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Contents

Volume 39 No. 8 August 2017

16 Cover Story

Drafted into service Defense Commissary Agency deploys first private brands in 25-year history

Features 22 Healthful Ingredients Building blocks From natural colorants and preservatives to wellness-promoting ingredients, retailers have a growing selection of options for developing nutrient-dense, clean label store brand food products

30 Strengthing Store Brands

Destination fresh Private brand pizzazz propels perimeter sales

34 2017 Beverage Report Retailers can learn the trends and what they mean for private brands in the following categories: tea and coffee extracts, roast/ground coffee, wine, ready-to-drink coffee and cold-brew coffee.

Departments

6 8 10 15 58

Editor’s Note Minding the Store Around the Industry Getting Social End Cap

Category Intelligence 44 48 51 55

Honey and syrups Salty snacks Fruits and vegatables Wet wipes

About the cover: The Defense Commissary Agency’s introduction of store brands is about providing a service as much as it is about offering quality and value products. Cover design by Colette Magliaro and Jeff Bowes.

34 4

Store Brands (ISSN-0190-9851; USPS # 0488-370) is published monthly by EnsembleIQ, 570 Lake Cook Rd., Deerfield, IL 60015. Subscriptions: One year, $95; two years, $146. One year, Canada $112; two years, Canada $150, One year, foreign $175; two years, foreign $285. Payable in advance with a bank draft drawn on a US bank in US funds. Single copies $10, except foreign, where postage will be added. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295. Canada Post: Canada returns to be sent to IDS, P.O. Box 456, Niagara Falls, ON, L2E6V2. Periodicals postage rates paid at Deerfield, IL and additional mailing offices. Printed in USA. POSTMASTER: send all address changes to Store Brands PO Box 1842 Lowell MA 01853. Copyright 2017 by EnsembleIQ. All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI, 48106. The contents of this publication can not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for claims and representations.

Store Brands / August 2017 / www.storebrands.com

Editor’s Note Business Intelligence for an Evolving Market

Private brands and doppelgangers

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EVENTS • MARKETING • DIGITAL • RESEARCH • CIRCULATION CORPORATE OFFICERS Executive Chairman

Alan Glass

Chief Operating Officer Chief Brand Officer

Richard Rivera Jeff Greisch

Chief Financial Officer

Len Farrell

Chief Business Development Officer & President, Ensemble IQ Canada President of Enterprise Solutions/ Chief Customer Officer Chief Digital Officer

Korry Stagnito Ned Bardic Joel Hughes

Chief Human Resources Officer

Greg Flores

referred Selection and Private Selection. What’s the difference in names? Not much if you ask The Kroger Co., which owns Private Selection, the retailer’s longstanding and successful store brand line. But if you ask German retailer Lidl, which owns Preferred Selection, a new private brand it debuted at its recent first U.S. store openings on the East Coast, there’s a big difference in names. If you ask a federal judge whether he believes there’s a difference in the names — and Kroger did just that — he will tell you that “private” and “preferred” have different definitions and therefore there is a difference in names. And so goes Cincinnati-based Kroger’s lawsuit against Arlington, Va.-based Lidl. In July, Kroger filed the suit against Lidl, claiming the retailer was infringing on its Private Selection brand with its Preferred Selection brand and causing confusion among customers. Kroger asked the federal court for an injunction to force Lidl to stop selling its Preferred Selection line products immediately, but the judged ruled otherwise. Meanwhile, the case will go to a bench trial on Jan. 11. Of course, Preferred Selection and Private Selection aren’t the only doppelgangers when it comes to private brands. Consider Kroger’s Simple Truth and Aldi’s SimplyNature and Ahold Delhaize’s Nature’s Promise. If you’re not in the private brand industry, you might get confused about what retailer is offering what. My favorite doppelganger when it comes to private brands is Aldi’s Kirkwood brand and Costco Wholesale’s Kirkland Signature brand. I actually read a response to a person’s blog on shopping tips mentioning that the “Kirkwood brand Aldi sells is also sold at Costco.” I’m not taking sides here, but considering that a federal judge already ruled once in favor of Lidl in Kroger’s lawsuit against the retailer, I have a feeling that the same will happen come Jan. 11, especially if the judge considers the similarities between other retailers’ private brand names. If anything, Kroger’s lawsuit against Lidl has made for great theater in the evercompetitive grocery industry, specifically private brands. The lawsuit was reported throughout the mainstream media, including USA Today. I recently conferred with brand expert, Todd Maute, who said the lawsuit, despite the two retailers throwing Rocky Balboa-like haymakers at each other, is actually a good sign for the private brands industry. Maute, a partner at New York-based brand agency CBX, says the lawsuit reminds him of years ago when the owners of top consumer product brands always went after what they saw as trademark infringement on the part of private brand emulators. But Maute says this lawsuit is different because one of the top owners and creators of private brands is taking a fellow private brands competitor to court. “Here we have one major grocer suing another over private label trademarks,” Maute says. “I see it as an indication of how far private label has come, at least with respect to those retailers that truly understand its power and potential.” No doubt that Kroger, which is heralded for its private brands, and Lidl, which features 90 percent of private brands in its assortment, understand the power and potential of store brands. That’s why both retailers will be around for years to come. But this really all comes down to individual promotion and marketing, doesn’t it? The best retailers of private brands will find a way to make their store brands stand out — exclusivity anyone? — despite a possible resemblance in names. SB

Lawrence Aylward, Editor-in-Chief laylward@ensembleIQ.com

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Store Brands / August 2017 / www.storebrands.com

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Minding the Store

Private brands boosting deep-discount grocery retailers’ growth

By Jordan Rost

he retail industry has been experiencing disruptive and, in some cases, very challenging shifts in the past year. But despite the overall slowdown in dollars and units across the U.S. grocery landscape, some retailers are still finding growth opportunities. To understand where these pockets exist and how to take advantage, it’s important to first understand how consumers’ shifting shopping habits are changing channel-by-channel dynamics in recent years. For the first time in over a decade, shoppers actually made more trips to stores, taking 0.5 percent more trips in 2016 compared to the previous year. However, despite an increase in the number of trips taken, consumer spending was relatively flat. Of the dollars they did spend, 85 percent of baskets were smaller compared to years’ past (containing fewer than 15 items per trip). For retailers, the combination of more frequent trips with smaller basket sizes still equals less dollars being spent in total. However, one retail channel worth focusing on is deep-discount grocery. Not inclusive of dollar stores, deep discounters offer many value-added products and heavy pricing discounts but, more importantly, have a significant share of store brands, which play a strategic role in winning over shoppers from other channels. Deep discounters have more than twice the store brand share of dollars (49 percent) compared to other major retail channels’ store brand share: warehouse club (24 percent), conventional grocery (21 percent) and drug stores (18 percent).

Driving trips While consumers are taking more trips across most retail channels, deep-discount grocery is seeing some of the largest increases in shopper activity. In fact, while trips across all channels are up 0.5 percent, shoppers took 2.9 percent more trips to deep discounters over the past year. However, only about 8

Store Brands / August 2017 / www.storebrands.com

40 percent of households shop at deep discounters, which is much lower compared to more established channels like supermarkets and mass merchandisers. For deep discounters, there are still significant opportunities for growth, unlike the already saturated conventional grocery channel. Though conventional grocery still commands the largest share of sales, in the first quarter of 2017 deepdiscount grocery and online channels were among the top-growing beneficiaries of consumer spend leakage from other channels. With online grocery sales expected to reach $100 billion by 2025, according to a study by Nielsen and the Food Marketing Institute, e-commerce will continue to grow total sales across the store. Consumers are increasingly shopping online due to value and convenience, and while online they’re spending more per trip on store brand purchases ($16 per trip on average).

Driving sales The majority share of sales generated from store brands are in three departments within the deepdiscount grocery channel: dairy (72 percent), grocery (53 percent) and frozen food (52 percent). What’s causing such high store brand growth in this channel? Consumers are taking more trips to purchase store brand grocery, dairy and frozen products (up 3.3 percent, 5.7 percent and 3.7 percent in trips, respectively, over the prior year) when compared to trips where branded products were purchased from these departments. Deep-discount grocery retailers are certainly reaping the benefits of having a robust store brand presence within their stores. Consumers are purchasing private brands in deep-discount grocery stores at three times the rate of the average across total channels. With this in mind, the opportunity for growth should only continue to rise. While deep discounters have significantly high store brand growth, there is still room for penetration growth across all retail channels. Whether a deep discounter, a traditional supermarket or an online channel, retailers should continue to keep store brand strategy front and center as a way to offer consumers the value and quality they’re looking for at price points that resonate with their wallets. SB Jordan Rost, vice president of consumer insights for New York-based Nielsen, explores emerging trends and shifting buying and media consumption behavior.

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AroundtheIndustry SHORT TAKES Lidl wins first round in Kroger lawsuit A federal judge denied The Kroger Co.’s request for a preliminary injunction against Lidl that would’ve prohibited the German retailer from using “Preferred Selection” for its store brand products. Kroger contends that Lidl copied the Cincinnati-based retailer’s Private Selection store brand and infringed on its trademark in launching Preferred Selection. “I think the public interest lies in competition,” said U.S. District Judge John A. Gibney Jr., according to an article in the Richmond (Va.) Times-Dispatch. Acknowledging that the logos look “somewhat alike,” the judge noted, “I don’t find that they have an identical or similar meaning.” The words “private” and “preferred” have different meanings, he pointed out. The case is set for a bench trial on Jan. 11, 2018.

Earth Fare debuts prototype store Asheville, N.C.-based Earth Fare recently debuted a new store prototype in Concord, N.C. The 24,000-square-foot location includes expanded seafood and produce choices, additional bulk products, slightly wider aisles and more grab-and-go options. Beyond groceries, the new store will feature Earth Fare’s Heirloom Organic Juice Bar, which serves organic smoothies and juices, as well as Earth Fare’s Ocala Kitchen, which includes a salad bar, hot foods bar and pizza station.

Let’s face it, private brands over the years have really improved. The quality has gotten so much better. I can remember when we use to buy generic pork and beans. And boy was it bad. It consisted of Northern beans with a splash of ketchup and a chunk of bacon in a can. — Joseph Welsh, a grocery consultant based in El Paso, Texas, on the evolution of private brands.

Store Brands / August 2017 / www.storebrands.com

Using transparency to differentiate private brands Study says consumers more trusting of and willing to pay more for brands whose ingredients they understand By Lawrence Aylward

e often hear the word “differentiation” tossed about in the private brands industry. In most cases, differentiation means retailers offering private branded products — consider Publix’s premium ice cream selection — that consumers can’t get anywhere else. But what about using transparency — a hot topic among consumers if there ever was one — to differentiate? According to data released recently by Chicago-based Label Insight, a company that specializes in product transparency data, many consumers are confused about the ingredients in their food products after examining their food labels. Label Insight recently surveyed more than 1,000 consumers on feelings of confusion with food product ingredients and labeling, the impact of this confusion on purchasing behavior and how technology solutions might alleviate concerns. Here are three key points that Label Insight found in its research:

• 35 percent of those surveyed say they do not buy products when they find the ingredients on their labels confusing.

• 60 percent of those surveyed say they trust a brand less when they see ingredients they don’t recognize or find confusing.

• 64 percent are so turned off by the confusion created by some product labels that they not only consider switching brands, but also are willing to pay more for brands whose ingredients they understand.

