement with Safeway, the Warner Bros. animated Looney Tunes characters will be featured on the new Eating Right Kids line of food and beverages, which will be sold at Safeway outlets.
- Publix, Lakeland, Fla., launched a promotion called "Grocery Cart Comparison," according to the June 4 Chattanooga Times Free Press. The program shows Publix customers how much money they can save by choosing private label products instead of the national brands.
- Loblaws, part of Loblaw Companies Ltd., Brampton, Ontario, is running an online promotion that allows customers to submit suggestions for new President's Choice potato chip and cookie flavors.
- The Kroger Co., Cincinnati, announced a series of initiatives to help its customers save money, including fuel discounts associated with store purchases, a growing lineup of private label products, an expanded $4 generic drug program and more.