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Tesco’s Jack’s will compete with Aldi and Lidl Frozen foods Condiments Sauces Household products Baby care
The Real
DEAL
Authentic Italian pizza is a premium product that can help retailers differentiate
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FALL 2018
CONTENTS
10 COVER STORY
The real deal Authentic Italian pizza is a premium product that can help retailers differentiate
REGULARS 4
EDITOR’S TAKE
6
MARKET REPORT
26
END CAP
FEATURES CATEGORY UPDATE
16 Frozen foods Heating up
18
18 Condiments A nod to new
20 Sauces All is well
22 Household products Scents and sustainability
24 Baby care
Gentle thoughts
24
20 FALL 2018 | PRIVATE LABEL INTERNATIONAL
3
EDITOR’S TAKE
An opportunity like never before A new report from Nielsen offers plenty of good news globally for private label. The title of the global market researcher’s report, “The Rise and Rise Again of Private Label,” pretty much says it all. “There is a new retail revolution underway, and it’s going to affect the food industry across the globe over the next five years in ways we have never seen before,” the report states. “We’re talking about the development of private label products.” The report stresses that private label growth will occur at brick-andmortar stores and online. Nobody should be surprised, considering how far private label products have come in the past several years in regard to quality, differentiation and exclusivity. Consumers around the world have discovered and continue to discover the value that private label presents. “In the brick-and-mortar world, when shoppers visit stores more often, they will purchase more private label products,” the report says. “As the online share of fast-moving consumer goods (FMCG) sales continues to grow, this behavior is very likely to be replicated in the e-commerce world.” That’s not all. Private label products from one country will continue to become accessible to consumers in another country because of e-commerce, which could generate sales and market share of retailers’ private label products around the world. Consider The Kroger Co., the world’s third-largest supermarket chain. The Cincinnati, Ohio-based chain recently struck a deal with China’s Alibaba Group Holding to sell its products on Alibaba’s Tmall global site, a platform for international brands. And what will Kroger sell? Products from its popular organic and free-from Simple Truth private label line. Soon, more than half a billion Chinese consumers will have easy access to America’s largest natural and organic brand. Simple Truth is arguably the greatest private label success story ever in America. There’s no doubt that Chinese consumers will embrace the products. “E-commerce enables Kroger to quickly scale to reach new customers and markets where we don’t operate physical stores, starting with China,” said Yael Cosset, Kroger’s chief digital officer, in a press release. According to consumer research firm Kantar Worldpanel, online sales of FMCG grew 30 per cent in the 12 months ended in March 2017, and now account for 4.6 per cent of global FMCG sales, up from 4.4 per cent a year earlier. Online sales of FMCG are also surging in developing countries, Kantar Worldpanel reports. The fastest-growing online FMCG markets over the same 12-month period were Thailand (up 104 per cent), Malaysia (up 88 per cent) and Vietnam (up 69 per cent). There will continue to be more international online platforms that provide retailers the chance to sell their private label products online to consumers around the world. It’s a revolution for sure, and an opportunity for private label products to succeed globally like never before. PLI
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You ain't seen nothin'yet!
PLMA’s Annual Private Label Trade Show just keeps growing larger and larger. More exhibitors. More products. More retailers. The reason, of course, is more consumers than ever are buying store brands. But as the man says “You ain’t seen nothin’ yet.” Store brands are heading for unprecedented growth and PLMA’s 2018 event is adding new categories to keep pace: housewares and kitchenware, natural and organics, and private label wine. Add these to all the food, snacks and beverages, health and beauty, GM and household, and you can see why this year’s show will be the most exciting show PLMA has ever presented. Come and see it all for yourself. Visitor registration is now open. Telephone +1 212 9723131 or online at www.plmaregistration.com.
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MARKET REPORT
NEW RETAIL OPERATION WILL OPERATE A LOW-COST BUSINESS MODEL DESIGNED TO KEEP COSTS LOW AND PRICES DOWN
Tesco’s Jack’s will compete with Aldi and Lidl esco, the U.K.’s largest supermarket chain based in Welwyn Garden City, England, launched a new grocery value chain, Jack’s. In a press release, Tesco said, “Jack’s will bring customers greattasting food at the lowest possible prices.” According to MarketWatch, published by Dow Jones & Co., Jack’s will compete with German deep-discount chains Aldi and Lidl in the U.K. Jack’s opened two stores in the U.K. in September and plans to open 10 to 15 stores in the next six months. Jack’s is named after Jack Cohen, who founded Tesco in 1919. Cohen is regarded as the “original value champion,” according to Tesco. The launch of Jack’s is part of Tesco’s centenary celebration. Eight out of 10 food and drink products will be “grown, reared or made in Britain,” according to Tesco. Jack’s will also carry its own private brand, also called Jack’s. Jack’s will operate a low-cost business model designed to keep costs low so it can keep prices down, according to a press release. “It’s a no-fuss approach with a simplified range of products, no fancy fixtures or fittings, and no added extras, just good quality at low prices,” the press release stated. Dave Lewis, Tesco’s group chief executive, said Cohen championed value for customers and changed the face of British shopping. “He’s an inspiration for all of us and that same spirit still drives Tesco now,” Lewis said in a statement. In other Tesco news, the retailer announced that it’s teaming up with chef and author Jamie Oliver to promote the company’s food products. Oliver has created several recipes and tips for the retailer, which will include “healthier” recipes from scratch. Oliver’s previous 11-year deal with London-based rival store chain Sainsbury ended in 2011. Tesco said the campaign would see Oliver promote “helpful little swaps” in stores, suggesting healthier alternatives with reduced levels of sugar, salt and fat. Tesco announced the partnership in accordance with a recent survey that revealed seven out of 10 families want supermarkets to help them lead healthier lives and make healthier choices more affordable. PLI 6
PRIVATE LABEL INTERNATIONAL | FALL 2018