“Consumer demand for product transparency is on the rise, and when brands and retailers fail to deliver, it erodes brand trust,” said Kira Karapetian, vice president of marketing for Label Insight. Many private brands are known for offering equal to or better than the national brand equivalents at a lower cost. If these same private brands decided to offer easier-to-understand labels on those products, they would be offering consumers two good reasons to buy their store brands — lower cost and friendlier labels. Heck, retailers may even be able to charge the same amount as NBE products in some cases if consumers are willing to pay for them, increasing their margins as a result. continued on page 12

AroundtheIndustry SHORT TAKES Amazon introduces meal kits In a bid to expand its grocery business, Seattle-based Amazon.com is now selling Amazon-branded meal kits in the United States in select markets, including Seattle. Only Amazon Prime members who also subscribe to the e-commerce giant’s Amazon Fresh grocery delivery service for an additional $14.99 a month can purchase the ready-to-prepare meals. The private brand kits, which cost $16 to $20 for two servings, include a range of vegetarian and meat-based meals, among them ethnic-inspired dishes such as chicken tikka masala and falafel patties.

continued from page 10 Retailers offering premium private brands could also benefit by offering easier-to-understand labels, which would give consumers two good reasons to spend more on them — they are premium and they have friendlier labels. Label Insight’s survey also found that 83 percent of consumers feel confused at least some of the time about ingredients listed on food package labels; 45 percent are concerned when they eat food products that contain ingredients that they don’t understand; and that while package claims of “natural,” “healthy” and “clean” should help inform consumers, only about one-third of Americans completely understand what those claims mean. Clearly (pun intended), transparency can equal distinction. SB

Kroger rolls out more private brands The Kroger Co., which offers more than 30,000 store brand SKUs, announced in July it has rolled out 1,000 new private brand food and household items in the past 18 months. “Our brands sold a record-setting 8.2 billion units in 2016, which equates to customers choosing to add 1.25 million of our exclusive products to their shopping carts every day,” Gil Phipps, Kroger’s vice president of Our Brands, said in a statement. A story on Cincinnati.com explored the growth of Kroger’s private brands while interviewing local shoppers who buy them, noting that “if Kroger’s private label business was its own company, it would land at about No. 127 on the Fortune 500 — just behind corporations Duke Energy and U.S. Bank but ahead of Sears Holdings (including Kmart stores), Starbucks and Southwest Airlines.”

‘Good Housekeeping’ recognizes BJ’s product A BJ’s Wholesale Club’s private brand — Berkley Jensen Ultra Soft Bath Tissue — is the winner of Good Housekeeping magazine’sBest of Test in the bathroom tissue category. According to Good Housekeeping, the Berkley Jensen Ultra Soft Bath Tissue had the best overall score and price continued on page 14

Store Brands / August 2017 / www.storebrands.com

What superhero approach do you take? The Cambridge Group’s Pete Killian distinguishes between an Avengers and a Superman approach to private brands By Carolyn Schierhorn

n the summer movie hit “Spider-Man: Homecoming,” Peter Parker is mentored by Tony Stark, a.k.a. Iron Man, a leader and founding member of Marvel’s Avengers. The film shows that the Marvel superheroes are an indomitable force when working together as a team — far more powerful than Iron Man, Spider-Man, Captain America, Hulk, Thor and the others would be acting alone. That message reminded me of a conversation I had recently with Pete Killian, a principal at Chicago-based The Cambridge Group, who has expertise in private brands. He explained that grocery retailers with successful private brand programs tend to take either an Avengers or a Superman approach to their store brands. Arguably the most powerful of superheroes, Superman has superhuman strength, incredible speed, X-ray vision and enhanced hearing and can fly. Accordingly, a Superman strategy with store brands means that a retailer has one notable brand that “is doing it all,” Killian said. “Basically it’s one brand across every category. It has slightly different meanings in each category, but it’s generally known to be extraordinarily high quality.” continued on page 14

AroundtheIndustry SHORT TAKES continued from page 12 from their top choices. The bathroom tissue earned high marks in softness, dissolvability and absorbency to earn the highest overall score. “The recognition is a testament to the unbeatable quality and value we deliver to our members,” said Scott Williams, vice president of own brands and quality at Westborough, Mass.-based BJ’s Wholesale Club.

Hy-Vee to build production facility Hy-Vee Inc. plans to build a $64 million production facility in Ankeny, Iowa, that will house the West Des Moines-based chain’s prepared foods commissary, central bakery and meal kit division, according to an article in the Des Moines Register. The company will also invest $22 million in expanding the Hy-Vee-owned Perishable Distributors of Iowa warehouse in Ankeny. “The move appears to position Hy-Vee to compete for more market share in the $2.2 billion meal kit business, competing with athome delivery businesses like Blue Apron and Hello Fresh,” the article stated. Pentallect, a Chicago-based consulting firm, predicts that the at-home meal kit market will grow 25 to 30 percent over the next five years.

Costco co-founder dies suddenly Jeff Brotman, co-founder of Costco Wholesale in 1983, died Aug. 1. Jim Sinegal, who launched the first Costco with Brotman in 1983, told The Seattle Times that Brotman’s death came as a “complete shock for everyone.” Brotman reportedly died in his sleep. In a short press release issued by the Issaquah, Wash.-based warehouse club, Costco announced Brotman’s death with “great sadness.” Brotman served as chairman of the company since 1994. Costco operates more than 700 wholesale warehouses across 11 countries and is well-known for its Kirkland Signature private brand. SB

Store Brands / August 2017 / www.storebrands.com

continued from page 12 Costco’s nearly 20-year-old Kirkland Signature brand is an excellent example of this: one super-strong brand with a reputation for quality that resonates across the retailer’s customer base. In contrast, an Avengers strategy means multiple brands across different categories or even within one category. Retailers adopting a tiered approach to store brands typically favor this strategy as do mainstream chains that are rolling out organic and other free-from lines. The Kroger Co., for example, uses an Avengers approach with its Kroger, Simple Truth, Private Selection, HemisFares, Big K and other brands as does Walgreens Boots Alliance with its Nice!, Well at Walgreens, and several skincare and cosmetic brands, Killian noted. Now most retailers, unless they’re Cambridge Group clients, probably aren’t asking themselves, “Should I follow a Superman or Avengers strategy with my store brands?” But the distinction is a useful one at a time when consumers are less loyal to national brands and more willing than ever before to try store brands — a time when millennials are influencing retailers and manufacturers to make products that are cleaner label and more transparent, sustainable and wellness-oriented. One strategy isn’t necessarily better than the other. The choice depends on the needs and preferences of a particular chain’s customers, the competitive environment and the company’s mission. The multiple-hero Avengers approach is more difficult to execute well because a variety of specialized brands (the national brand equivalent, the value brand, the premium brand, the sustainable brand, the organic brand, etc.) all need attention and muscle behind them. “More investment is required to build these brands and support them over time,” Killian observed. But when the customer base is diverse in terms of age, ethnicity, geography, finances and social priorities, retailers may be able to meet shoppers’ needs better and generate more sales with multiple store brands. The power and simplicity of the Superman strategy is undeniably appealing, however, as Killian emphasized. Retailers adopting this approach can put their efforts into ensuring that their one store brand is the apotheosis of both quality and value. Chains that are not planning to revamp or launch store brands still benefit from understanding whether they currently take more of a Superman or Avengers approach. This insight enables retailers to better benchmark themselves against competitors and against the market to see whether they are relatively over- or underdeveloped by category, according to Killian. SB

Here we have one major grocer suing another over private label trademarks. I see it as an indication of how far private label has come, at least with respect to those retailers that truly understand its power and potential. — Todd Maute, a partner at New York-based brand agency CBX, on The Kroger Co.’s lawsuit against Lidl. Kroger claims Lidl is infringing on its “Private Selection” store brand with Lidl’s “Preferred Selection” store brand.

Getting Social

Q A with Nicky Walsh

Director of business development/private brands for Tops Friendly Markets/Daymon in Williamsville, N.Y. How did you come to the world of private label? Fourteen years ago I came upon an opportunity to work for Daymon as director of health-beauty care/general merchandise sourcing for Ahold USA. I’ve worked for Tops the past nine years.

What is the biggest obstacle you have ever overcome? Thyroid cancer.

Describe the private label industry in one word. A mystery.

It’s 5 o’clock (or later), what do you do for fun? Go out to dinner and have a few glasses of wine.

What do you like most about the industry? The creativity around the development of new products and feeling a sense of ownership.

You have a week off. Where do you go and why? Somewhere exotic and warm.

What do you dislike most about the industry? Supplier consolidation.

If you were born 100 years ago, what would you do for a living? Be a cook.

What’s the best advice someone ever gave you? To go see my mother more often.

What one great thing does the industry have going for it? Younger people are not as brand loyal as they were in past years. Capturing the younger generation with innovative product is exciting. What is the industry’s biggest challenge? Consolidation of suppliers and retailers.

Nicky Walsh (center) was behind the revamping of Tops Friendly Markets’ Tops brand late last year, along with Diane Colgan and John Persons.

If you could invent one private brand product for yourself, what would it be? A ready-serve meal. Who is your hero and why? My husband, who has been my rock for 26 years. Who is the business person you admire the most? My boss John Summers, a vice president at Daymon. What trait in yourself do you attribute most to your success? Not too much scares me. I just go for it.

What song do you love to crank up in the car? “You Shook Me All Night Long” by AC/DC. What’s the best book you’ve ever read? “The Pearl” (1947) by John Steinbeck. The moral of the story: Never underestimate what you have. What movie can you watch over and over? “Trains, Planes and Automobiles” (1987). SB www.storebrands.com / August 2017 / Store Brands

Cover Story

Drafted SERVICE

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Defense Commissary Agency deploys first private brands in 25-year history By Lawrence Aylward

Store Brands / August 2017 / www.storebrands.com

Randy Chandler was 11-years-old when his father left home in 1967 for a year to fight in the Vietnam War while a member of the Marine Corps. It was a stressful time for Chandler, who wondered if he would ever see his dad again. “They sent my father to Vietnam and told him that somebody was going to try and kill him for the next 365 days,” says Chandler, the principal deputy of sales, marketing and policy for the Fort Lee, Va.-based Defense Commissary Agency (DeCA), which operates a worldwide chain of stores providing groceries to military personnel, military retirees and their immediate families.

Fortunately, Chandler’s father, Rocky, returned home safely a year later and was stationed at Camp Lejeune in Jacksonsville, N.C., where he moved his family. Randy, aware that many of his father’s comrades didn’t return home alive from Vietnam, developed an appreciation for those in the military — a gratefulness that has only deepened as he has grown older. Chandler, who has spent nearly 40 years working for military commissaries, is passionate about what he can do through his profession to help those who are serving in the military and those who have served. Through DeCA, he wants military personnel to receive the best food at the best prices at each of the 238 commissaries that are located in 13 countries. And, beginning this year, those products include private brands. Last November, following a competitive selection process, DeCA chose Grand Rapids, Mich.-based

SpartanNash as its partner to introduce private brands for the first time in its 25-year history. In June, DeCA rolled out the first products — bottled water and kitchen and trash bags — featured in its new Freedom’s Choice (food products) and HomeBase (non-food items) lines. The commissaries also introduced TopCare products including first aid supplies, vitamins, over-the-counter medications and beauty care items. TopCare is a store brand supplied by Elk Grove Village, Ill.-based Topco Associates.

DeCA’s Freedom’s Choice water is selling for about $2.50 less than the name brand equivalent at the Fort Belvoir Commissary in Virginia. Photos by Kevin Robinson/DeCA

www.storebrands.com / August 2017 / Store Brands

Cover Story “When we first set out to choose our private brand partner, we knew we wanted our private brand products to be quality offerings — equal to or better than branded products,” he says. Chandler remembers the days when private label meant generic and low quality. Those are two attributes he didn’t want associated with DeCA’s offerings. “We were not interested in developing generic offerings for our patrons; we were determined to give them the high quality they deserve,” he stresses. Chandler says SpartanNash “showed us their approach and the processes they have in place to ensure the products are quality first.”

