Private Label Buyer

PL Packaging Needs Careful Consideration, Analyst Says

June 27, 2012

As retailers expand to three-tier private label programs in North America, and increasing to four-tier and potentially five-tier programs in Europe, focusing on packaging at the value end of products is crucial for success, Aisling Balfe, custom research analyst with London-based retail consultancy Planet Retail told a webinar audience Wednesday morning.

“Packaging design today needs to be very carefully considered because there’s a risk of confusing the consumer of where the product sits within the value line or the tiering system,” she said.

As packaging at the value-tier has improved over the year, Balfe said customers could become confused that the value product is actually a step up to the standard, national brand equivalent tier.

“There’s a very fine line to be drawn,” she said. “You want the value lines to be functional and attractive, and those are ones that consumers might see as a standard line and they begin to trade down from that. So we’re starting to see value lines adopting a clean-cut, white packaging design, with premium or super premium products  adopting black or silver lines.”

Balfe said that United Kingdom grocers were leading the next trend into four- or five-tier platforms, adding a super-premium line of products, as well as a newer version of the value brand. As examples of the super premium moves, she cited Tesco’s Venture Brands launch in 2011, which was put in six markets in the categories of pet, frozen foods, pasta, oils, and sauces.

“They bear no explicit mention of the Tesco name on the packaging, and they’ve been marketed by Tesco as brands in their own right, but they’re private label products.”

The potential benefit, she said, is that the super-premium brand can be expanded into channels and retailers outside of the producer. The risk, however, is that marketing the private label line like a national brand could cost more money in terms of marketing and advertising, thereby cutting into margins.