Private Label Buyer


August 18, 2010

Ask many Americans to remember what they consumed in their college dorm or bachelor pad, and memories of Rice-a-Roni and Kraft macaroni and cheese most likely would fill their heads. But retailers would be mistaken to believe the only consumers who eat pasta and rice are single people and college students.
According to “Side Dishes: The Market – US – June 2010,” a report from Mintel International Group, Chicago, with 2009 FDMx sales of nearly $1.5 billion, the market for rice is almost twice as large as the next biggest side dish segment, dry macaroni and cheese.
“The popularity of these products is due in part to the fact that they are filling and easy [to prepare], important to consumers trying to stick to a budget and also for those with little cooking skill,” the report says.
Consumers already have been enjoying more pasta and rice products since the economy took a turn for the worse several years ago. Perhaps this reality explains why dollar and unit sales of overall and private label pasta and rice products have been relatively flat, according to the 52 weeks of data ending June 13 from Chicago-based market research firm SymphonyIRI Group.

The only exception was ready-to-serve rice. Most likely in response to consumers’ demand for easy-to-prepare meal solutions, the overall ready-to-serve rice category grew 17.9 percent and 22.2 percent in dollar and unit sales, respectively. And private label ready-to-serve rice’s dollar and unit sales respectively jumped a whopping 329.8 percent and 320.6 percent.



As it is in most categories, health and wellness is a big deal in the pasta and rice categories.

“In pasta, the growth trend is health and wellness, and the opportunity is to provide a selection of better-for-you pastas in your store brand,” Mike Cunningham, director of private label sales at Dakota Growers Pasta Co., Carrington, N.D., says.
Brian Fox, vice president of customer marketing at Kansas City, Mo.-based American Italian Pasta Co. (AIPC), says there still is strong consumer demand for pasta products made from whole grains. Products made from whole grains make up more than half of the health and wellness segment, he says, and they continue to show strong growth.
“If a retailer isn’t offering a whole grain or whole wheat option today, they are not only losing sales opportunities - they are not staying relevant with today’s consumer,” Fox says. “The last redesign of the food pyramid put a huge emphasis on whole grains, and manufacturers have responded by offering more and better products to meet those needs.”
Bill Stabert, executive vice president of sales and marketing at Philadelphia Macaroni Co., Philadelphia, agrees that there is continued interest in the whole grain arena. He also sees more brands looking to blend various grains together.

“You’ll see pasta blends where people are blending different lentils, peas [or] ancient grains,” he says.

Unique rice blends also are popular. For example, Richmond, British Columbia-based K International Trading Co. offers several unique rice blends for private labeling, including basmati white rice with lentils, and brown wild rice with goji berries. Gluten-free is another growing trend, both Fox and Stabert agree.
“Gluten-free continues to be top of mind for manufacturers and retailers because of the growing consumer [base],” Fox says.
In fact, AIPC recently introduced its Heartland brand of gluten-free pasta, made with a blend of yellow corn and white rice. The pasta, which is available for private labeling in fusilli, penne and spaghetti shapes, is egg-free and dairy-free, and is said to match the color, texture and flavor of traditional pasta.
Licensing also provides a way for retailers to match the national brands’ pasta products, especially if a retailer is trying to appeal to children.

“There’s always new shape development - pasta shapes and pasta dyes are relatively easy and inexpensive to develop to create a point of difference,” Stabert notes. “As far as shapes and identities, things you’d want to present are the Nickelodeon characters [or] Disney characters.”



Speaking of matching, packaging of a private label pasta or rice product should have a look that is consistent with that of the national brands, Fox says.
“When a retailer has 25,000 to 30,000 items in a store, getting lost in the mix is easy,” he explains. “If private label matches a national brand, the packaging should maintain consistency in the package claims so consumers recognize the private label is a quality match.”
On the ready-to-serve side, some retailers are getting downright innovative with packaging. According to Mintel’s Global New Products Database (GNPD), in the last year, several retailers have introduced better-for-you varieties of pasta and rice products that prepare in the microwave.
“Manufacturers are looking to tap into Americans’ desire to eat better in a way that is consistent with their busy lifestyles,” the report says.
For example, Harris Teeter launched its Ready Quick brand of steamable brown rice, which GNPD says is described as “a quick and easy side dish that is low in sodium and fat that microwaves in five minutes.” Kroger also introduced its own natural brown rice that is microwaveable and gluten-free and contains no preservatives, GNPD reports.
But even the most distinctive packaging doesn’t necessarily attract the eye as well as a clever marketing program. Fox notes that in the rice and pasta segment, cross-category promotion offers retailers a huge opportunity to increase the overall dollar ring at the register.

“People want to know what they will eat tonight, tomorrow, and the next week without thinking too hard about it,” he explains, “and retailers are in the perfect situation to answer that question for them.”

Cunningham agrees, noting that pasta and rice products are “meal-builder items” that function as a catalyst in creating a successful cross-merchandising program - especially on the private label side.

“By building trust in your brand of pasta, you can extend household usage of your store brand into other categories,” he says.
One example Cunningham gives is lasagna noodles. Retailers could build a display around lasagna noodles that promotes all sorts of private brand lasagna ingredients: cheese, pasta sauce, spices - even meats and produce.

“Another example might be elbow macaroni, the second most-popular pasta shape to spaghetti,” Cunningham adds, noting that retailers could promote the macaroni alongside “adventurous new salad dressings or sauces being launched,” then support the products with recipes offered in-store or online.



In the end, though, a private label program is only as strong as the partnership between the retailer and manufacturer. Cunningham notes that a good partnership is built on strong communication and trust.

“It’s important for retailers to bring their store brand manufacturer into the process from the beginning and not be afraid to use their expertise,” he says. “Utilize your suppliers and ask them questions - really understand the products that you’re putting into your brand and the benefits to market to the consumer.”

Cunningham concludes by noting the importance of retailers sharing with suppliers the direction of where they wish to go.

“Plan to go there together,” he says. “Your supplier should have consumer trend information specific to their products, and by sharing consumer and trend information, you can build strong strategic brands together.” PLB