“Our research indicated that our customers were already buying private brands at other stores. So if we were going to offer them a complete benefit, we needed to have store brands as well.” — Kevin Robinson, DeCA

Randy Chandler says Freedom’s Choice and HomeBase are “devoted” to those who serve and have served in the military.

Chandler is convinced that DeCA’s patrons will embrace the brands. SpartanNash says the products, including everything from beans to rice to cheese to snacks to shelfstable juice to paper plates, are equivalent in quality and taste to national brands but are sold at a lower cost than brandname products. “We want [our patrons] to view Freedom’s Choice and HomeBase as their brands,” Chandler says. “They have devoted their lives to the military, and these brands are devoted to them. We also hope they embrace the quality and savings made available to them with the TopCare products.” Chandler says present and former military personnel have earned their commissary benefit, allowing them to purchase groceries at tremendous savings when compared to commercial stores. Adding store brands will make DeCA’s offerings even more affordable. On a recent day, DeCA was selling a 24-pack of Freedom’s Choice bottled water that cost about $2.50 less than the name brand equivalent. But Chandler says it’s not just about offering the lowest prices. 18

Store Brands / August 2017 / www.storebrands.com

SpartanNash says it applies the same strict quality assurance measures to the DeCA brands that it uses for all of the proprietary brands it offers under its food distribution business. “Not all private brands are created equal,” Chandler says. “Our best-in-class quality assurance will provide DeCA’s brands with a quality differentiation that will delight our patrons. Anyone who is not delighted with our Freedom’s Choice or HomeBase products can return the products for a full refund.” Disadvantage now an advantage At the recently remodeled 82,600-square-foot Fort Belvoir Commissary in Fort Belvoir, Va., DeCA’s new store brands are prominent, including a massive display of the Freedom’s Choice bottled water stacked about 4 feet high. DeCA operates 180 commissaries in the U.S., mostly located on military bases. Many shoppers, especially military veterans, will travel many miles to shop at a commissary, including Kevin Robinson, a U.S. Army veteran who works in media relations for DeCA’s corporate communications division. As a customer, Robinson is excited that he will get the chance to purchase the commissary’s private brands. “Our research indicated that our customers were already buying private brands at other stores,” Robinson says. “So if we were going to offer them a complete benefit, we needed to have store brands as well.” Unlike other commercial stores, DeCA is governed by specific statutes which dictate everything — from how it operates to how it spends its money to what products it can

carry. Two recent developments spurred DeCA’s entry into the private brands arena. First, DeCA was previously only allowed to sell name brand products, but the law changed under the National Defense Authorization Act for 2017, allowing DeCA to sell store brands. Second, DeCA learned through surveys that its patrons wanted private brands. Sixty percent of patrons said they purchased private brands at other retailers and would welcome DeCA selling them. A ‘complete solution’ DeCA conducted an extensive search for a partner with rich experience in developing and executing a private brands program. DeCA received about 45 proposals when it solicited companies to supply private brands, including from SpartanNash. Chandler and the other DeCA officials were impressed by the SpartanNash proposal because SpartanNash offered a complete solution for private brand product

ideation, sourcing and distribution. DeCA also liked that SpartanNash would be able to distribute product. MDV, SpartanNash — a SpartanNash subsidiary — has been distributing to the military resale system for more than 25 years. Chandler says he was also impressed by SpartanNash’s commitment to develop the DeCA brands and bring them to the shelves faster than normal. Jason Cunningham, senior product development manager at SpartanNash, has been on site at Fort Lee and working closely with the DeCA team to help implement the program. Cunningham believes DeCA was at a disadvantage by not offering private brands. He notes that DeCA patrons were able to purchase private brands at other retailers for a lower cost than they were paying for the national brands at DeCA, despite the deep commissary discount. “Now [patrons] can buy private brands that are equal to or better than the national brands right at their own commissary,” Cunningham adds.

DeCA’s food-safety program goes ‘above and beyond’ The Defense Commissary’s (DeCA) new store brands, Freedom’s Choice and HomeBase, will be well-guarded on the food-safety front. “We have a very vibrant food-safety network that is above and beyond anything you might see at a commercial store,” says Kevin Robinson, who works in media relations for DeCA’s corporate communications division. Those purchasing the store brands at commissaries around the world will be buying products that have passed through a multitiered inspection process.

Those purchasing store brands at commissaries around the world will be buying products that have passed through a multitiered inspection process.

The first line of defense begins during the procurement process. All food sold in military commissaries comes from approved sources. Approving authorities for these sources include the Food and Drug Administration, the U.S. Department of Agriculture, the U.S. Department of Commerce, the European Union and military food inspectors overseen by the Defense Health Activity. The next line of defense is a coordinated effort of receipt and surveillance inspections that begins when the food arrives at the commissary or at the central distribution center and does not end until it is purchased by customers. According to Robinson, what makes the military commissary food inspection process unique is that medical food inspectors from the U.S. Army Public Health and U.S. Air Force Public Health are assigned to support a commissary store. At many locations the medical food inspector maintains an office on the commissary receiving floor. In cases where medical food inspectors are not on site daily, DeCA has trained receiving personnel to ensure only safe, wholesome food comes through the door. When food is received at the commissary or central distribution center dock, it’s checked for temperature, sanitation and signs of tampering or other damage. When in storage or on display in the commissary, the food is continuously monitored to ensure proper temperature, sanitation and rotation is maintained. www.storebrands.com / August 2017 / Store Brands

Cover Story The names Freedom’s Choice and HomeBase were selected for the store brands by commissary customers who voted from a list of names compiled by DeCA, with input from DeCA employees and SpartanNash. While DeCA wanted the names to have a military theme, it was conscious of not coming up with names that were overtly military.

Story highlights

This year, for the first time in its 25-year history, the Defense Commissary (DeCA) introduced private brands to its offerings.

The new private brands are Freedom’s Choice (food products) and HomeBase (non-food items). The products featured in the line are national brand equivalents and are supplied by SpartanNash.

In addition, DeCA also introduced TopCare products, including first aid supplies, vitamins, over-the-counter medications and beauty care items. TopCare is a store brand supplied by Topco Associates.

DeCA aims to have about 800 SKUs on the shelves by the end of the year and up to 2,000 by the end of 2018, in addition to the more than 2,000 SKUs provided by Topco.

The names Freedom’s Choice and HomeBase were selected for the store brands by commissary customers who voted from a list of names provided by DeCA and SpartanNash. While DeCA and SpartanNash wanted the names to have a military theme, they were conscious of not coming up with names that were overtly military.

DeCA operates 238 commissaries that are located in 13 countries, including 180 in the U.S. Most are located on military bases.

Store Brands / August 2017 / www.storebrands.com

Robinson, who served 21 years in the Army, believes Freedom’s Choice and HomeBase “identify with who we are.” “Freedom’s Choice defines what the U.S. military does — defend freedom,” he says. “HomeBase resonates with me because these are products I need around the house like garbage bags, paper plates and paper towels. Our commissary brands are part of an overall benefit that delivers a slice of home for our military – even if they’re stationed overseas.” No coconut water just yet DeCA is rolling out its store brands program slowly, partly because it has to make room on store shelves for HomeBase, Freedom’s Choice and the TopCare line. It aims to have about 800 SKUs of HomeBase and Freedom’s Choice on the shelves by the end of the year and up to 2,000 SKUs by the end of 2018, in addition to the more than 2,000 TopCare SKUs. “If you look at other retailers today, they have had a head start on DeCA,” Cunningham says. “They have been building their private brand offerings for decades. We can’t go from 0 to 100 miles per hour overnight. This is a process. We have to build traffic. We have to build brand equity. We want to have a best-in-class private brand program where the commissary patrons enjoy quality products that are equal to or better than national brands at a significant cost savings.” Organic and natural/free-from products will come, as will premium and exclusive store brands as the program evolves. The goal now is to introduce quality products slowly and to maintain them. “There is a present-day level of savings that has been calculated that the commissaries provide to the patrons,” Cunningham says. “And we need to maintain that level of savings. If we can’t provide the level of savings that is necessary at the quality we want, then we won’t bring the product out. We don’t want to put a product on the shelf that is not high quality.” A better benefit Chandler hopes HomeBase and Freedom’s Choice become the go-to brands at the commissaries. “We want patrons to come here to get our store brands because they know they can’t get them anywhere else,” he adds. Chandler reiterates that having great store brands is akin to great service, which retired and active military personnel deserve unequivocally. Chandler has fond memories when his family shopped at the commissary during his father’s military tenure. “I know the commissary meant a lot to our family,” he says. “And that’s what drives me every day to help deliver value to our patrons.” SB Aylward, editor-in-chief of Store Brands, can be reached at laylward@ensembleiq.com.

Honored to Serve SpartanNash and MDV congratulate DeCA on its exciting new store brands. Patriotism is at the heart of what we do. That’s why we’re honored to partner with DeCA to create and deliver quality, wholesome, national brand equivalent foods and products for life’s everyday needs to our military families, at home and abroad.

Healthful Ingredients

Building blocks From natural colorants and preservatives to wellness-promoting ingredients, retailers have a growing selection of options for developing nutrient-dense, clean label store brand food products

n the healthful ingredient realm, innovation salty snacks, sauces, soups, jams and jellies, has been occurring at a rapid pace. Two condiments and other processed food products. By Carolyn major trends are driving new developments: More than 90 percent of Americans want to know Schierhorn the clean label, or free-from, movement whether their food contains GMOs, according to in which consumers are opting for natural SPINS, a Chicago-based market research firm. rather than artificial ingredients and shunning A number of private brand manufacturers such certain chemicals; and the wellness, or functional as Cherry Hill, N.J.-based Puratos Corp., a developer food, movement in which consumers are taking almost a of bakery products and ingredients, are responding to this biochemist’s approach to what they put into their bodies. demand. “We believe there is tremendous opportunity “These are two sides of the same coin — what’s not in around non-GMO products and have invested resources the food and what is in the food,” observes Carl Jorgensen, to develop dough conditioners and improvers such as our director of global consumer strategy and wellness at Intens range (ingredients) that comply with most nonStamford, Conn.-based Daymon. “Consumers are looking GMO certifying organizations,” says Michael Gleason, for something that doesn’t contain artificial colors, market intelligence manager for the company. artificial flavors or artificial preservatives. And they are also In addition, organic ingredients, which are all non-GMO looking for nutrient-dense foods. Consumers really like but must satisfy a number of other criteria as well, are inthe idea of a lot of nutrition in a small package — that’s creasingly sought after, notes Shrene White, director of spewhat superfoods are.” cialty and risk management for Denver-based Ardent Mills. Shoppers are seeking foods that are high in protein, fiber, “Since 2015, we’ve added organic durum, organic cracked antioxidants and particular vitamins or minerals, Jorgensen wheat and organic spelt to our product mix, which also innotes. What’s more, consumers are interested in products cludes organic whole wheat flour, organic bread wheat flour, that contain functional ingredients such as prebiotics and organic all-purpose wheat flour, organic pastry flour and a probiotics, which work together to promote gut health. complement of grain mixes and blends,” White says. Growing concerns about environmental sustainability Whether food products such as frozen entrées contain and animal welfare affect both the clean label and grass-fed meat and dairy products as ingredients — or functional food trends. Non-GMO ingredients, in cage-free, free-range or pasture-raised eggs and chicken — particular, are increasingly in demand for baked goods, also influences consumers’ purchasing decisions. 22

Store Brands / August 2017 / www.storebrands.com

Jorgensen points out that La Farge, Wis.-based Organic Valley, an independent cooperative of organic farmers, recently introduced a line of yogurt called Grassmilk that is made from the milk of grass-fed dairy cows. Organic Valley also has a line of butter called Cultured Pasture Butter that is sourced from pasture-raised cows. There is much opportunity in this area for private brands, according to Jorgensen.