ASDA ON MISSION TO REDUCE PLASTIC PACKAGING BRITISH RETAILER AIMS TO MAKE ITS PACKAGING 100 PER CENT RECYCLABLE BY 2025 Asda is on a mission to reduce plastic in packaging throughout its operation. In September, the British retailer announced the removal of avoidable plastic from its greetings card range. The decision is expected to save over 50 million individual cellophane bags annually — equivalent to over 100 tonnes of plastic, according to a press release. The removal will apply to the majority of Asda’s range, but the supermarket’s more delicate, hand-crafted cards will remain in plastic sleeves to protect them against damage. In July, Asda launched a new logo that reads “Less Plastic Packaging” on the front of products where at least 10 per cent of plastic has been removed from packaging. The logo launched on Asda’s chilled juice lines and will be added to other lines. “Customers looking to reduce their plastic consumption will be able to easily identify products that have had plastic removed or reduced from their packaging, thanks to the new on-pack logo,” the retailer said in a press release. Last February, Asda outlined plans to use less and recycle more plastic, including reducing own brand plastic packaging by 10 per cent by next February and making its packaging 100 per cent recyclable by 2025. The retailer is also working to develop future alternatives to plastic. “We know that customers are looking to reduce the amount of plastic they use and want us to help them to do so,” said Nikki Dixon, Asda’s senior manager for plastic reduction, in a statement. “Our shoppers love sending greeting cards and this change will mean they don’t need to worry about their impact on the environment.” PLI
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MARKET REPORT
Private label continues gains in Europe STORE BRANDS CLIMB TO ALL-TIME HIGHS IN SEVEN COUNTRIES Retailer brands keep gaining popularity across Europe, according to the Private Label Manufacturing Association’s 2018 International Private Label Yearbook, which reports that the latest data from market researcher Nielsen shows market share for private label increased last year in 12 of 19 countries. Market share for private label now stands at 30 per cent or above in 17 countries.
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Private label reached an alltime high in Europe’s largest retail market, Germany, with its market share there climbing to over 45 per cent for the first time. Market share also increased to its highest levels ever in six other countries: The Netherlands, Belgium, Sweden, Norway, Hungary and Turkey. The gains came even in countries where private label already had very high penetration, according to New York-based PLMA. Market share for retailer brands climbed in the U.K., Germany, Belgium and Portugal, where share was more than 40 per cent. In the U.K., where supermarkets are investing in their private label programmes to meet competition from discounters, market share climbed to more than 46 per cent. Private label’s share has remained above 40 per cent there ever since Nielsen began compiling data for PLMA in 1997. Private label still accounts for half of the products sold in Spain and Switzerland. Market share in France remained above 30 per cent, but declined as some retailers reduced their price entry brands and moved toward more premium products. The biggest market share gain was posted in Turkey, where private label climbed by three points to nearly 26 per cent. In Greece, retailer brands still account for one of every three products sold in the country. In Scandinavia, there were gains in Sweden, Norway and Finland, with market share in all three countries above 30 per cent. Private label share also was at 30 per cent or above in four central and eastern European countries — Poland, Hungary, Czech Republic and Slovakia. Market share stayed at or above 20 per cent in Italy for the sixthconsecutive year but declined by a point last year. PLI
PLMA toasts private label wines
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ASSOCIATION AWARDS 28 RETAILERS WITH 58 AWARDS Retailers from 10 countries were named winners in the Private Label Manufacturers Association’s (PLMA) 2018 international “Salute to Excellence Wine Awards” during PLMA’s “World of Private Label” International Trade Show in May in Amsterdam. The 28 retailers honoured included supermarkets, hypermarkets, discounters and grocers. In all, 58 wine awards were announced in categories covering reds, whites, roses, sparkling, and fortified wines. The awards are proof that private label wines are succeeding in all price ranges and varieties, said Brian Sharoff, president of PLMA. “This is resulting in a significant growth of private label wines in all categories as these retailers are well-known for their private label food, snacks, beverages, health and beauty and household products,” he said in a statement. “According to Nielsen, private label sales in these categories are already more than 40 to 50 percent.” Consumers are not shopping for cheap wine, Sharoff said. “It is clear from the awards that shoppers are looking for quality and good value. That is why the awards reflect both best quality and best value,” he added. Discounters such as Aldi and Lidl won 12 awards, which is a continuation of a trend found at other wine competitions over the past few years, the press release said. By country, French retailers won 12 awards, British retailers won eight, those in Spain and Portugal won seven, retailers in Italy earned six, retailers in The Netherlands took home five and retailers in the U.S. won four. The top score in red wines for Best Quality was Albert Heijn’s AH Excellent Selectie Côtesdu-Rhône Villages. The top score for Best Value was Auchan’s Pierre Chanau Cahors Malbec. In the white wine category, the top score for Best Quality was Thailand’s Central Food Retail for its Joy Rhein Riesling. The top ranking for Best Value was Aldi Süd’s Mario Collina Pinot Grigio Valdadige. For a complete list of the winners, visit www.plmasalute.com/wine-awards. PLI
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FALL 2018 | PRIVATE LABEL INTERNATIONAL
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COVER STORY By Lawrence Aylward
The Real Deal
AUTHENTIC ITALIAN PIZZA IS A PREMIUM PRODUCT THAT CAN HELP RETAILERS DIFFERENTIATE
n some parts of the world, people love to load their pizzas with pepperoni, sausage, bacon, meatballs, mushrooms, onions, extra cheese … and the kitchen sink if there’s room. The toppings are sometimes so heavy — and can create so much grease — that the crust droops like a tree branch during an ice storm. Italian pizza makers, however, are much more discreet when it comes to what and how many toppings they put on a pizza. They take a minimalistic approach. A sagging crust caused by too many toppings is considered a travesty. Italians also take great care in prepping ingredients for pizza. They aren’t in a rush. For instance, Italian pizza makers will let dough sit and ferment for what may seem like an eternity to some pizza makers. Earlier this year at the 19th CIBUS International Food Exhibition in Parma, Italy, I spoke with several representatives from Italian pizza ingredient manufacturers about what constitutes an authentic Italian pizza. I found that Italians are very diplomatic and welcome other countries’ diverse pizza 10
PRIVATE LABEL INTERNATIONAL | FALL 2018
versions, even Americans who try to turn a pizza into a cheeseburger by adding ground beef, cheddar cheese and pickles. That said, Italians are also firm — if not unyielding — in adhering to what constitutes an authentic Italian pizza, which means many things, including a philosophy that accentuates the relevance and influence of all ingredients. So their doctrine toward pizza making made me wonder if authentic Italian pizza would work as a private label product throughout the world, whether it’s sold as a frozen food or as a chilled or cooked item in the fresh-prepared section.
