Article: Editorial: Pondering Private Label -- January 2009
For as long as I can remember, the future of private (i.e., store) brands vs. those of consumer packaged goods (CPG) companies has been debated.
With my own nose buried in formulation topics and consumer trends, it has been a discussion to which I have not paid much attention. Lately, however, it has been hard to ignore an “employment drift” by past co-workers from my days in R&D at food processing companies. Retailers such as Wal-Mart, Target and SuperValue have hired friends with resumes listing Ph.D.s in food science and stints in product development at International Multifoods, Del Monte and ConAgra Foods, among other CPG companies.
According to The Nielsen Company, private label products, in general, had a 10.2% increase in U.S. sales over past year to over $81 billion (total U.S. grocery, drug, mass merchandiser stores, including Wal-Mart, 52 weeks ending 9/27/08).
Intuition says the recent economic downturn has helped drive sales of reduced cost products, the hallmark of private label items. For example, Nielsen reports private label products are 21% of unit sales, but represent only 16% of dollar sales. However, an online survey conducted in June and July 2008, also by The Nielsen Company, indicates changing attitudes may be a driver. Some 63% of consumers indicated that the quality of private label brands is as good as name brands (up three points since 2005), with 33% saying some store brands are of higher quality.
Branded products are still the vast majority of most product category sales, with private label success primarily occurring in commodity areas (e.g., some 72% of fresh egg and 60% of eggs in the U.S. are private label). Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company, is quoted as saying, “Translating private label growth outside of commodity categories requires innovation, an area where CPG manufacturers, rather than retailers, traditionally excel.”
Perhaps, however, subtle changes are occurring. A few exhibitors at the 2008 Private Label Manufacturers Associations’ annual expo offered intriguing concepts more typically expected at the Natural Product Expos. For example, Ichimasa Kamaboko Co. (a.k.a. Japanese Fishcake Company) sampled kinako (soybean flour) pudding and a green tea pudding based on soymilk, trehalose, starches and gums with the consistency of a starchy flan and a pleasing flavor. A trip to Target finds products such as “Maryland Style Mini Crab Cakes with Real Blue Crab” in upscale packaging under its Archer Farms brand. Some private label foods look an awful lot like consumer brands.
With my own nose buried in formulation topics and consumer trends, it has been a discussion to which I have not paid much attention. Lately, however, it has been hard to ignore an “employment drift” by past co-workers from my days in R&D at food processing companies. Retailers such as Wal-Mart, Target and SuperValue have hired friends with resumes listing Ph.D.s in food science and stints in product development at International Multifoods, Del Monte and ConAgra Foods, among other CPG companies.
According to The Nielsen Company, private label products, in general, had a 10.2% increase in U.S. sales over past year to over $81 billion (total U.S. grocery, drug, mass merchandiser stores, including Wal-Mart, 52 weeks ending 9/27/08).
Intuition says the recent economic downturn has helped drive sales of reduced cost products, the hallmark of private label items. For example, Nielsen reports private label products are 21% of unit sales, but represent only 16% of dollar sales. However, an online survey conducted in June and July 2008, also by The Nielsen Company, indicates changing attitudes may be a driver. Some 63% of consumers indicated that the quality of private label brands is as good as name brands (up three points since 2005), with 33% saying some store brands are of higher quality.
Branded products are still the vast majority of most product category sales, with private label success primarily occurring in commodity areas (e.g., some 72% of fresh egg and 60% of eggs in the U.S. are private label). Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company, is quoted as saying, “Translating private label growth outside of commodity categories requires innovation, an area where CPG manufacturers, rather than retailers, traditionally excel.”
Perhaps, however, subtle changes are occurring. A few exhibitors at the 2008 Private Label Manufacturers Associations’ annual expo offered intriguing concepts more typically expected at the Natural Product Expos. For example, Ichimasa Kamaboko Co. (a.k.a. Japanese Fishcake Company) sampled kinako (soybean flour) pudding and a green tea pudding based on soymilk, trehalose, starches and gums with the consistency of a starchy flan and a pleasing flavor. A trip to Target finds products such as “Maryland Style Mini Crab Cakes with Real Blue Crab” in upscale packaging under its Archer Farms brand. Some private label foods look an awful lot like consumer brands.
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Claudia Dziuk O'Donnell is Chief Editor and Associate Publisher of Prepared Foods magazine including its NutraSolutions and Culinary sections. Her responsibilities include determining the editorial content of the print publication and the New Products Conference.