Natural replacements

“You don’t want to add too much cost by using natural alternatives to chemical ingredients.” In producing clean-label processed meats, celery powder can be used as a replacement for nitrates and nitrites (though these products must be labeled “uncured”); cherry powder from the acerola cherry, as a replacement for sodium erythorbate; and plum juice concentrate, as a replacement for phosphates to improve moisture retention. To prevent microbial growth in uncured meat and poultry products, Lenexa, Kan.-based Corbion, which specializes in clean label solutions, manufacturers a new proprietary product, Verdad Opti Powder N70. This formulation provides protection against pathogens, especially superior control of Listeria monocytogenes, with 35 percent less sodium than other powdered antimicrobials, says Tom Rourke, PhD, Corbion’s director of business development.

Food scientists have been working diligently to develop natural substitutes for artificial colors, flavors, preservatives and other additives, overcoming many hurdles along the way. For example, “there have been some serious challenges in the world of colorants” because of the relative instability of many natural pigments compared to FD&C synthetic colors, Jorgensen says. Even though a number of fruits and vegetables produce anthocyanins, water-soluble pigments that depending on their pH are the source in nature of pink, red, purple and blue colors, “the colors from these natural sources are According to research by Bellevue, Wash.-based The Hartman really tough to use in food processing,” Group, consumers are adding more nutrient-dense foods to their he explains. “A lot of times when they’re diets, with an emphasis on healthy fats, protein and fiber. This combined with other ingredients or they’re graph shows the percentage of surveyed consumers who have exposed to heat, pressure or light, these added specific ingredients to their diet. colors tend to be a bit fugitive.” But after much trial and error, successes Fiber 63% have emerged. “Huckleberries, believe it Protein 60% or not, are a wonderful source of purple Vitamin D 59% color,” Jorgensen shares. “Some companies are also making a very stable red color from Whole grains 58% tomatoes, which are high in lycopene.” Nuts and seeds 57% Finding a heat-resistant natural source of Calcium 54% blue coloring has been especially problematic. Olive oil 51% When General Mills was reformulating Trix cereal, the company’s food scientists “were Antioxidants 43% really having a lot of trouble with blue,” Green tea 42% Jorgensen recalls. “But, ultimately, they were Omega-3 42% able to find a heat-resistant blue color from a variety of spirulina,” a nutrient-dense blueFish oil 40% green algae that is considered a superfood. Healthy fats 39% The food industry has also come up with Probiotics 38% natural replacements for such common artificial preservatives as butylated hydroxyanisole Plant-based protein 32% (BHA), butylated hydroxytoluene (BHT) and Sea salt 31% tocopherols (synthetic Vitamin E). Grass-fed beef 31% For instance, “rosemary extract can deliver very good shelf-life extension in a very wide Omega-6 29% range of products,” Jorgensen points out. Coconut oil 29% Perhaps even more promising, spearmint Grass-fed dairy 28% extracts, which like rosemary contain rosemarinic acid, can be used as a preservative. Flaxseed oil 24% “Spearmint is a slightly cheaper plant Source: The Hartman Group, Health + Wellness 2017. Reprinted with permission. than rosemary,” Jorgensen observes.

Top 20 Foods/Ingredients Consumers Are Adding to Their Diets

www.storebrands.com / August 2017 / Store Brands

Indeed, reducing sodium and sugar is an important aspect of the clean label and better-for-you movements. Sugar, in particular, can often be reduced to a considerable extent without affecting flavor, Jorgensen points out. In helping a major retailer reformulate its store brand portfolio “to clean it up,” Daymon worked with private brand cereal manufacturers to cut back the sugar in sweetened cereal incrementally. With each reduction, a panel tasted samples. “The panelists were just as happy with the 35 percent sugar-reduced product as they were with the original product,” Jorgensen says. “That gives you have idea of how much excess sugar there is in these foods.” All grocery retailers by now should be considering how they can make their store brand food products “more clean label,” Jorgensen maintains. To learn more about ingredient innovations in this area, he recommends attending Global Food Forums’ annual Clean Label Conference, held each March in Itasca, Ill.

Wellness-promoting ingredients In the domain of wellness-promoting or functional food ingredients, retailers have many more options for their store brand food products. Bellevue, Wash.-based The Hartman Group’s report Health + Wellness 2017 lists

the top 20 foods or ingredients consumers are proactively adding to their diets (see the graph on page 23). Fiber, which has cardiovascular as well as digestive benefits, tops the list. Whole grains, including ancient grains such as spelt, teff and quinoa (see accompanying article on page 28), are excellent sources of fiber. Protein (both animal- and plant-based) ranks No. 2 among the nutrients consumers make a point of consuming. In addition to seeking out foods that are naturally rich in protein such as meat, dairy products and nuts, consumers are looking for protein-fortified snacks and beverages. For Eden Prairie, Minn.-based Milk Specialties Global, a manufacturer of both slowdigesting milk protein and fast-digesting whey protein concentrates and isolates, This Albertsons pasta incorporates a NutriFusion vegetable blend for added vitamins and antioxidants.

Photo courtesy of NutriFusion

Healthful Ingredients

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Healthful Ingredients midst of a flexitarian movement, where people are eating less animal protein than they used to, and they’re eating more vegetable protein than they used to. It’s a shift that’s taking place.” Legumes and their derivatives, including pea protein, soy protein, peanuts and pulses (chickpeas, lintels, dried peas and dried beans) are the No. 1 source of plant-based proteins today, according to Jorgensen. “But you also have grain-based protein such as brown rice protein and quinoa, which is actually a complete protein,” he says. “There are a lot of new protein propositions out there.” Consumers (43 percent of them) are also striving to The GanedenBC30 probiotic can be added to many types of foods, including shelf-stable snacks such as this just-launched trail mix at Walmart.

Photo courtesy of Ganeden

this has meant a market expansion from sports nutrition to functional food products. “Healthy snacking has grown in popularity, and Milk Specialties is responding,” says Mike Hiron, the company’s vice president of sales for human nutrition ingredients. “Today’s consumers are looking for additional protein options in different applications that are convenient within a busy lifestyle.” Milk Specialties has been focusing its research and development efforts on improving the shelf life of protein bars and protein-enriched ready-to-drink beverages and on developing more everyday foods fortified with protein such as bread, ice cream, soup and jam. “Dairy proteins contain all essential and non-essential amino acids and are considered the best protein source from a quality perspective,” Hiron maintains. “They also provide an overall better consumer experience from an organoleptic point of view as dairy protein works well in many applications and tastes great.” Plant-based protein is more on-trend, however, with millennials in particular striving to reduce their consumption of animal-derived products as much for the planet’s health as their own. “As a percentage of the population, actual vegans are very small in number,” Jorgensen notes. “But we’re in the pened in 2013, ourour pened in 2013, state of the art art state of the 86,000 square foot 86,000 square foot facility in Las Vegas greatly facility in Las Vegas greatly expands ourour production andand expands production distribution capabilities distribution capabilities offering ourour west coast offering west coast customers thethe same level of of customers same level quality andand execution as our quality execution as our flagship New Jersey facility. flagship New Jersey facility. OurOur precision small batch precision small batch technology delivers a level technology delivers a level of quality thatthat rivals thethe best of quality rivals best finefine dining establishments, dining establishments, andand enables us to enables us repeat to repeat thatthat quality on on a scale thatthat quality a scale meets thethe demands of even meets demands of even thethe largest private label largest private label retailers andand food service retailers food service companies. companies.

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Healthful Ingredients add more antioxidants to their diets, according to Hartman Group’s Health + Wellness 2017. Among the top foods containing antioxidants, which help prevent cell damage and fight disease, are berries of all types, cherries, dark chocolate, artichokes, pecans, kidney beans, cilantro, and a number of other fruits, vegetables and herbs. Villeroy, Quebec-based Fruit d’Or Nutraceuticals manufactures two of the most potent antioxidants in concentrated form — organic wild blueberry and cranberry juice powders — maintaining control over the supply chain of these products from farm to table in order to ensure transparency, points out Stephen Lukawski, the company’s director of sales. The cranberry juice powder also promotes urinary tract health, Lukawski says. This powder can be supplied in individually portioned packets to consumers, so they can add a packet to a bottle of water while on the go. Also available in bulk, the wild blueberry and cranberry juice powders can be used in food processing

applications such as in the manufacture of yogurt, nutrition bars and popsicles. Naples, Fla.-based NutriFusion manufactures several bulk blends of fruits, vegetables or both that are high in vitamins A, C, D, B1 and B6, says William J.H. Grand, the company’s founder and CEO. The fruit blend, which can be used in yogurt, smoothies and cookies, consists of oranges, cranberries, apples, cherries, blueberries and strawberries. The vegetable blend, commonly used in pasta (see the photo on page 24) and snack chips, contains spinach, broccoli, carrots, tomatoes and beets. Both blends also include shitake mushrooms, a good source of Vitamin D, Grand points out. Although Grand recommends the eating of actual fresh fruits and vegetables, he notes that Americans get adequate nutrition “only seven days out of a year on average.” The high concentrations of vitamins and antioxidants in his blends are 100 percent bioabsorbable, he adds.

Ancient grains keep growing in modern times Many of today’s food ingredient trends originate with creative chefs in the restaurant industry. In its “What’s Hot: 2017 Culinary Forecast,” the National Restaurant Association ranked ancient grains among the top 20 food trends in the United States. Unlike modern varieties of wheat, corn and rice, ancient grains include grains and pseudo-cereals that have remained largely unchanged over the millennia. As such, these grains appeal to sustainability-conscious as well as health-focused consumers. “Many ancient grains thrive with lower levels of pesticides, fertilizers and irrigation, making them an attractive choice to consumers who choose to shop with their carbon footprint in mind,” states the Whole Grains Council on its website (wholegrainscouncil.org). A number of companies, including Denver-based Ardent Mills, are developing flours and blends that feature ancient grains. “One of the great things about ancient grains is that they appeal to modern consumers who are interested in eating clean, simple foods,” says Zachery Sanders, marketing director for Ardent Mills. A cereal grass, barley is an ancient grain first cultivated 10,000 years ago that is especially high in fiber and includes a broad range of vitamins and minerals. Ardent Mills’ Sustagrain, a proprietary barley, has more than three times the dietary fiber of oats and corn flour and at least 10 times the fiber of brown rice, according to the company. “The significant fiber content allows developers the capability to increase fiber content in nutritious snacks,” Sanders notes. Sustagrain also can be used for formulations that need to meet certain glycemic index (GI) requirements. “Sustagrain’s starch content ranks among the lowest of commercially available grains and

Store Brands / August 2017 / www.storebrands.com

can assist in smoothing out spikes in blood glucose and insulin responses that may play a role in the development of Type 2 diabetes,” Sanders says. The following ancient grains showed the strongest growth on restaurant menus in 2016, reports the Whole Grains Council, citing research from Chicagobased Dataessential: • Khorasan wheat (Kamut) — 67 percent increase. Said to have a rich and buttery flavor, Kamut is rich in protein, lipids, vitamins, minerals and amino acids. • sorghum — 64 percent increase. A cereal grain, sorghum is a natural alternative to sugar that is rich in nutrients such as protein, fiber, B vitamins, iron and manganese. • millet — 46 percent increase. A seed, millet is a gluten-free ancient grain that is very in high B-vitamins and a good source of calcium, iron, potassium, zinc, magnesium and essential fats. • quinoa — 33 percent increase. Originating in South America, quinoa is a pseudo-cereal that contains iron and lysine; is rich in magnesium, riboflavin and manganese; and has almost twice as much fiber as other grains. Most important, quinoa is a complete protein that contains all of the essential amino acids. • amaranth — 29 percent increase. Originally a staple grain of the Aztecs in what is now Mexico, amaranth is pseudo-cereal that is high in protein and lysine as well as a moderately rich source of dietary minerals, including manganese, phosphorus and iron. • bulgar — 24 percent increase. A whole wheat grain that is partially cooked, bulgar is low in calories and fat and rich in protein, fiber and minerals such as manganese, magnesium and iron.

