Private Label Buyer
Special Report - The Hot List: Non-Food

The Hot List, May 2013

PLBuyer takes a look at the non-food categories that saw dollar sales increase by at least 10 percent in 2012.

May 10, 2013
Hot List May 2013

PLBuyer’s 2013 Non-Food Hot List includes private label non-food categories that saw dollar sales across supermarkets, drugstores, mass market retailers,

Enlarged Image

Hot List May 2013 chart

military commissaries and select club and dollar retail chains increase at least 10 percent in 2012.

The chart on page 10 shows a sampling of the categories on this year’s Non-Food Hot List. The 2013 list has grown to include 94 categories, up from 38 in 2012 and 51 in 2011.

At the top, the other laundry detergent (packet/bar) category hits the No. 1 spot, up 30 million percent to almost $2 million in sales. This category is primed for rapid growth, with club store Costco one of the first retailers to offer a private label laundry packet with its new Kirkland Signature Ultra Clean laundry detergent packs.

National brand Tide Pods rolled out in March 2012, finally bringing the laundry pod trend from Europe to busy Americans.

“The case here is simply a matter of the product category starting from a zero base,” said Jim Wisner, president of Libertyville, Ill.-based Wisner Marketing Group, Inc. “Laundry ‘pod’ products are relatively new to the market, and most private label entries were just hitting the shelves in the prior year. Although many private label products in this category are now of consistently high quality, private label detergents have struggled over the years to gain a substantial share of market.

“There are many reasons for this, but primarily it is a result of the entrenched strength and equity of the leading brands and their aggressive and constant promotional activity. I would anticipate that eventually the ‘pod’ subcategory will approach the market shares of the powders and liquids currently being marketed.”

Also of note, SHC bleach (standard bleach) came in No. 8 and fabric softener sheets came in No. 12 when looking at the list in order of highest dollar sales.

However, OTC private brands are the clear winners in non-food categories this year. When looking at the categories on the Hot List that have the highest dollar sales, internal analgesic tablets ranks first, up almost 15 percent to more than $1 billion in sales. The category also has the largest unit share of any category on the list, at 46 percent.

Over the past few years, shoppers have seen more private label answers to children’s products in this category, as well. For example, Rite Aid added Rite Aid Children’s Acetaminophen Grape Rapid Melt tablets to its private label lineup, listing the item under new products on its website.

“Johnson & Johnson continues to have several plants that have been put out of production for remodeling and other improvements to address their product quality issues,” Wisner said. “However, it is important not to underestimate the inherent strength of private brand OTC products. Not only have quality perceptions improved dramatically, but customers have begun to understand that they must meet the same stringent manufacturing requirements as any name brand products. Add to this the dramatic price spreads and it is no wonder that consumers are turning to private brand OTC items in droves.

“This applies not only to the analgesic items, but across the whole range of OTC categories, including antacid tablets, first aid, laxatives, anti-smoking, and all the others.”

Antacid tablets comes in second on the list, up almost 15 percent to more than $788 million, and first aid ointments/antiseptics falls at No. 5, up more than 11 percent to almost $307 million, with a 40 percent share of the category.

Laxative/stimulant liq/pdwr/oil comes in ninth, but is up more than 18 percent to more than $206 million. Anti smoking tablets, muscle/body support devices, and heat/ice packs also all fall into the top 20 when looking at the list in order of highest dollar sales.

According to Wisner, an aging baby boomer population will continue to drive further sales growth and overall category growth in private label OTCs for the foreseeable future.

Baby wipes came in at No. 3 when looking at highest dollar sales categories on the list. With sales of more than $439 million, up about 12 percent, it is easy to see moms’ acceptance of these private label products. Another standout baby care category last year was baby care and safety accessories, which fell at No. 8 on the Non-Food Hot List, bringing in more than $15 million in sales and up 164 percent.

“In spite of the large millennial population now beginning to form households and families, the overall birth rate continues to be very low,” Wisner said. “This is a result of individuals deferring families because of the economy, student debt, and other reasons, but also a longer-term cultural shift to smaller family sizes.”

However, in the private label arena, many retailers have been aggressively developing sub-brands and other marketing initiatives directed at new households, according to Wisner, and many retailers have launched new premium product lines.

“The millennial generation is somewhat less national brand conscious, and more apt to evaluate products solely on their merits,” Wisner said. “Additionally, they are not big users of print media, which have been used aggressively over the years by national brands to drive sales and brand share in this category.”

To no great surprise, dog/cat needs fell at No. 4 when looking at highest dollar sales and rawhide dog chews fell at No. 6.

“Our view,” Wisner said, “is that after a private label slump in this category going back many years, retailers have aggressively reinvested to regain market share. For items like rawhide chews, it is arguable that anything other than private label would be needed on the shelf.”

Private label pet care products have had a spotlight shone on them recently, with the PLMA dedicating a pavilion to the subject at the 2012 PLMA Private Label Trade Show last November.

The only other category not mentioned in the top 10 ranking of highest dollar sales was No. 7, sanitary napkins/liners. However, Wisner explained that although they are in the top 10 in dollar sales, this is a very large category, and dollar share is still less than 10 percent. Even a relatively modest dollar growth will show disproportionate strength against a small share base.

It also appears affordable ways to bring pleasant scents to the home were popular last year. Potpourri/sachets was 21st on the Hot List, bringing in $88 million in sales, up 50 percent. Home air fresheners also make the list with more than $67 million in sales, up 18 percent.

“From what we have seen,” Wisner said, “there is simply more private label product coming to market, and growth may be as much a result of new availability as anything else.”

Showing how powerful unpredictable weather events can be on the market, the all other batteries category may have benefitted from Hurricane Sandy last year, falling at No. 23 on the list, up 49 percent to bring in $38 million.

“No question that the weather, not only from Hurricane Sandy, but many other serial weather issues both in the Northeast and Mid-South, has probably driven battery sales more than the typical weather patterns in the past may have,” Wisner said. “Hurricane Sandy, in particular, came into the most populated area in the U.S. and would likely have a disproportionate impact on disaster-related sales than might occur in other parts of the country.”

In this case, private label might not have been a shopper’s choice, but the only option left on the shelf in some areas with a spike in demand.

A Look at the Numbers

Looking at the list as a whole, private label non-food categories had total dollar sales of more than $6.2 billion. Total unit sales reached more than $1.6 billion, up from $555 million the previous year. The growth of categories on this year’s list to 94 from 38 last year contributes to the boost in volume.

Hair growth products had the highest unit share on the list at 51 percent. Dollar sales were up 17 percent to more than $42 million. Wisner explained that private brand hair growth products offer a very large difference in terms of both initial and ongoing purchase cost.

“It is an expensive product that must be purchased frequently, and the savings are very dramatic,” he said.

Looking to the future, Wisner said to a great extent, private label non-foods growth is being driven by product expansion, improved attention to quality, and new product launches across all channels.

 “In particular, Walgreens and CVS efforts are driving the drug trade,” he said. “Also, both OTC products and general merchandise items enjoy the largest differences in cost versus national brands. As individuals and households continue to look for ways to save this is a very easy and very visible place in which to change buying habits. Added to this is the high product satisfaction new customers are experiencing. They remain private label customers even when their personal economic situation improves.”