‘MADE IN ITALY’
There are at least three reasons why authentic Italian pizza could work as a private brand internationally. First, many of today’s food shoppers desire authenticity in food products and want to be told a story behind a product. Three words — “Made in Italy” — tells a story. And to expand on where the pizza originated in Italy in 50 words or less through packaging or merchandising only makes the story more romantic and entertaining.
COVER STORY
Italians take great care in prepping ingredients for pizza. They aren’t in a rush.
Second, citizens from countries throughout the world have an affinity for eating real Italian food, which constitutes an experience, not just a meal occasion. And third, although some pizza makers around the world have turned pizza into junk food, pizza can be healthy. Consider the margherita pizza, the most popular pizza in Italy, which consists of tomato, olive oil, mozzarella and basil. It’s a simple offering with healthy ingredients, yet retains its indulgence. And don’t forget that more people around the world want food products that are healthy and free from preservatives and other undesirable ingredients, which authentic Italian pizza offers.
THE ‘FULL EXPERIENCE’
At the CIBUS show, I spoke with Stefano Laudadio, business development executive for PizzaSi, which manufactures “premium pizza bases” at its facility in Italy that are handmade with natural yeast, extra virgin olive oil and semolina durum wheat flour. Laudadio told me that Italians like the “full experience” of pizza, meaning they like to taste the dough, the sauce, the cheese and whatever toppings are
placed meticulously on the pizza in every bite. It’s why all of the ingredients are viewed as equal, none more important than the other. “The dough is not just a support that holds the toppings,” Laudadio said. “We stress the fact that it’s not about the quantities, it’s about the quality. Less is best. Pizza doesn’t have to be junk food.” Pizza chef Massimiliano Saieva, who operates the Roman Pizza Academy in Miami, Fla., was busy making pizza for show attendees as a celebrity guest at the Molino Polselli booth during the CIBUS show. Based in Arce, Italy, Molino Polselli manufactures flour for pizza crust. Saieva stressed the key to making an excellent Italian pizza is chemistry, including allowing the proper time for dough to ferment. The Sicilian-born Saieva, whose academy teaches people everything they need to know to make a Roman-style pizza (a rectangular pie with a thin and airy crust), doesn’t let a pizza in the oven unless the dough has been fermented in a refrigerator for at least 48 hours (he prefers 72 to 96 hours). The extended time and refrigeration slows the yeast fermentation, allowing carbon dioxide and gluten more time to develop, which leads to an airier and more flavorful crust. “There’s a huge difference [in the crust],” Saieva said, when the dough is allowed to ferment longer. The crust is so light and airy, he added, that you can see right through it. I tell Saieva that the phrase “time is money” is adhered to by many businesses around the world, and that a food retailer might not be able to allow dough to ferment for so long because that would be classified as “labor intensive.” “Time is not money,” Saieva responded. “Quality is money.” Saieva is not critical of the various spins that pizza makers around the world have put on pizza. He said several students at his school “tell me they hate Hawaiian pizza.” But Saieva tells them, “You can’t hate a product if your customers want it. If you do it right, why not?” That’s Saieva’s point: Doing it right. But his “right” requires perfection, nothing less. Giulia Miatto, a technician for Padua, Italy-based Molino Quaglia, which manufactures wheat flour for pizza crusts, is also all about perfection. She said using the right flour and using it correctly are crucial elements in creating the perfect pizza. Molino Quaglia is a fourth-generation familyowned business, which has its roots in stone grinding, a process that creates flavourful flour while retaining all the vitamins, enzymes, amino acids and fiber contained in the grain. On its website FALL 2018 | PRIVATE LABEL INTERNATIONAL
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COVER STORY
The best pizza crust is so airy that you can see right through it, says Massimiliano Saieva, who operates the Roman Pizza Academy. Saieva posted this photo on his company’s website, www.romanpizzaacademy.com.