From supplement to bulk ingredient Probiotics are also among the top 20 ingredients American consumers are adding to their diets, with 38 percent finding ways to incorporate them, according to the Hartman study. In addition, at least half of consumers would pay 10 percent more for a food or beverage product if fortified with probiotics, according to research by Ganeden Inc., a Cleveland-based probiotic manufacturer. Also significant, 79 percent of healthy consumers would prefer to consume probiotics in foods or beverages versus a supplement, Ganeden maintains. Probiotics support digestive health and immune health and promote protein utilization and weight loss, says Mike Bush, Ganeden’s president and CEO. Said to be “exceptionally stable,” the company’s GanedenBC30 probiotic is being added to kombucha, baking mixes, tea, cereals, granola and a lot of protein-enriched items. Pet food has also become a growing market for the product. Although GanedenBC30 can be used in refrigerated products and dry shelf-stable food products, it cannot be used in shelf-stable beverages, Bush says. Consequently, Ganeden has developed a new product, Staimune, for shelf-stable RTD beverages. Made from the deactivated cell walls of the GanedenBC30 probiotic, “Staimune isn’t live, so it isn’t technically a probiotic,” Bush explains. “Staimune doesn’t provide the digestive benefits of a probiotic, but it does provide the immune health benefits.” Staimune, which can remain unrefrigerated for months, is ideal for sports drinks and beverages intended for children’s lunchboxes, according to Bush. What will be the next trending functional food ingredient? Retailers with private brands might want to scrutinize their dietary supplement aisle for some ideas. The CVS Health brand, for example, includes a dietary supplement called Cognitive Health with Cognizin Citicoline. According to the label, “Cognizin Citicoline has been clinically studied to support cognitive function, mental focus, and attention to detail,” while a footnote emphasizes that these statements have not been evaluated by the U.S. Food and Drug Administration. Originally developed in Japan for treating stroke, citicoline is frequently prescribed in European countries for cerebrovascular problems. Manufactured by South Elgin, Ill.-based Kyowa Hakko USA, Cognizin, a proprietary form of citicoline, is beginning to be used in food and beverages as a functional ingredient, says Elyse Lovett, the company’s marketing manager. Baltimoreheadquartered Kolé Life Foods makes a beverage called Inspire Brain Tonic that includes Cognizin. Could brain health be the next frontier for wellness foods? SB Schierhorn, managing editor of Store Brands, can be reached at cschierhorn@ensembleiq.com.

www.storebrands.com / August 2017 / Store Brands

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Photo courtesy of Wegmans

Strengthening Store Brands

Private brand pizzazz propels perimeter sales By Carolyn Schierhorn

egmans Food Markets is one retailer that knows how to wow in fresh. In its produce department, the Rochester, N.Y.-based chain encourages customers to spontaneously sample its huge, colorful assortment of fresh fruits and vegetables. The exuberant act of cleaning, cutting and offering shoppers samples of whatever piques their curiosity is known as “spruiking,” a term Wegmans borrowed from an Australian word for “promoting.” “Wegmans is wonderful at creating this romantic touching, tasting experience for customers,” notes David Ciancio, London-based dunnhumby’s senior customer strategist for North America, who suggested the retailer as an example of what other chains could aspire to in the fresh-food realm. Unlike Wegmans, certain retailers in the United Kingdom have an overwrap on most of their produce. “Part of our work is getting them to unwrap all of that, so customers can touch it,” Ciancio shares. “This a very human need, to hold and feel perishable product.” To build excitement not just in produce but also in 30

Store Brands / August 2017 / www.storebrands.com

other departments on the store perimeter, grocers need to create “multisensory experiences” for customers, Ciancio emphasizes. Retailers, for example, might position the bakery department near the store entrance so shoppers can enjoy the aroma of fresh-baked bread as they walk into the supermarket. Even discount retailers with smaller footprints can do this, says Ciancio, pointing to the fresh baguettes that the Cologne, Germany-based retail chain Penny Market continuously bakes in its stores and sells for a low price. “It’s the idea of romance again,” he explains. “You don’t expect to smell bread being baked in that type of store. But when you go in and inhale the scent, you think, ‘Wow, I’ve got to buy a loaf of this.’ ” The sense of smell can be extraordinarily evocative, bringing back childhood and other pleasurable memories from long ago. Grocery retailers such as Roundy’s Supermarkets’ Mariano’s banner (now owned by Cincinnati-based The Kroger Co.) leverage all five senses — sight, sound, smell, taste and touch — on the perimeter with lively made-to-order stations featuring everything from subs to sushi, hot and cold buffets, coffee and wine bars, ice cream kiosks and even sometimes full-service restaurants. Stores with delicious and aromatic signature dishes

such as Lakeland, Fla.-based Publix’s Deli Fried Chicken can generate interest and enthusiasm with samples offered soon after shoppers enter the store. Indeed, the store perimeter can extend outside of the brick-and-mortar building. Retailers could hand out product samples and coupons to customers before they walk in, while food trucks in the parking lot could sell culinarily adventurous ethnic dishes that appeal to millennials.

Perimeter priorities Nowadays, consumers of all ages are clamoring for fresh food. Sponsored by the Food Marketing Institute, Chicago-based IRI and Stamford, Conn.-based Daymon, the “Power of Private Brands” research report notes that all generational groups have a more favorable impression of private brand fresh products compared to store brand processed, packaged food. “The best quality perceptions belong to the private brand perimeter categories, with a 74 percent quality perception for dairy, 70 percent for fresh produce and 60 percent for bakery,” the report states. But even the best retailers can’t afford to rest on their fresh laurels. In today’s intensely competitive retailing environment,

supermarket chains have to stand out from the competition by uniquely branding their perimeter spaces, says Nicole Peranick, director of global consumer strategy and culinary for Daymon. To differentiate themselves, retailers must “create a destination for shoppers,” recommends the new Daymon white paper “From Shopper to Advocate: The Power of Participation,” which can be downloaded from http://www. daymon.com/publications-and-white-papers/daymon-powerof-participation-study. “Globally, six out of 10 shoppers cite fresh categories (such as produce, meat and seafood) as being important factors in store choice,” points out the report, which draws on Daymon’s research of 8,500 consumers across eight countries. The perimeter of the store is where retailers first captivate customers and win their trust, observes Michael Duffy, group creative director for Equator, a Chicago-based design and branding agency. “If you can capture the customer’s trust in fresh, everything else will fall into place after that,” he says. In the produce section, the beauty of the products themselves may dazzle and delight customers. But the way they are arranged and presented, the signage that tells shoppers about local farms that grew the fruits and vegetables, and indications that the retailer cares about sustainability or customer convenience all have a tremendous impact on consumer perceptions, according to Duffy. Having high-quality product is paramount, of course. “If you get home and the product doesn’t taste good or it’s not fresh or if there is a strawberry in the middle of the container that is moldy, that’s what customers will remember,” Duffy says. Still, retailers today must be exceptionally creative to impress increasingly particular consumers. For example, Düsseldorf, Germany-based Metro is positioning itself as the embodiment of fresh and local by having an in-aisle greenhouse in certain locations. “You can pick your own herbs or produce directly from the store,” Peranick says. “This is taking fresh up a notch and brings the shoppers even closer to the store, which we know is so important to them.” H-E-B-owned Central Market in Dallas is experimenting with a similar concept, in which herbs and other produce are grown in a climate-controlled Growtainer trailer outside of the store and then sold with much fanfare in the fresh-grown section of the produce department. “We’re watching the data to see where this trend goes,” Ciancio says. “It’s an interesting principle that allows customers to share in their own experience.” Aiming for both value and sustainability-conscious shoppers, a number of retailers, including West Des Moines, Iowa-based Hy-Vee, have enjoyed success with “ugly produce,” misshapen but unspoiled fruits and vegetables that would otherwise end up as food waste. “In the U.K., this is called wonky produce,” Ciancio adds, noting that the good-tasting but cosmetically challenged products have taken off in a big way there and have started to resonate with consumers across the United States. Another way to drive home the environmental message www.storebrands.com / August 2017 / Store Brands

Strengthening Store Brands

As consumers move away from processed foods and purchase more and more products online, the center store has been struggling. What can grocery retailers do to inject life into these once-robust aisles and leverage their store brands? Several retailing and food marketing experts share their insights: PLAY UP KEY AREAS OF INNOVATION. Retailers need to devote more shelf space to — and develop more store brand SKUs in — four trending areas of food product innovation, and they should champion these products with signage and special promotions and through social media, says David Ciancio, London-based dunnhumby’s senior customer strategist for North America. The hot innovation realms include health and wellness, certified organic, free from, and locally made. LOOK FOR CROSS-MERCHANDISING OPPORTUNITIES ON THE PERIMETER. The center store and the perimeter are not separated by a moat. They work together synergistically and are interdependent, says Michael Duffy, group creative director for Chicago-based Equator. Made-to-order stations, coffee bars, ice cream kiosks and product sampling stations on the perimeter can all direct shoppers to specific center store aisles. For example, the café could have a sign that states, “Would you like to be able to brew this coffee at home? Visit Aisle 9.” BRING MORE IMAGINATION INTO MERCHANDISING. When a new store brand line comes out, use creativity to generate excitement and facilitate wayfinding, Duffy suggests. For example, when he worked on branding for a new private brand cat food line, he placed pawprint decals on the floor to lead shoppers to the new products, samples of which were displayed in cat bowls on the floor. “Kids were following the pawprints,” he remembers. “The whole experience was a lot of fun.” USE TECHNOLOGY TO FACILITATE CROSS-MERCHANDISING. Grocery retailers are behind department stores when it comes to pairing beacon technology with smart phone apps, points out Yosi Heber, founder and president of Oak Park, Mich.-based Oxford Hill Partners. Neiman Marcus, for example, has the technology in place to recognize particular customers who have the retailer’s smart phone app as soon as they enter the store. Based on the customer’s purchase history, the retailer can push specific messages to him or her and alert associates in the departments the customer will likely visit. “If the customer previously bought a red dress in the dress department, this information can be sent immediately to that department, so the sales associates will be better prepared to make recommendations,” Heber explains. In grocery, this technology could be used to instantly identify individuals who are, say, looking at sour cream-based dips in the dairy case, mine their purchase history, and then push the recommendation, “Try our new premium sea-salt kettle chips in Aisle 12.” TAKE ADVANTAGE OF THE MEAL KIT CRAZE. Meal kits constitute a $2.2 billion business, one that is expected to grow 25 to 30 percent over the next five years, according to Pentallect, a Chicago-based food industry consulting firm. Grocery retailers need to figure out how to tap into this market. Meal kits typically include all of the pre-measured ingredients, shelf-stable products, and fresh items needed to create a meal for a specific number of people. Retailers could promote sample meal kits on the store perimeter and direct customers to a center-store aisle to pick up pre-measured spices and seasonings, flour, pasta and other non-perishable items, depending on the recipe. COMPLETELY RETHINK THE CENTER STORE. Some grocery retailers have placed produce in the center of the store, creating the effect of a theater in the round, with fresh fruits and vegetables taking center stage. Accordingly, retailers are starting to rethink where they place shelf-stable food and non-food items, observes Richard Bode, a principal consultant with Cadent Consulting Group who is based in Chicago. “For example, Main & Vine, a Kroger banner in the Northwest, places their ‘center store’ products in a section in the corner of the store,” he says.

