Private Label Buyer

PL Buyer's eReport June 3, 2008

June 4, 2008

Top Story

Dairy Labeling Debate Continues
Legislation in various states threatens to complicate matters when it comes to the labeling of dairy products free of artificial growth hormones.
 
During the past year or so, a number of grocery chains have announced their intention to offer store brand dairy products, namely milk, in a format that's free of artificial growth hormones. But proposed legislation in various states threatens to complicate matters when it comes to the labeling of such products.

The Organic Trade Association (OTA), Greenfield, Mass., said it has been working closely with consumer, dairy and other industry stakeholders to counteract these proposed measures "to make truthful labeling claims concerning their production practices and consumers' rights to know how the milk they purchase is produced." OTA added that it is "deeply concerned" about some state actions that would severely restrict truthful and accurate labels on consumer goods.

Ohio is just one state that has made recent headlines for its controversial labeling proposal, which was subject to "emergency implementation" by Governor Ted Strickland.

According to the DailyGreen.com, Ohio milk producers may label their milk as having come from cows not treated with rBST, or recombinant bovine somatotropin (also known as rBGH), a synthetic hormone given to cattle to increase milk production. However, they also must place a disclaimer on the container stating that the FDA has found no difference between treated and untreated milk. The disclaimer must be the same font and color as the label, but Ohio's proposed ruling established that the disclaimer must be only at least half as big as the label instead of the same size. The disclaimer must also be contiguous to the label.

OTA said the Ohio Department of Agriculture's (ODA) proposed rule prevents organic farmers and processors from truthfully communicating with consumers about federally regulated organic production practices.

The International Dairy Foods Association (IDFA), Washington, D.C., also weighed in, stating the state's actions were very disappointing.

"Despite the department's efforts to convince consumers that there is a problem, there has been little if any public outcry for the state to mandate the appearance and content of current labels," IDFA said in its testimony. "To the contrary, we believe that the department and the state of Ohio have heard from hundreds of consumers who have voiced opposition to the department's efforts to restrict dairy labels and very few proponents, by comparison."

IDFA said Ohio's business community remains strongly opposed to the new proposal, believing it infringes on its right to commercial free speech and impedes interstate commerce. IDFA said that, in addition to OTA, it is joined by the Grocery Manufacturers Association and the Midwest Dairy Foods Association in its opposition to the new labeling restrictions.

In mid-April, ODA said it made small changes to its proposed rule, stating that the FDA production disclaimer must be no smaller than a 7-point font and adding a specification that hormone-related claims are false and misleading. The amendments also added a clarification that production claims with respect to the use of antibiotics or pesticides will be permitted, as well as a stipulation that the rule does not prohibit seals authorized by federal law or Ohio statutes. The ruling went into effect in mid-May.
 

Our Take: Labels proclaiming the absence of undesirable substances and ingredients generally are provided in response to consumer demand - and consumers' right to know. Measures to reduce the impact of such labeling seem to go against the grain of what consumers want, and invite confusion.



An Eye on Health

Health & Wellness: A Competitive Strategy
A new report says retailers are helping consumers eat better and live healthier in an effort to fend off the competition.
 

Food retailers increasingly are addressing competition issues by emphasizing perishables and natural and organic products often tied to a broader health and wellness strategy, according to the Food Marketing Institute's (FMI) "The Food Retailing Speaks: The Annual State of the Industry Review 2008." The results of the survey-based report reflect a major industry movement to help consumers eat more nutritious foods and promote their overall well-being.

FMI said 97.3 percent of food retailers are emphasizing perishables to address competition, while 89 percent are concentrating on the development of natural and organic products, and 84.9 percent are stressing consumer wellness and family health.

Meanwhile, 90.4 percent of food retailers are focusing on the development of private label products as a competition strategy. And the shopping experience also was cited as a major competitive strategy, with 82.2 percent of food retailers emphasizing a unique shopping experience, store design and product selection.

Arlington, Va.-based FMI said the five strategies enjoy relatively high rates of effectiveness (based on a scale of 1 to 10), ranging from a high of 8.4 for an emphasis on perishables to a low of 6.5 for an emphasis on consumer wellness and family health. (The development of private label products scored a 6.9 for effectiveness.)

To purchase FMI's annual industry review, visit www.fmi.org/store
 

Our Take: Health and wellness issues are top of mind with today's consumers. Combining a health and wellness focus with private label product development would seem to be a logical strategy for addressing competition issues in an economic downturn.



The Green Scene

Good Deeds Go Green
Consumers who buy reusable shopping bags help Whole Foods feed hungry children.
 

Caper Whole Foods Market, Vancouver, Canada, announced the launch of FEED 100 reusable shopping bags at locations across the area's lower mainland to help provide nutritious meals for school children in Rwanda. The organic cotton and sustainable burlap bags, designed exclusively for Capers Whole Foods Market by Lauren Bush, retail for $29.99; each bag purchase provides 100 healthful school meals through the FEED Project's FEED Foundation and the UN's World Food Programme.

"By partnering with FEED Projects and the World Food Programme, we are helping to make a direct impact on the lives of children in need," said Vicki Foley, a Capers Whole Foods Market representative. "Not only does this project help encourage environmental conservation with reusable shopping bags, but it also helps raise awareness about the very immediate issue of world hunger and how we can each do a small part to alleviate this widespread problem."

Our Take: The sustainability movement encompasses much more than environmental initiatives - it also addresses human concerns and corporate responsibility. Kudos to this division of Austin, Texas-based Whole Foods Market for finding a meaningful way to make a difference.



Bits and Pieces

What's News in Private Label

Among the most notable retail and private label news:
  
  • Stop & Shop, Quincy, Mass., and H.E. Butt, San Antonio, both announced initiatives designed to save shoppers money. Stop & Shop said it lowered prices on thousands of items in its health and beauty departments, while H-E-B said it launched the "Big Savings Start Here" program, which includes lowering thousands of prices and increasing the value of weekly promotions.
  • Private label foods are gaining market share in the slowing economy, according to a May 21 article in the Wall Street Journal. Anjali Cordeiro, the article's author, also reported that the overall packaged food industry - including both branded and private label products - is gaining share from restaurants.
  • Target, Minneapolis, said it partnered with designer Rogan Gregory to create a limited-edition for GO International, a program designed to provide affordable fashion created by world-renowned designers. All cotton used in the Rogan for Target collection is 100 percent certified organic. The collection will be available in most Target stores between May 18 and June 28.
  • Staples Inc., Framingham, Mass., announced the launch of its M by Staples collection, which stands for "My Style. My Way." The collection of high-end journals, notebooks, file folders, stationery and other business essentials is designed to "connect with customers on an emotional level and stand out with personality and style," Staples said.