(www.molinoquaglia.org/ en.php), Molino Quaglia explains that the task of the wheat miller is to protect the vitality of the grain, using the best technology available to provide clean, healthy and reliable flour. Molino Quaglia utilizes augmented stone milling, a patented modern stone-grinding process “that combines the nutritional qualities and the taste of stone grinding with the cleanliness and stability of the most advanced cylindrical grinding process in Italy.” Like Saieva, Miatto has no problem with people around the world adding their own pizazz to pizza. “They are creating something new,” she said. But Miatto qualified her statement, stressing perfection again. No matter what the pizza style, she said it must contain the best and freshest ingredients. At the Italpizza booth, the topic of perfection was
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PRIVATE LABEL INTERNATIONAL | FALL 2018
again the subject of discussion. Modena, Italy-based Italpizza was founded in 1991 in Castello di Serravalle, a small town near Bologna, and manufactures and provides private label authentic Italian pizza to retailers in 55 countries. Last year, Italpizza produced more than 87 million pizzas. Its team of 18 chefs carefully analyzes market trends and experiments with new recipes. Massimo Sereni, the sales manager for Italpizza, also emphasized the important roles of “dough maturation” and “chemical composition” in authentic Italian pizza. He said Italpizza’s crust consists only of water, oil, wheat, salt, yeast and a small amount of sugar to activate the yeast. Sereni said he has seen and tasted dough that is very heavy because of all the sugar and preservatives in it. “We are labor intensive,” Sereni said, describing Italpizza’s manufacturing process. “And [we make] no apologies for that.” Private label is in an era that emphasizes authenticity, premiumization and differentiation. Real Italian pizza — and all of its simplicity — fits all three requirements. Retailers around the world might be wise to get in on a slice of the action (pun intended). PLI
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COVER STORY
Other ‘eccellente’ ideas for private label t’s a mainstream product in Calabria, Italy, and has been for nearly 30 years. But nduja — a spicy, spreadable pork salami from Italy — could be the definition of differentiation as a store brand for other international retailers. San Pietro Srl, an Italian meat company that exhibited earlier this year at the CIBUS 19th International Food Exhibition, offers the tasty artisanal product made from pig shoulder and belly, and was serving up samples of it on crackers at its trade show booth during the show. I stopped by a
few times to partake. Noemi Sirianni, production manager for San Pietro Srl, told me that the company has been exporting the product to Canada, Japan, China and England. Incidentally, Sirianni says San Pietro Srl is open to offering nduja for private label. Nduja would definitely qualify as a premium product, a tier of private brands that is growing as retailers seek to differentiate themselves. There’s a good chance that the people in charge of private brands at food retailers throughout the world have attended the CIBUS show in Parma, a city known as “the heart of the Italian Food Valley.” CIBUS is called the “key event of the Italian agrifood sector,” allowing the companies committed to “Made in Italy” food to meet the major distributors, importers and retailers of domestic and international markets. It’s one of the top food shows in Europe. No doubt that “Made in Italy” resonates with many nationalities, especially when it comes to food. So the CIBUS show, which takes place every two years and featured about 3,100 Italian food exhibitors and 1,300
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COVER STORY
Noemi Sirianni of San Pietro Srl shows off a wooden plate of crackers topped with nduja, a spicy, spreadable pork salami. new products this year, will remain a place to find potential private label products. During the show, I also spoke to Gianluca Compare, the export manager for Saporeat s.r.l, an Italian snack supplier which specializes in tarallini, a cracker that has been popular in southern Italy for years. Compare said his company has kept the traditional recipe and craftsmanship of the product going. But the key is “tradition in innovation,” he noted, to keep the product popular. Saporeat s.r.l has offered flavoured tarallini in pizza, chili pepper and extra virgin olive oil flavors for several years. But the company was introducing three new flavours, including coffee, lemon and wild berry at CIBUS. Compare stressed that the tarallini contains few ingredients and called them natural products. He said the new coffee tarallini contains real coffee, not just coffee flavour. But tarallini is expensive to manufacture, Compare stated, and its popularity isn’t what it once was. But with the new flavours — all of them outstanding in taste and aroma, by the way — Compare hopes to rejuvenate the product sector. Considering that more international consumers want to snack on tasty, clean-label products with natural flavours, his product might make a good fit for a retailer looking to add something different to its private label product lineup. —Lawrence Aylward
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CATEGORY UPDATE: FROZEN FOODS
Heating up
By Lauren R. Hartman
HEALTH-INSPIRED TRENDS, QUALITY, VALUE AND CLEAN INGREDIENTS ARE SPURRING GROWTH IN FROZEN FOODS
rozen foods’ popularity is having an awakening in grocery stores and supermarkets globally after several years of decline. More important, consumer perceptions about private label frozen foods are especially improving as retailers add more healthful selections, bolder and tastier varieties, and easier-to-use packaging. “There are two main trends influencing ingredients and flavors,” says Sara Pilati, sales associate at Emilia Foods, a Modena, Italy-based processor of private label vegetables, entrees, pizzas and desserts. “With so much globalization, people are more used to exotic foods and want more nutritional benefits, so they look for products combining healthy ingredients with a delicious taste.” “Consumers want the same features in both private label and branded frozen items,” Pilati says. “That is why private label retailers usually look for products that match national brand features. Retailers should pay attention to requests for gluten-free, vegan, lactose-free and vegetarian products, to name a few.” One sub-segment store brand owners should not ignore is microwavable foods. A study published by Allied Market Research expects the global microwavable foods market overall to reach €116.6 million by 2023, with a compound annual growth rate (CAGR) of 4.4 per cent from 2017 to 2023. Freezer-to-microwave products are popular because of their convenience. Microwavable frozen products require minimal preparation time and attract a changing family dynamic with hectic lifestyles and work schedules, says market researcher Allied Market Research. Microwavables are usually portion-controlled, Pilati adds. “Transferring portion control to product development becomes a bonus for companies that help consumers plan their diets,” she says. Retailers should invest in private brands to improve
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PRIVATE LABEL INTERNATIONAL | FALL 2018
customer loyalty, notes Anna Roriz, marketing manager at Topan Srl, a Treviso, Italy producer of frozen vegetables, ready-toeat courses and chilled foods. “Consumers expect private label product to offer the best value for the money,” she says. “Demand for value-added, premium quality products should keep growing. Private label products are expected to have either the same standard of quality at a better price or a higher standard of quality for the same average price.”