is to use compostable produce bags, which can be branded with the retailer’s name and a message. Even better, stores can sell branded, reusable specialized bags for different types of bulk produce. Although Peranick believes “private brand” should be used in the holistic sense of being the retailer’s brand (the sum of all connections made with customers), grocery retailers can gain considerable mileage by putting a name and logo on any fresh or fresh-prepared items carried out of their stores. In their grocerant, deli and bakery departments, for example, retailers should look for opportunities to brand disposable bags, carry-out boxes and to-go plastic and clamshell containers, Duffy suggests. This way, customers will be reminded of where they bought those mangoes and fresh bagels or that delicious heat-and-eat chicken tikka 32

Store Brands / August 2017 / www.storebrands.com

masala when they get home. And the customers’ family members and friends will see the bags and containers as well. “You’ve got all the power in the world,” Duffy says. “Think about how you can brand your fresh offerings.” The team members in a store’s fresh departments also play a huge role in perimeter branding, Ciancio adds. Customers should be able to interact easily with knowledgeable, friendly butchers, chefs and retail dietitians to learn how to prepare and cook cuts of meat, seafood and fresh vegetables and better meet their dietary needs.

Co-creation, collaboration, community As the Daymon white paper stresses, “in this time of brand agnosticism, shoppers need a compelling reason to choose one store or brand over the competition that is eagerly

waiting in the wings.” One key strategy that retailers can use to attract and keep customers is to provide opportunities for co-creation on the store perimeter, Peranick says. “What we mean by ‘co-create’ is giving consumers the ability to interact and to participate in the process, be it new product innovation or services at retail,” she explains, noting that consumers today seek greater involvement and connectivity. One retailer that already leverages the co-creation concept to engage consumers is H-E-B. The San Antonio, Texas-based chain solicits new product creations from consumers and small businesses throughout Texas in its annual “Primo Picks Quest for Texas Best” competition. The top winners receive cash prizes and the opportunity for their products to become part of H-E-B’s Primo Picks private brand. Other innovative retailers are also starting to foster collaboration in their stores. For instance, Lowes Foods, headquartered in Winston-Salem, N.C., has a “Community Table” — a meeting space with a long wooden table and benches right outside of the produce department, Peranick notes. “What they do there is facilitate co-working and community by having events at the table, inviting shoppers to co-create meals or to sample some of the latest items from Lowes’ prepared food chefs,” she explains. “It’s a beautiful space, and it’s a wonderful example of how a retailer can create something new and different right in a core area of the store.” Another intriguing idea that has seized Peranick’s attention, Hy-Vee in Minnesota hosts DISH (an acronym for “dinner is solved at Hy-Vee”) Meal Preparation Workshops for customers. In a kitchen-equipped room in the store, five to 12 shoppers will work together to prepare a meal. “Everyone takes home leftovers for the rest of the week,” Peranick says. “So they are working together to create meal solutions, leveraging fresh produce, fresh meats and other products. This is a great example of how you can build community around this idea of fresh and really draw shoppers into the store in a different way.” The perimeter of the store can also be used to connect members of the outside community with customers, Peranick suggests. Carrefour in Italy, for one, has a new urban concept store that is open 24/7, includes laundry facilities and features a handyman team that can be hired to make repairs in shoppers’ homes. Austin, Texas-based Whole Foods Market is another chain known for incorporating community elements into its stores, Peranick points out. At its Montrose location in Houston, in a neighborhood rich in culture, Whole Foods integrates the work of local artists. There is even an art vending machine, repurposed from a retired cigarette vending machine, which dispenses small works of art. (Visit Artomat.org to learn more about this concept.) “The local art dispenser was my favorite” of the hyperlocal experiences created in the store, Peranick says. “It’s an example of how to bring engagement to the perimeter of the store in a different way, all under the lens of private brands.”

What’s the overarching objective of destination retailing? According to Peranick, the goal is ultimately “to develop a cult-like following” for one’s private brand. SB Schierhorn, managing editor of Store Brands, can be reached at cschierhorn@ensembleiq.com.

www.storebrands.com / August 2017 / Store Brands

This and the following pages comprise our annual Beverage Report with stories on the following categories: tea and coffee extracts, roast/ground coffee, wine, ready-to-drink coffee and cold brew coffee.

2017 Beverage Report

Coffee and Tea Extracts

It all adds up to innovation Flavor combinations, functional benefits fuel category’s growth

f retailers are looking for that exclusive store brand to set them apart from their competitors, they might find it within coffee and tea, where extracts are being used to fuel innovation to create new good-for-you drinks. According to market intelligence agency Mintel, consumers are increasingly looking for drinks that provide a functional benefit, such as energy boosting, antioxidants, anti-inflammatory properties or just to help them relax. More than ever, coffee and tea are providing these advantages by using extracts and gaining a positive reputation for doing so. Heidi McCormack, marketing manager for Finlay Extracts & Ingredients USA, a Lincoln, R.I.-based company that produces and supplies coffee ingredients and tea extracts to flavor various products, says private-branded products are growing in the coffee and tea category, particularly in the ready-to-drink segment (RTD), thanks to extracts. “Millennials are helping to drive this trend, as they are increasingly interested in value products that appeal to their needs over brand recognition and loyalty,” she adds. “As millennials look for more excitement — and the third-wave culture and premiumization trends grow — it’s becoming more important for brands to

launch new and interesting values and flavor combinations for their products in order to be successful.” Category growth will be driven by a focus on premium/specialty ingredients, and interesting and innovative new flavors and flavor combinations combined with value propositions around health, transparency and sustainability, McCormack says. There is plenty of opportunity for retailers with private brands to attract new customers by leveraging key trends such as functionality as well as creating stories behind products, McCormack stresses. “Brands are looking for more transparency and a sustainable story as well as positioning for more natural and fresh labeling in drinks,” she adds. That said, more consumer education is needed around coffee and tea extracts, McCormack states, noting that origin of extracts and the stories behind their creation can increase consumer appreciation. She cites three opportunities for innovation: • blending different types and flavors, • technology around processing to deliver more fresh and natural claims, and • new trends like cold-brew tea. She adds that the trend for mixing tea and lemonade continues to be popular. “Spice trends are also growing, with specific growth especially in chai,” McCormack adds. “Specialty/premium teas continue to drive the market forward with more product introductions using herbals and pu’er [fermented dark tea sourced from ancient trees in the forests of southwest China] in RTD and items like kombucha [a sweetened black or green tea used for its health benefits] driving the energy/recovery growth.” McCormack stresses that it’s important to understand what is driving the market forward to understand what products will be successful. She says Finlays, founded in 1750, uses a global network of experts that work with other teams across its business, from taste application specialists to market insight analysts, to understand the global and regional trends driving consumption, which then shapes innovation literally from from bush to cup. SB — Lawrence Aylward

Store Brands / August 2017 / www.storebrands.com

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2017 Beverage Report: Roast/Ground Coffee

Blend of success Category’s growth driven by freshness, sustainability, value and the experience factor

illennials may be getting a caffeine boost from drinking their coffee, but in turn they are boosting store brand sales in the roast/ground coffee category. According to the National Coffee Association, daily coffee consumption by millennials climbed to 60 percent from 51 percent in recent years. Thanks to millennials, Chicago-based food and beverage researcher Technavio expects the global roast and coffee market to grow at a steady pace from 2017 to 2021. Elizabeth McLaughlin, executive vice president of sales and marketing for Westrock Coffee Co., a North Little Rock, Ark.-based roast/ground coffee supplier, isn’t surprised that millennials are spurring category growth and product innovation. “Millennials value different aspects of their coffee — including traceability, unique taste profiles and single origins that replicate a ‘coffee house’ offering,” McLaughlin says. “Older generations drink their coffee at home, focusing on the price of the coffee, and they drink coffee to wake up or to warm up. Millennials, on the other hand, are more focused on the experience rather than the price.” McLaughlin expects the category to move toward more sustainable coffee practices and toward fresher and more natural as well as organic offerings largely because of the influence of millennials. “We think consumers will gravitate to brands that are trustworthy and known for their social values,” she adds.

WHAT’S TRENDING

Technavio cites three emerging trends driving the roast/ground coffee category market: • rising demand for organic coffee, • increasing availability through online retailers, and • the growing popularity of private brands. Overall, McLaughlin says consumers are seeking more gourmet coffee options and prefer mediumto dark-roast coffees. Westrock recently created a triple-certified, single-origin, medium-roast coffee of high quality and value for a large drugstore chain. “Other retailers with private brands are asking us for high-quality, ethically sourced, certified coffee products at a competitive price, and they want this messaging to be communicated to the consumer on the packaging,” McLaughlin says. Origin and certification callouts on packages make make “a big difference” at point of sale, she adds. “At Westrock, we work from crop to cup — having direct involvement at every step of the supply chain process,” McLaughlin notes. “This allows us to monitor the quality at every stage of production, ensure sustainability and transparency, and create a measureable global impact.” With third-wave roasters heavily influencing the bagged coffee category, customers are more interested than ever in single-origin, sustainably sourced coffees, McLaughlin states. “A small percentage of consumers are also interested in things like smoked and aged coffees,” she adds. TELL A STORY

Retailers need to share the story behind their private-branded offerings, McLaughlin says. “Tell the story of the coffee from the most personal perspective possible,” she advises. “Roast is the leading purchase factor for customers, followed by its origin and it’s sourcing. Consumers want to know where the coffee came from, where it’s roasted, how it’s roasted and why it is a particular roast level.” McLaughlin advises retailers to consider that consumers are looking for the coffee trifecta: Is it fresh, is it ethically sourced, and is it a good value? “Offering products that answer these three questions for the consumer is the quickest and most effective way to drive sales,” she says. SB — Lawrence Aylward

