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The Private Label

Plus, the Millennial Shoppers Spur Growth of Store Brands

By Kathleen Furore

Have you ever considered that the economic downturn might have been positive for your business?

Jim Wisner, president of Wisner Marketing Group, LLC in Libertyville, Ill., says it could be considered a plus where private label products are concerned.


“Private label got a boost during the downturn of the economy because consumers had less money and they turned to alternatives,” Wisner says, “and a lot of those customers didn’t go back to the national brands.”


Today, private label products hold a prominent place in most retailers’ inventories, with shoppers turning to brands like Kroger’s Simple Truth, Jewel’s Culinary Circle, and Costco’s Kirkland Signature label for the quality and flavor they deliver.


Kroger’s Simple Truth label offers a variety of products that customers flock to for the quality and flavor they deliver.

“Everyone realizes what a good job private label is doing now – many of the products taste no different [than the national brands],” Wisner says. “Also most of the growth in private label is with the premium tier products – things that are marketed not as direct alternatives to the national brands but as unique, different, and somehow better products. Consumers are finding items that are really interesting and fun.”

“Everyone realizes what a good job private label is doing now – many of the products taste no different [than the national brands].”


— Jim Wisner, president of Wisner Marketing Group, LLC in Libertyville, Ill.


Meeting Retailers’ Private Label Needs

When developing private label lines, retailers and their meat and cheese suppliers also should consider qualities consumers say they’re seeking in deli products. “Convenience was the number one demand, with four in 10 respondents opting for 'more items that can save me time at home,’ followed closely by  ‘more restaurant quality items’ and ‘heart healthy items, such as low sodium,’" the Private Label Manufacturers Association (PLMA) reports.


“Private label products get a lot more oversight! If I am putting my name on it, my people are going to go to the plant, they’re going to make sure they’re following my specifications and certification requirements,” Wisner stresses.


With sales of store brands in the plus column, and millennials turning away from national brands, the future for private label looks bright.


“Consumer acceptance of private label, especially in new, lifestyle-focused labels, has been positive,” Wisner concludes. “By and large, for the long-term, every reporting source on earth says the trend will continue for a while.”

“What retailers want and need when it comes to private label products is much like what they want from any other vendor. The quality has to be there – and the emphasis on quality is increasing,” Wisner says. “Most mainstream retailers are trying to replicate the Trader Joe’s experience because once they get customers into that pattern of buying [their store brands], the more destination shopping events they will create.”


Deli meats and cheeses – think Safeway’s exclusive Primo Taglio line – offer prime opportunities to create a go-to private label brand.


“Retailers can over-spec a [meat] product – they can make it leaner, or specify that it have more fat,” Wisner explains. “In the cheese category, private label is moving into more artisanal products. And you’ll occasionally see a ‘co-branded and made exclusively for us by…’ statement, Costco does that a lot and Target is starting to do it,” he adds, noting that Target “is becoming more transparent with its Archer Farms products.”

Understanding what deli retailers and their customer’s want is key for meat and cheese vendors who supply private label products.
Vendors also must realize the pressure that goes along with providing private label.

Statistics Show Store Brands Booming

According to the PLMA, sales of store brands in all major retail channels continue their upward climb. In fact, they’re setting new annual revenue records, even as national brands struggle with lower growth year to year in supermarkets, drug chains and mass merchandisers.


Total private label sales in the U.S. were $115.3 billion, according to the PLMA’s 2015 Private Label Yearbook, which utilizes data from The Nielsen Company for the 52 weeks ending December 27, 2014.


“When 2014 came to a close, store brands had accounted for nearly $3 billion in incremental sales, an increase of 2.5 percent over the previous year and more than twice the percentage gain that was recorded by national brands,” the Private Label Yearbook says.


What’s more, the same publication reports that, over a three-year period, store brands sales across all combined retail outlets increased by $5.5 billion. That moves the market share of store brands dollar from 17.3 percent to 17.7 percent they conclude.


In addition, more than half of respondents in a PLMA-commissioned study of buying behavior and consumer preferences in deli, dairy and fresh bakery departments said they buy more private label now than they did five years ago. Forty-four percent of survey respondents claim that they “always” or “frequently” buy store brands. Frequency of buying is even higher in deli, dairy and bakery, where it reached 47 percent.


Turning the focus to deli, about one-third of dollar sales and one-quarter of unit sales in deli are private label, says Alan Hiebert, senior education coordinator for the International Dairy-Deli-Bakery Association (IDDBA).