DARE TO BE DIFFERENT
“Product differentiation is also important to grow profitability,” Roriz adds. “Retailers have clearly reacted. Knowing the consumer well is crucial. For store brands, a consumer-oriented strategy is more likely to succeed than a brand-oriented one.” Healthy frozen foods should try to be clean label, says Pablo G. Herrera, commercial director at JCP Foods, a Nueva de Lyon, Chile, producer and exporter of frozen berries and fruit mixes. “Lower sugar and sugar-free frozen fruit is meeting consumers’ dietary needs and expectations,” he says. “Consumers want clean labels and healthier ingredients.” Although fruit is the fastest-growing [product] category within the frozen aisle, it has been treated mostly as a commodity, says Julia Klein, new trend manager at JCP Foods.Most types of frozen fruit are sold as single types, but now there is more differentiation with variety packs and blends, she says. Millennial parents want convenience more than other demographics, Herrera adds. With or without children, millennials are also more committed to eating fresh, lessprocessed foods and organics than other age groups. “Usage has completely changed for frozen fruit,” Herrera says. “It is used every day in healthier products, like smoothies, oatmeal, salad toppings and in yogurt.” Grocers are also touting frozen store brands with more pizzaz through demos, strategic placement and attractive prices, Herrera says. PLI
CATEGORY UPDATE: CONDIMENTS By Rich Mitchell
A nod to new CONSUMER DEMAND FOR TASTY, NOVEL AND HEALTHY OPTIONS IS DRIVING INNOVATION IN THE GLOBAL CONDIMENTS SECTOR AND MAKING PRIVATE LABEL INCREASINGLY ATTRACTIVE
rivate label is becoming a more significant force in the worldwide condiments market. While private label activity varies widely among regions, store branded condiments are major revenue generators in many countries and becoming more influential as merchandisers expand selections in response to growing shopper interest in flavourful and wellness-oriented foods. Brian Sharoff, president of the New York-based Private Label Manufacturers Association (PLMA), notes that “condiments have become a very important part of the growth of private label in Europe,” and states that store brand condiment penetration in the U.K., Germany and Spain is between 45 per cent and 55 per cent for mayonnaise and 30 per cent to 50 percent for mustard. While the aggressive marketing of such major international retailers as Aldi and Lidl is helping to
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expand private label’s presence in all food categories, the launch of ethnic, local and internationally inspired selections, including flavours from Asia, South America and Africa, are giving a bigger boost to store brand condiment activity, Sharoff states. He adds that millennials are driving demand for newer flavours, but consumers from all shopper sectors also are spurring revenue gains because of their widespread interest in convenience. “It is easier to buy a pre-made condiment than to make it from scratch,” Sharoff states. “That trend crosses all demographic groupings.”
EUROPE LEADS THE WAY
The mature European retail sector is the largest market for private label products, with store brand penetration still relatively low in North America and the Asia-Pacific region and small in Latin America, reports New Yorkbased market research firm Nielsen. “The challenging economic situation in Latin
CATEGORY UPDATE: CONDIMENTS
America, however, may help private label become a good alternative for Latinos looking for value,” Nielsen states in its 2018 “The Rise and Rise Again of Private Label” report. “Penetration and adoption will also increase as consumers are increasingly exposed to private label offerings through retail expansion by global and local retailers.” Store brands also can gain market share from multinational brands by offering options with specific benefits, such as being natural and organic, Nielsen notes, stating that such activity already is occurring in the Netherlands, France, Italy, Portugal, the U.K. and Belgium. “Smaller, niche and private label brands often lead innovation, and these brands have been very successful in communicating to shoppers that there is no price or quality trade-off in their offerings,” Nielsen reports. “Retailers that use private label to target niche categories and to enter new channels will further challenge established brands.” Retailers also can benefit by offering different price tiers of store brands, which can fill the gap created by some national brands that use premium pricing to build brand equity, Nielsen notes. Products with a health halo, meanwhile, are becoming the main focus of shoppers in many regions. Condiments with low salt and fat, for instance, are growing significantly in Colombia, reports Euromonitor International Inc., a London-based market research firm. “Consumers embraced those products, as there is a popular belief that table sauces are high in calories and promote weight gain or even obesity,” Euromonitor notes. “That is why concerned consumers abandoned table sauces as an initial approach to reducing their fat intake.” Products with healthier ingredients, however, including olive oil and omega fatty acids, could prove attractive to such shoppers, Euromonitor states. Lower fat condiments also are gaining popularity in South Africa, Euromonitor reports, especially with healthier versions of spicy mayonnaise and ketchup becoming available. Selections with reduced sugar and sodium also will continue to gain momentum, Euromonitor states, noting that “while health and wellness products are not the most affordable in the category, this will not put off the wealthier consumers in the country.” In addition, a wellness movement is occurring in New Zealand, where more condiments contain stevia and are being marketed as having less sugar, Euromonitor states. “Health and wellness is expected to be the leading trend influencing condiments, with the continuation of
product development trends of reduced salt and reduced sugar,” Euromonitor notes, adding that the use of locally sourced and natural ingredients also is expected to remain important differentiators.