Store Brands / August 2017 / www.storebrands.com

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2017 Beverage Report: Wine

Fine time for private-branded wine Retailers can differentiate and attract loyal customers through store brand offerings recent article in The Wall Street Journal asked in its headline, “Are Wines from Costco and Sam’s Club Worth Drinking?” The news outlet had its wine columnist, Lettie Teague, purchase assorted private-branded wines from Costco, Sam’s Club and Trader Joe’s to taste-test them. Teague was on a quest to find the best store brand wines at three of the country’s largest grocery chains. “I bought at least half a dozen private-label wines in each store at prices ranging from $3 to $20 a bottle; most cost under $10,” Teague wrote in her story. “The wines were produced in a variety of places including New Zealand, California, Italy, France and Germany — and were various in quality, too.” In short, Teague liked several of the wines. And there were some she didn’t care for, too. But it doesn’t take a wine expert to concur that private brand wines are gaining in popularity among consumers. Costco is a popular destination for wine lovers. Sam’s Club and Lidl have also upped their wine offerings. Jonathan A. Gelula, president of KDM Global Partners LLC, a Philadelphia-based company that develops private-branded wine programs for retailers, says market factors are coalescing in favor of an

increase in private brand wine sales. But Gelula says an increase in competition among retailers in the category contributes to a need for each retailer to: • devise ways to differentiate themselves, • increase margin in a world where margin is diminishing, • cultivate customer loyalty, and • bring foot traffic to their stores where the ability to shop online is keeping customers at home. “In the wine category, especially, private label offerings offer a compelling way for retailers to do all of the above,” Gelula adds. What wines are retailers finding compelling to differentiate, increase margins, gain loyalty and build traffic? It depends, Gelula says. “Wine products ebb and flow in popularity just the same as clothing — one year it’s bell-bottoms and the next year it’s Nehru jackets,” Gelula says. “It’s the same for wines. But private label offerings are a way to hedge in that world with just-in-time inventories of proprietary label wines.” Moscato has been popular in recent years as have rosé wines, Gelula says. According to Aurore Godin, a U.S. sales executive assistant for Francebased wine producer Les Grands Chais de France, millennials are purchasing twice as many rosé selections as baby boomers, who tend to prefer chardonnay, merlot or cabernet sauvignon. In terms of packaging, Gelula says canned wines are coming to market more frequently. Godin says Les Grands Chais de France is using packaging — specifically metallic, leather and wood labels — to enable retailers to differentiate their store brands. Gelula says retailers can help their own cause selling private brand wines in-store by promoting them online and through social media. Godin suggests that retailers can boost store brand wine sales by providing extensive information on the label such as a wine’s region of origin and history as well as a taste description. Retailers should also make their store brands more affordable by pricing the items lower than comparable national selections. SB — Lawrence Aylward

Store Brands / August 2017 / www.storebrands.com

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2017 Beverage Report: Ready-to-Drink Coffee

Brewing with opportunity Now is the time for retailers to capitalize on category with private-branded RTD offerings

f retailers want to jolt their beverage sales with store brands, they should consider the ready-to-drink (RTD) coffee segment. In the overall coffee category, the percentage of Americans drinking coffee on a daily basis increased to 62 percent this year, up from 57 percent in 2016, according to the National Coffee Association. The global RTD coffee and tea market is expected to reach $116 billion by 2024, according to a recent report by Grand View Research. RTD coffee and tea are a part of a growing trend in the soft drinks industry where the drinks aren’t only perceived as instant energy drinks but also form a part of lifestyles in major countries around the world. The enhanced nutritional benefits and compatibility with different flavors is also driving the demand for these products, according to Grand View Research, a market research and consulting firm in San Francisco. Todd Mullane, vice president of private label sales for Dakota, Ill.-based Berner Food & Beverage, which offers a broad range of milk-based readyto-drink coffee, says more consumers are buying grab-and-go coffee beverages because of their convenience, which has benefitted private brands. “More coffee chains are bottling their products

and bringing them to grocery retail,” Mullane says, noting that the national brand chains are also heavily promoting them. “This gives those retailers an opportunity to grow their private label portfolio in a category experiencing growth. We expect these trends to continue moving forward.” What retailers want in the category in terms of store brands depends on what they are trying to accomplish, Mullane says, noting that Berner has the capability to work with retailers to give them quality products — made consistently — to serve the needs and wants of the consumers shopping in their stores. Berner can help with “whatever the strategy might be for that retailer with its private brands program,” Mullane says. “The bottom line is retailers are looking for flexibility in offerings and for guidance on where the category will go next, he adds. As private brand programs continue to evolve, so do flavor offerings. “Many retailers are looking to add limited-time offering SKUs during the key holiday drive times,” Mullane points out. “Pumpkin spice always seems to be a big winner during the Halloween and Thanksgiving timeframe. Other retailers look to a mint of some sort around the Christmas timeframe. The nice thing is that the opportunities are indeed endless and the ability to create something different is there.” If retailers want to drive category growth, the answer is simple in what they need to do, Mullane says. “They need to get behind their programs and promote what they have spent a long time developing,” he adds. “Be proud of your brand and let the consumer know what is different about your product. Do not be afraid to step outside of the box.” It’s still vital to offer the basic products, Mullane notes, but offering items that are different, even exclusive, can generate profits. “Make the shopping experience truly that — an experience,” he says. Mullane says products should be merchandised in different and multiple areas of the store, where it makes sense for individual retailers. “Offer the consumer a great price gap between your private brand and the national brand equivalent to create trial,” he adds. SB — Lawrence Aylward

Store Brands / August 2017 / www.storebrands.com

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2017 Beverage Report: Cold-brew Coffee

Catching on … fast Category is small but burgeoning, providing an opportunity for private brands

ow hot is the cold-brew coffee segment? It grew 580 percent from 2011 to 2016, according to market research firm Mintel. True — cold-brew coffee makes up less than 1 percent of the ready-to-drink coffee segment at retail, which is only 17 percent of the total coffee category. But that number is rising. Cold-brew coffee’s growing popularity has been a newsworthy topic in newspapers, magazines and blogs. In a recent article, the New York Times stated that “the United States is becoming a cold-brew nation” because of the product’s “massmarket appeal and indie credibility.” Cold-brew coffees are part of the “third wave” coffee movement, which has spurred the overall coffee category, according to Mintel. While coldbrew coffees are made with more labor-intensive methods (beans steeped in cool water for several hours), they are lauded by consumers as having more flavor without any acidity or bitterness. Coffee giant Starbucks helped drive coldbrew coffee sales — and its acclaim — when it introduced the drink in 2015. Earlier this year, the National Coffee Association (NCA) listed cold-brew

coffee in its 2017 trend list, noting “cold-brew coffee has exploded in popularity over the last several years, and 2017 should be no different.” NCA said while “a large part of cold-brew sales have been at coffee shops themselves, plenty of retail brands are also adding cold-brew products to their lineups.” According to Mintel, while cold brews have seen a number of launches at foodservice and within the RTD segment, the concept is generating new attention in ground coffee formats. The idea of at-home cold brewing has potential to catch on with consumers. While a large part of cold-brew sales have been at coffee shops themselves, plenty of retail brands are also adding cold-brew products to their lineups. — National Coffee Association

Clearly, the burgeoning category presents an opportunity for private brands to capitalize with their own cold-brew products. And retailers can take their pick of what facets to introduce, from concentrates to grab and go to organic. Elizabeth Sisel, a beverage analyst at Mintel, recently wrote in a report that the cold-brew coffee industry is small but trending with force. “Right now it is experiencing impressive growth, thanks to consumers’ enjoyment of new styles of coffee preparation and interest in trial,” Sisel said. “However, cold-brew consumption and RTD coffee in general are not consumed frequently, challenging future growth and perhaps foreshadowing early onset for a plateau in sales. Greater awareness is needed, but most importantly consumers need to be in the mind set to drink cold coffees just as frequently as they do hot coffees.” Sisel noted that it is unlikely consumers are staying loyal to a particular brand of cold-brew coffee, which presents even more opportunity for retailers to step in with private brands. Sisel also said that while innovation opportunities are plentiful, so are the challenges to maintain and support future growth for the category. Obviously, it’s not a category that can be debuted and forgotten. It will not only take quality products, but education as well. It will also take in-store merchandising and sampling to get more people to try it. SB — Lawrence Aylward

Store Brands / August 2017 / www.storebrands.com

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Category Intelligence: Honey & Syrup

Sweeten the proposition Retailers could make honey and syrup more appealing to consumers by emphasizing their versatility and health benefits By Kathie Canning

imes are not so sweet for the U.S. sweetener segment. According to “Sugar and Sweeteners — US,” a December 2016 report from global market research firm Mintel, 84 percent of surveyed American adults said they are limiting their sugar intake, with the highest percentage citing weight management as the reason. Artificial sweeteners, meanwhile, are struggling amid negative consumer perception. But there’s some good news on the honey and maple syrup front: Mintel notes that natural sugar substitutes such as these show growth potential. In fact, three-quarters (75 percent) of surveyed U.S. consumers indicated that honey is healthy, while 45 percent said the same of maple syrup.

consider offering raw, organic and monofloral honey varieties, which are gaining in popularity.

Think beyond the honey bear Demand for honey shot up in 2016, notes Londonbased Euromonitor International in its March “Spreads in the US” report. The sweetener’s health halo — honey boasts both antibacterial and antifungal properties — and unique taste and texture make it a highly versatile sweetening agent. “Although honey held only a 16 percent value share of spreads in 2016, this represents an increase of nearly 4 percentage points since 2010,”

Euromonitor says, “coming as most spread products saw flat or declining growth.” Retailers seeking to strengthen their store brand honey programs will want to approach new product development with emerging consumer trends in mind. One such trend is that toward specific types of honey. “We’re starting to see consumers taking more of an interest in the sourcing, packaging and flavor of the honey,” says Phil deVooght, chief commercial officer for Sweet Harvest Foods in Rosemount, Minn. “Sales of traditional honey bears are flat to declining, but we’re seeing strong interest in raw, organic and monofloral varieties.” Beyond specific types of honey, consumers also are looking for ethically sourced options, says Gordon Marks, executive director of Washington, D.C.-headquartered True Source Honey LLC, a non-profit organization that represents beekeepers, honey packers and importers. The organization’s True Source Certified Honey program assures shoppers that the honey they purchase can be traced back to the hive in the country of origin listed on-pack. “Having the True Source logo on a bottle of honey gives consumers the confidence that the honey is a quality product from a company that cares about honey bees, beekeepers and honest sourcing,” Marks notes. In addition, there is increased interest in singleserve honey options that fit busy consumers’ desire for portability and convenience, deVooght notes. “Qualitatively, we’ve heard from consumers that the traditional honey straws aren’t fulfilling their needs in this way,” he says, “and they’re seeking single-serve packaging that travels well, won’t burst in their purse or backpack and is easy to open.” Glass containers, too, are forget to crossof growing interest, deVooght merchandise says. They not only help honey and maple preserve honey’s quality, but syrup in other also better communicate the categories. value of specialty honeys at the shelf.

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Category Intelligence: Honey & Syrup Emphasize maple syrup’s versatility Although pure maple syrup doesn’t quite match honey when it comes to overall health perception, that reality could change in the near future as more consumers learn about maple syrup’s health benefits. Maple syrup boasts many active antioxidant elements such as polyphenols, trace elements and vitamins, notes The Federation of Quebec Maple Syrup Producers. “New studies found that maple syrup combines many families of antioxidants, some of which are also found in berries, tea, whole wheat, flax seed and red wine,” the Federation says. Arnold Coombs, director of sales and marketing for Bascom Family Farms in Brattleboro, Vt., suggests that the findings tied to health benefits are starting to trickle down to consumers. “Total maple usage is up 7 percent,” he says. “As more consumers learn about maple — it has over 60 antioxidants, and research indicates it may inhibit Alzheimer’s — this growth should continue.” Retailers could also benefit on the private brand side by emphasizing maple’s syrup’s versatility. “Maple syrup is trending right now as customers discover multiple usages for the product,” notes Lyne Chayer, vice president of sales and marketing for L.B. Maple Treat Corp. in Granby, Quebec. “They now cook with it, bake with it, do dressings, etc.” Added flavors are another trend in the segment, she says, with flavors such as cranberry, blueberry and coconut becoming very popular. Pure maple syrup is a pricier alternative to artificially flavored syrups, so value

Honey and syrup category performance Maple pancake and waffle syrup

Honey Private Brands

All Brands

Private Brands

All Brands

Dollar Sales (in millions)

$294.3

$634.8

$228.3

$684.9

Change vs. Year Ago

+10.1%

+7.6%

1.2%

-0.3% 100%

46.4%

100%

33.3%

Unit Sales (in millions)

58.5

112.1

71.3

193.0

Change vs. Year Ago

+9.8%

+6.70%

-1.5%

-1.4%

Avg. Price Per Unit

$5.03

$5.66

$3.20

$3.55

Dollar Share

Source: InfoScan Reviews, IRI, a Chicago-based market research firm. Total U.S. supermarkets, drugstores, mass market retailers, military commissaries and select club and dollar retail chains for the 52 weeks ending July 9, 2017.