“Private label is strong in many categories,” Hiebert reports. “A staple of the deli, sandwiches are a growing category. Private label sandwiches account for one-fifth of the deli sandwiches sold in supermarket delis, but they’ve also been growing in dollar and unit volume.”


Other strong deli items include private label pizza, which accounts for over half of the deli pizza sold in supermarket delis, and private label deli sandwich spreads, which account for 60 percent of sandwich spreads sold in supermarket delis – both growing in dollar and unit volume, Hiebert adds.

Anyone involved in food retailing today knows that marketing to millennials has become a big part of the profit picture. New data from PLMA shows that private label can be a plus for the sought-after demographic group – the association even says store brands “may be the retailer’s best friend!”


According to the new study, ”The Rise of Loyal Shoppers,” about half of the respondents in the coveted 25- to 45-year old category buy store brands “always/almost always/frequently”– a dramatic increase in the top rates of purchase when compared to PLMA studies over the past decade.


As Brian Sharoff, PLMA president, says, “The baton has passed to a new generation of consumers. There has been a major shift of purchasing power in the marketplace. After decades of dominance by boomers, a new generation of Americans – those ages 25 to 45 – has taken over as the heaviest purchasers of consumables. What’s more, they behave differently from other generations when they shop.”

“Consumers 25 to 45, in increasing numbers, are trying store brands for the first time in product categories where they had previously only bought a national brand.”

On the Move with Millennials

 – Private Label Manufacturing Association study, ”The Rise of Loyal Shoppers” 

“Consumers 25 to 45, in increasing numbers, are trying store brands for the first time in product categories where they had previously only bought a national brand,” the study says. “Moreover, in overwhelming numbers, they report the trial produced a satisfactory experience.”


In one of the survey’s most significant findings, more than 49 percent of respondents recently chose a store brand for the first time instead of a favorite national brand. When asked how the store brand compared with the national brand, 28 percent said “very favorably” and 62 percent said “favorably.”


Five Star Food Products, Inc., in Long Island, N.Y., specializes in pre-sliced deli products. The family-owned firm has been slicing and co-packing pre-sliced deli meats for the retail and food-service industries for over 15 years. Today, those deli meats are sliced in what owner James Omage describes as “a brand new 30,000-sq.-ft. HACCP- and BRC-certified facility.


“We offer all deli meats pre-sliced in a variety of configurations, package sizes and types such as

re-sealable zipper packages, Peel Re-Seal, and Semi Rigid Trays in Vacuum Pack or MAP Packaging,” Omage says. “We co-pack for companies that distribute products for both the retail and foodservice industries, and offer branded as well as private label products.”


Modern Deli Mobile asked Omage to share his impressions of the market for private label today, and to explain how Five Star Food Products is stepping up to meet the demand.

Modern Deli Mobile Spotlight: Five Star Food Products

Modern Deli Mobile: What trends are you seeing in private label deli products?

Omage: There is definitely an uptick in [demand for] private label products, especially over the past five years. Price point and quality over branded products are two things that I see driving demand.


Modern Deli Mobile: Do you see demand for sliced vs. whole product on the rise?

Omage: Yes – especially now that the quality of the products that are offered in pre-sliced is just as good, if not better in some cases, than the whole products offered behind the deli counter. Add the fact that the current generation is about convenience and does not want to waste time waiting at the deli counter.


Modern Deli Mobile: There is a lot of pre-sliced product out there in the market. What is special about the products you offer?

Omage: We do not produce any of our own products, as we specialize in slicing and packaging other manufacturers products. This has become a business of its own and allows us to pay more attention to the demands of the ever-changing needs of our customers’ packaging needs.

Modern Deli Mobile: How does the way you slice the product contribute to its quality?

Omage: We slice and package all of our products in a new, state-of-the art HACCP- and BRC- certified plant using the best slicing and packaging equipment available on the market today. We set very high standards for the products and packages that are produced on all of our packaging lines. All of our products are also high pressure pasteurized (HPP) after slicing and packaging to ensure that products produced at our plant are the safest in the marketplace.


Modern Deli Mobile: What features of the slicers you use ensure you get the best slice possible?

Omage: We use all Weber and Textor slicers to ensure that we achieve the best possible slice quality and yields for our customers. Sanitation of these slicers is also a top priority for us. The accessible design of the Weber and Textor equipment allows for easy and effective cleaning in a limited amount of time. There are so many features on the Textor and Weber slicers that help us to accomplish our goal of producing the highest quality sliced product on the market today but telling you about all of these would require a whole article in itself!

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