ORGANIC IS ON A ROLL
The growing consumer demand for healthier options also is leading to the launch of more organic condiments that emphasize wellness without comprising taste and flavour, reports Future Market Insights, a London-based market research and consulting firm. North America is forecast to be the largest market for organic condiments, Future Market Insights states, followed by Europe, because of rising demand in such countries as Germany, France, the U.K., Italy and Switzerland. Asia-Pacific will be the third-largest market, with interest in organic condiments being driven by a growing middle-class population, increasing consumer spending and the growing premiumization of consumers, Future Market Insights reports. Consumers in China, Japan and Australia will likely be the major users. Organic condiment activity is in the early stages in Latin America, where manufacturers are exploring opportunities in the basic ketchup and sauce categories, and in the Middle East and Africa regions, Future Market Insights says. “The major factor restraining growth is that consumers are minimizing or eliminating the use of additives, such as condiments, in food preparations in line with their healthy food habits,” Future Market Insights states. Yet, additional product rollouts will likely lead to greater store brand activity. “Major retailers are launching private label organic condiment products to increase their organic product lines, improve profitability margins and maintain quality,” Future Market Insights adds. To most effectively market private label condiments in all global markets, meanwhile, retailers need to ensure their selections match or exceed the quality of the top national brands; promote and advertise the products; make it easy to identify options on shelves; and have packaging that is strong and attractive, Sharoff says. “Retailers must innovate and be responsive to their customers’ desires,” he adds. “Not listening to the shopper and not being innovative is the surest way to fall behind and allow the challengers to overtake you.” PLI
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CATEGORY UPDATE: SAUCES By Rich Mitchell
All is well
SHOPPERS SEEKING SAUCES WITH BETTER-FOR-YOU ELEMENTS ARE BECOMING COMMONPLACE THROUGHOUT THE GLOBE AND CREATING STRONG GROWTH OPPORTUNITIES FOR PRIVATE LABEL
ealth and wellness is having a major impact on the international sauces sector. The greater focus by shoppers on free-from selections, including natural and organic items, is resulting in the launch of new options that can generate potentially powerful revenues streams for store brand merchandisers. “Wellness brands are the fastest-growing segment in the private brand universe,” reports Daymon, a Stamford, Conn.-based global provider of retail strategies and services for private brands. “Every retailer, from priceoriented to progressive, can differentiate with a wellness brand program suited to their customer segments and banner values.” Increasing demand for healthy selections is occurring in a multitude of regions. For example, low-calorie and reduced-salt sauces will continue to gain ground in Argentina, as the nation’s economy improves, states market researcher Euromonitor International. “With the recovery of purchasing power, many consumers will be willing to buy healthy products
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that have a price somewhat higher than standard,” Euromonitor notes. More shoppers are seeking healthier alternatives to dress salads and season foods while also preferring new and unique flavors, Euromonitor notes, adding that new labeling regulations that identify healthier options also may have a positive impact on sales. Euromonitor further projects an expansion of private label sauces in the U.K., adding that there will likely be a drop in smaller brands within a variety of sauce categories as store brands take more shelf space. “Private label should develop more variations of different products as well as tapping into sauce categories where it is not yet present,” Euromonitor states. “More established brands are, however, likely to hold onto their shares by creating more innovative products tailored to consumers’ changing tastes and by relying on consumer loyalty to a specific brand.” Sauce sales in the U.K. “have been driven by consumers’ increased health awareness and desire to purchase healthier products,” Euromonitor says, yet there is a decline in volume and value sales of ready-made cooking and pasta sauces.
CATEGORY UPDATE: SAUCES “Instead, Britons are cooking more sauces from scratch, purchasing lessprocessed options, such as tomato pastes and purées, and organic and reducedsalt sauces,” Eurmonitor reports. The greater interest in scratch cooking is resulting in more consumers eschewing sauces in favor of individual ingredients, including canned tomatoes, says Diodato Ferraioli, export area manager of La Doria S.P.A., an Angri, Italy-based sauce supplier. Diodato notes such activity is occurring more in northern European markets, including the U.K. and Ireland. Premium sauces are more popular today in private label and niche selections, Ferraioli states. “There is a clear shift from national to private brands, resulting in part from brands ‘commoditizing’ themselves,” he adds. Store brand owners can differentiate by adding selections as vegan products and sauces with free-from claims, Diodato adds.
In Latin America, meanwhile, private label sauces are popular because of lower prices, says Felipe Korzenny, a Tallahassee, Fla.-based provider of market research and consulting services targeting the Hispanic and Latino markets. “Claiming parity and lower cost is always attractive,” he says, adding merchandisers should also stress flavor and convenience by noting that selections are “fresh from the fields,” and that products will give families the tastes they desire “in just a few minutes.” Flavor preferences differ among countries. Spicy sauces are popular in Mexico, Bolivia, Ecuador and parts of Central America, while European flavors appeal to the rest of the hemisphere, Korzenny notes. “Most of South America has a strong Spanish or Portuguese influence and some countries have strong Italian and German influences,” he adds. Merchandising challenges include determining the ideal placement of products in stores while dealing with inadequate shelf space, says Christian Greber, CEO of Furore, a Götzis, Austria-based sauces developer. Retailers, however, can bolster activity by merchandising unique products. “Due to the wide selection of suppliers and large selection of products, manufacturers are required to set new trends,” Greber notes. “That includes new creations, new gourmet sauce varieties, new packaging possibilities, new displays and new jar units.” PLI
SPONSORED CONTENT
ORIGIN GREEN – SUSTAINABLE SOURCING MADE SIMPLE Bord Bia, the Irish Food Board invites all those attending SIAL this year to visit the Origin Green Ireland stands. SIAL, one of the world’s largest food fairs is taking place in Paris. A number of Irish food and drink exporters will attend this year’s event, all of which are participating in Origin Green and will be on hand to discuss sustainable sourcing for your business. In today’s world, consumers and businesses are becoming increasingly aware of sustainable sourcing. A growing number of customers are seeking sustainable products while businesses are developing more sustainable processes and supply chains. Origin Green is Ireland’s national food and drink sustainability programme, uniting government, the private sector and food producers. It enables Irish farmers, food and drink suppliers, retailers, and foodservice operators to set and achieve measurable sustainability targets. Sustainability is incorporated into all areas of the supply chain. Members are audited at every step, making it the only
independently verified programme of its kind. Already over 90% of Irish food and drink exports are coming from Origin Green’s 340+ verified members. You can meet Origin Green members at SIAL in Hall 6, Meat (J214 & H214); Hall 7, Dairy (A 109); Hall 6, Prepared Foods (E 070); and Hall 5A, Confectionery/Bakery Foods (E 140). Exhibitors will be on hand to discuss whatever business needs you may have.
If you want to organise a formal meeting with any of the exhibitors please email OriginGreen@BordBia.ie or for further information visit OriginGreen.com
FALL 2018 | PRIVATE LABEL INTERNATIONAL
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CATEGORY UPDATE: HOUSEHOLD PRODUCTS By Dana Cvetan
Scents and sustainability CONSUMERS CAN CLEAN THE HOUSE, SAVE THE PLANET AND ENJOY DELIGHTFUL FRAGRANCE, ALL AT THE SAME TIME
he world has gone crazy for scent,” declares market research provider Euromonitor International in its May report, “The World Market for Home Care.” Consumers are clamoring for stronger and longer-lasting scents, Euromonitor found, even in markets previously unreceptive to them, such as in Japan. “Air Care in Western Europe,” also published by Euromonitor in May, reports sales of candle air fresheners experienced strong growth across key markets. Products perceived as more natural, such as candles or liquid air fresheners using essential oil, are sought after by consumers concerned with their health, the report adds. Another of “The World Market for Home Care” report’s major findings was that sustainability is on the agenda in 2018. Global market intelligence firm Mintel reports that Latin America is a strong growth region for house-
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hold cleaners, with retail sales jumping 11.6 per cent in 2017, according to its global annual review, “The Future of Household Cleaners: 2018,” authored by Henrik Moller Jorgensen and published in January. After the U.S., the top retail markets for household cleaners are Brazil with €1.73 billion in 2017 sales, France with €1.47 billion, China with €1.12 billion and Germany with €95 million, Jorgensen reports. Globally, retail sales of household cleaners in current U.S. dollar terms grew 3 per cent in 2017, to €17.8 billion.
PROTECTION AND SAFETY
Consumers increasingly focus on the environment and sustainable solutions to the problems caused by plastic waste, both in packaging and in content, says Sanne Strandskov, marketing coordinator for Hobro, Denmark-based Nopa Nordic. Retailers are looking for assurances that products and packaging are sustainable when it comes to household and laundry care, Strandskov adds. Nopa Nordic
CATEGORY UPDATE: HOUSEHOLD PRODUCTS
manufactures economically friendly private label detergents and cleaning products for retailers in Scandinavia and elsewhere in Europe and Asia. David A. Calvert, Ph.D., president and CEO of EcoCompounds Inc. in Ventura, Calif., says demands for petand child-safe floor cleaners, bleach-free household products and outdoor surface and furniture cleaners will lead to growth in the category. These are the types of products EcoCompounds develops.
Latin America is a strong growth region for household cleaners, with retail sales jumping
in 2017. Companies need to be aware of their global environmental footprint in manufacturing, product packaging and manufacturing practices, Calvert advises. Retailers that don’t yet have their own brand household cleaning products line should be working to develop green, ecofriendly liquid laundry detergents, liquid dishwashing soaps, liquid hand soaps and all-purpose cleaners, says Bobby Enriquez, key account sales and operations director for Cypress, Calif.-based Earth Friendly Products, maker of ECOS eco-friendly laundry detergent and more than 200 other environmentally friendly, people- and petsafe cleaning products. Those who already have a private label line should pay attention to “filling in the gaps,” and grow their entire cleaning category by incorporating specialty cleaners, Enriquez says. “The keys to growing new or existing
business are customer service, efficacious products, innovation and value. You have to think like a customer by putting yourself in their shoes and asking yourself, ‘What do I want?’” Enriquez explains. Retailers want more premium qualities in their household cleaning products than ever before, adds a company spokesperson for U.S. Nonwovens Corp. in Brentwood, N.Y.
PROVIDE EVIDENCE
Manufacturers should take notice of their educated consumers who are not brand loyal, Calvert says. These consumers are willing to pay more for a product with safety and sustainability certifications, and “are no longer relying on false advertised environmental friendliness. They demand evidence of efficacy,” Calvert adds. Sustainable solutions development that can be certified, in both product content and packaging, is essential to category growth, Strandskov adds. Sustainable packaging has the greatest potential to impact retail over the next few years, Enriquez says. “As sustainability initiatives continue to grow worldwide, they’ll begin to affect the entire consumer packaged goods industry, all the way down the supply chain,” he adds. “You’ll see it impact all aspects of a product, from high-content post-consumer-recycled resin in bottles, to greywater-safe cleaning products, to 100 per cent post-consumer-recycled paper, to bamboo-based paper towels. Consumers aren’t not just buying for value anymore; they also want to feel good about what they’re purchasing.” Digitalization (the use of digital technologies to change a business model, and provide new revenue and value-producing opportunities) and how businesses adapt to it, will also shape the category, Standskov points out. “Consumers are buying more and more online, which leads to packaging and transport challenges, issues like carbon dioxide emissions and compaction, which companies have to adapt to in their products,” Standskov explains. “When a retailer asks me about exclusivity in terms of private labeling, it’s usually about two things: a particular scent they’re seeking, or a unique bottle that stands out on the shelf,” Enriquez says. “They’re trying to provide a unique value proposition to their customers that sets them apart from their competition, which is extremely important in marketing. There is a strong correlation to innovation as well. The end consumer demands the latest and greatest, and it causes a ripple effect from there. In our industry, we provide innovation on several levels, from putting new ingredients in our products that our research and development departments have sourced [from] around the globe, to more efficacious formulas, to simply providing more variety in terms of bottle selection.” PLI
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CATEGORY UPDATE: BABY CARE By Dana Cvetan
Gentle thoughts DISPOSABLE INCOME PROMPTS PARENTS TO PURCHASE BABY CARE PRODUCTS THAT PROTECT THEIR YOUNG ONES
inancially stable parents are driving the global baby care products market, according to market intelligence and consultancy company P&S Market Research in Noida, India. Whether they are older and more established in their careers and/or are part of a dual-income couple, these practitioners of “cautious parenthood” are able and willing to pay for products they deem safe, protective of their child’s health and well-being, convenient, environmentally friendly and worth the expenditure, according to a P&S report, “Global Baby Care Products Market Size, Share, Forecast to 2023,” on the company’s website. Rising spending capability is indeed a major driver of the global baby product market, agrees San Francisco-based Grand View Research. Other factors driving growth, Grand View states in its report, “Baby Products Market Analysis and Segment Forecasts to 2025,” are the increasing adop-
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tion of modern lifestyles and awareness about baby hygiene, safety and nutrition. Increases in the number of working mothers and people having babies when they are in their mid-30s to mid-40s, who tend to be more financially stable, is accounting for increased spending on baby care products, Grand View states. According to P&S, factors driving diaper consumption are: increasing birth rates, improving life expectancy, increasing awareness about sanitation and personal hygiene, increasing disposable incomes, improving lifestyles and rapidly growing urbanization. The introduction of biodegradable disposable diapers and other new innovations are increasing competition in the market, the P&S report states. Sales of baby skincare and baby toiletries are expected to expand further in the coming years, P&S predicts. Infants and young children have sensitive skin, and gentle soaps and shampoos are required to prevent rashes and other skin irritations, Grand View points out.
CATEGORY UPDATE: BABY CARE
PROMOTE REASSURANCE
Parents are drawn to baby care products that provide a sense of reassurance; they value safety and gentleness in infant personal care products such as soaps, shampoos and powders, and this trend has benefitted natural brands, says Margie Nanninga, a beauty analyst for global market intelligence firm Mintel, writing in a blog post from 2017. In Australia, category growth is driven by products that feature naturally derived ingredients and are free from harsh chemicals, according to “Baby and Child-Specific Products in Australia,” a May report from market research provider Euromonitor International. Parents in Norway “are becoming increasingly health-conscious, and remain unwilling to compromise on quality when it comes to their children,” Euromonitor notes in the report.
Parents are likely to connect with brands that aim to offer what is best for their babies. RANJANA SUNDARESAN SENIOR RESEARCH ANALYST MINTEL
Launches of personal care products aimed at babies and toddlers nearly doubled between 2015 and 2016 in India, home to more than 100 million children age four and under, according to the Mintel Global New Products Database. In India, the category has expanded to include wipes and specialized body and face products, writes Ranjana Sundaresan, Mintel’s senior research analyst based in Mumbai, in a blog post from 2017.
Sundaresan points out there is plenty of opportunity for companies to engage with parents, parents-to-be and would-be parents through online portals and forums that offer sought-after advice about topics such as conception, pregnancy, birth and early childhood. In these ways, companies could learn and understand what types of products these consumers seek, and be more prepared to meet those needs, Sundaresan says. “Parents are likely to connect with brands that aim to offer what is best for their babies,” Sundaresan points out. Consumers are affiliating themselves with companies that share their cultural and ideological values, Sundaresan states, citing Mintel research spelled out in the Mintel Trend “Buydeology” report.
EMERGING ECONOMIES
Private label is a steadily growing trend in fast-moving consumer goods such as baby care products, especially in emerging economies, says Alican Yilankirkan, member of the board of Enka Hijyen, a manufacturer of disposable diapers based in Gaziantep, Turkey. “Even markets and supermarkets with only a few stores are trying to find a way to make private label [work because], in general, it is considered to be more profitable compared to branded products,” Yilankirkan says. Baby care products are being widely used in emerging economies, according to Grand View. “The cosmetic and toiletries baby products are further expected to drive the market demand. Rising awareness about baby nutrition, hygiene and safety is also likely to fuel the market growth. The growing emphasis by consumers on quality products in the developed economies such as Europe and [the] North America region owing to increasing spending capability is expected to drive the market,” according to the Grand View report. The largest global baby care products market comprises Europe, the Middle East and Africa; while the Asia-Pacific region makes up the second-largest market, according to P&S. Factors injecting vitality into these markets include emerging economies; large, underpenetrated markets; rising disposable incomes, rising birth rates and changes in consumption; and lifestyle patterns, the report explains. In Vietnam, baby- and child-specific toiletries are the largest category within baby and child-specific products, according to Euromonitor. “Baby and Child-Specific Products in Vietnam,” a Euromonitor report published in June, also notes that thanks to the dramatic development of the internet and social networks, Vietnamese parents are increasingly more aware of the benefits of using baby- and child-specific products than they were in the past. PLI
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ENDCAP
Private label perceptions According to a recent report from market researcher Nielsen, shoppers have favourable perceptions of private label, fast-moving consumer goods (FMCG) throughout the world. Nielsen surveyed consumers from Europe, the Middle East, Africa, North America, Latin America and the Asia-Pacific. Here’s what Nielsen found regarding several aspects of private label products from those consumers on a global average:
I AM A SMART SHOPPER WHEN I BUY PRIVATE LABEL.
I PURCHASE PRIVATE LABEL TO SAVE MONEY. GLOBAL AVERAGE
70% PRIVATE LABEL IS A GOOD ALTERNATIVE TO NAME BRANDS. GLOBAL AVERAGE
65%
GLOBAL AVERAGE
PRIVATE LABEL IS USUALLY EXTREMELY GOOD VALUE FOR THE MONEY.
58%
GLOBAL AVERAGE
67% PERCEPTIONS ABOUT PRIVATE LABEL QUALITY HAVE IMPROVED OVER TIME. GLOBAL AVERAGE
IT’S IMPORTANT TO GET THE BEST PRICE FOR THE PRODUCT.
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GLOBAL AVERAGE
69%
71%
What if sustainable sourcing was simple? Origin Green, the world’s first national food sustainability programme is Ireland’s commitment to a safe, secure food supply far into the future. Members are audited at every step, making it the only independently verified programme of its kind. With over 90% of Irish food and drink exports coming from participating members, finding a sustainable supplier has never been easier. So make sustainability key to a reliable food supply for your business and your customers for generations to come. Visit the Origin Green Ireland stands at SIAL, Paris, to find out more.
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