Store Brands / August 2017 / www.storebrands.com

is important to consumers, too. The fastest-growing size, therefore, is the 32-ounce jug, Coombs notes. “Consumers are progressing to alternative sweeteners and are willing to pay more for the benefits, yet they want the best value,” he explains. “The larger size gives this to them. We are also seeing growth in organic maple syrup.” Outside of the larger sizes, neither Chayer nor Coombs has seen much in the way of packaging innovation worth adopting within the maple syrup segment. “Squeeze bottles and pouches are in the market but have gained little traction,” Coombs says. “Maple syrup bottles and jugs have a distinctive look that consumers recognize. That might explain why other styles of packaging have had a hard time gaining traction.”

Tempt them to buy In addition to pursuing strong honey- and maple syruprelated product and packaging trends, retailers might want to put some extra muscle behind marketing and merchandising efforts within the segment. For instance, deVooght recommends that retailers demonstrate honey’s versatility by crossmerchandising store brand honey within multiple categories across the store. “Cross-category promotions align well with consumer uses of the product,” he says. “For example, honey and tea sales share a similar seasonality and usage. A joint display with honey and tea is a logical choice during the colder winter months.” Marks agrees and extends potential crossmerchandising opportunities into non-food territory. “Honey is a wonderful throat soother during the winter season and can be placed in the cough and cold aisle,” he says. Indeed: A 2007 study by a Penn State College of Medicine research team found that a small amount of buckwheat honey reduced children’s nighttime coughing and improved their sleep quality better than dextromethorphan or no treatment. A little consumer education, meanwhile, could help boost sales of store brand maple syrup. Chayer notes that retailers need to fill their customers in on the multiple uses of maple syrup and its health benefits. Photos could be helpful in demonstrating maple syrup being used in non-traditional ways — for example, in a maple-balsamic dressing or in a marinade for chicken or salmon, Coombs says. “We’ve had success with recipe cards/booklets to give consumers ideas on how to use maple as an ingredient,” he adds. SB Canning is a freelance writer from Libertyville, Ill.

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Category Intelligence: Salty Snacks

Crunch time Retailers need to focus on better-for-you formulations, fun flavors and new package sizes in a category where private brands have plenty of room to grow By Kathie Canning

consider international flavors such as Indian.

hether served alongside a lunchtime sandwich or poured into a bowl at snack time, salty snacks continue to be popular among American consumers. And there’s no sign of a slowdown to all of that crunching. Between 2011 and 2016, U.S. sales of salty snacks grew 30 percent, reaching an estimated $11.2 billion, reports global market research firm Mintel Group in its April “Salty Snacks — US” report. Moreover, Mintel predicts that sales will reach $13.6 billion by 2021. The strong recent growth wave can be attributed to healthy spikes in sales of meat snacks and ready-to-eat popcorn, Mintel notes. Cheese snacks and corn snacks also have posted positive growth. However, sales of pretzels and pork rinds are flat and are forecast to remain that way. Despite an abundance of existing options within the space, retailers will still want white space for private brand product development, the market research firm suggests. And with only a 6.4 percent dollar share of the category, according to data from Chicago-based IRI, private brands have plenty of room to grow. “While there is a lot of competition within the salty snack category, there are still plenty of opportunities for brands to grow,” the market research firm points out. “For example, 20 percent of consumers agree that premium salty snacks are worth paying more for. Consumers’ interest in premium snacks is evident in the premiumization of the meat snack category.”

Health it up

Don’t

In line with the trend toward premiumization is a trend toward forget to leverage more healthful formulations. websites and Kelly McGolrick, vice president social media to of category management and promote and sell customer marketing for Massillon, products. Ohio-based Shearer’s Snacks, points to growing interest in healthful inclusions such as quinoa, various seeds and black beans. Lower-sodium options also boast appeal for consumers who are on a low-sodium diet or just want to reduce their sodium consumption. But such offerings still must deliver the right amount of flavor. Nutrient-dense salty snacks, including higherprotein options, are worth pursuing, too, suggests Barbara Moreno, director of marketing for Snak King, based in City of Industry, Calif. “Low-carb, high-protein diets are here to stay — 71 percent of consumers state they want more protein in their diets,” she notes, citing recent research from The NPD Group Inc. of Port Washington, N.Y. U.S consumers also are seeking out clean labels, looking for claims such as “no artificial ingredients,” “no artificial sweeteners” and “no hydrogenated oils,” she says. And they are increasingly drawn to non-GMO formulations. “Currently, the buzz in the industry is non-GMO — everything from oil to seasonings,” adds Angela Schrock, an account manager with Old Dutch Foods Inc. based in Roseville, Minn.

Get creative with flavors To grow sales of store brand salty snacks, retailers might also want to consider flavors that go beyond the basic barbecue or

Store Brands / August 2017 / www.storebrands.com

Category Intelligence: Salty Snacks nacho cheese. Moreno notes that the popularity of bold flavors and spicy flavors continues to grow, driven by millennials’ quest for adventurous flavors. Millennials “place taste and enjoyment [above] health,” she explains, citing a Feb. 8, 2017 article on Forbes.com. “They forgo routine and seek out what is new and different, preferring bold and spicy flavors and culturally diverse options.” Speaking of culturally diverse options, McGolrick points to increased consumer interest in salty snacks with international flavors. “We’re seeing flavors with an Indian flair — tikka masala and turmeric — that are newer and fun,” she says. Nostalgic flavors, too, have potential, McGolrick suggests. “There’s a ballpark nacho flavor right now that you can put on a tortilla chip that tastes just like that cheese sauce that they put on your chips at the ballpark,” she says. “It brings that flavor and all of those memories.” While newfangled bold, spicy, international and nostalgic flavors are unlikely to challenge the sales of core own-brand flavors such as barbecue, they do help retailers bring some interest and fun to the category, McGolrick says. Executed as seasonal opportunities — on the shelf for six months to a year — such products could spur additional impulse transactions. “It does separate your brand from your competitors’ and from the national brands,” she points out. “And it’s a low purchase commitment.”

Position them to sell The right packaging, marketing and merchandizing are also critical to private brand growth within the salty snacks segment. On the packaging front, recyclability is a plus,

Salty snack category performance Salty snacks Private Brands

All Brands

$1,130.0

$17,574.6

+7.9%

+3.1%

6.4%

100%

Unit Sales (in millions)

590.3

6,979.0

Change vs. Year Ago

+10.6%

+2.5%

$1.91

$2.52

Dollar Sales (in millions) Change vs. Year Ago Dollar Share

Avg. Price Per Unit

Source: IRI, a Chicago-based market research firm. Total U.S. supermarkets, drugstores, mass market retailers, military commissaries and select club and dollar retail chains for the 52 weeks ending May 14, 2017.

Store Brands / August 2017 / www.storebrands.com

Schrock notes, particularly for better-for-you salty snack offerings. Family-size/party-size packs — 15-ounce instead of the conventional 10-ounce are growing in popularity, McGolrick says. But an even bigger opportunity for private brand salty snack packaging might be found within the multipack and variety pack space. “It’s challenging from a cost perspective to put together, but it is a segment where the national brand has done a fantastic job,” she says. To succeed here, retailers and their private brand suppliers must “hold hands and put a price out there that has probably a little less margin” than they both would prefer, McGolrick says. But the potential rewards are huge, as these small packs not only are staples in children’s school lunches but also play an important part in portion control for many adults. When it comes to marketing, sampling can go a long way to spur sales of store brand salty snacks, Schrock suggests. It’s an easy way to show shoppers that the quality of the products is equivalent to — or better than — that of the national brands. Retailers also have an opportunity to leverage their existing websites and social media assets for the benefit of their salty snacks (and other store brand items), McGolrick says, noting that Kroger and Publix do a great job here with their Simple Truth and GreenWise brands, respectively. And they also could reap rewards for these highimpulse-buy items through a bit of thoughtful merchandising. A typical grocery store features more than a dozen salty snack displays at any given time, and private brand offerings are seldom in that mix. “Get that private label product out on display, even at regular price, she advises. “You’re going to have a chance at capturing that impulse purchase.” Opportunity also knocks via expanded snacking occasions and merchandising in unexpected areas of the store, Moreno points out. Busy consumers are eating fewer traditional meals, so snacking occurs between meals, after exercise, in place of a meal and at other occasions throughout the day. “Breakfast is a peak time for snacking — the 6 a.m. to 10 a.m. daypart for snacking realized substantial growth between 2011 and 2015,” she notes, referring to a 2015 Euromonitor International study. “Snacking is now showing up in the produce, deli and cheese departments; vegetable-based chips are positioned nicely for high-traffic, high-growth perimeter-of-store placement.” SB Canning is a freelance writer from Libertyville, Ill.

Category Intelligence: Fruits & Vegetables

Blossoming sales Fresh produce dominates category growth, but there’s room for frozen to prosper, too By Dana Cvetan

consider new product and packaging innovations to spur sales of frozen produce.

roduce sales are up. Way up. Sales of fruit have grown 19 percent since 2012 and vegetable sales grew by 13 percent from 2011 to 2016, according to global market research firm Mintel Group. A populace eager to reap produce’s health benefits is largely responsible for this double-digit sales growth, which is mostly traced to fresh fruit and vegetables, according to two recent Mintel reports: “Fruit U.S., June 2017” and “Vegetables U.S., May 2017.” Fruit is a $50 billion market, and fresh fruit accounts for 90 percent of it. Mintel forecasts sales will grow to $60 billion by 2022. Vegetable sales, which reached $56 billion in 2016, should grow by about 10 percent to achieve $61 billion in sales by 2021, Mintel estimates. Private brand vegetables make up about 37 percent of category sales, according to Mintel.

Revitalizing frozen produce New product and packaging innovations,

as well as marketing to various usage occasions, can offer growth opportunities in the frozen fruit and frozen vegetables sectors, Mintel says. Retailers are seeing declines in their private label frozen fruit sales, but understanding the reasons for that can lead to a plan to reverse the decline, says Alex McIntosh, vice president of sales for Imperial Frozen Foods in Wake Forest, N.C. “Recent challenges over the last nine months have come from a strong fresh market in strawberries and blueberries, but retailer leadership will not settle for growth in fresh and decline in frozen — they want growth in both segments,” McIntosh says. “Category managers and suppliers need to understand the current marketplace while looking for ways to drive varieties and blends that will drive growth above and beyond blueberries and strawberries.” The frozen vegetable category is fairly stagnant, McIntosh adds, and requires strong innovation to drive growth. “The consumer is extremely health-conscious, so products that focus on health and convenience are doing well,” he adds.

Packaging selling points Steam-in-the-bag vegetable blends are a hit with time-pressed consumers, McIntosh says, noting that clear packaging that shows off the quality of the forget to offer product could also tropical fruits boost sales. such as acai, kiwi, Moving into papaya, mango larger frozen fruit and pineapple. bags of 32, 48 and 64 ounces provides

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Category Intelligence: Fruits & Vegetables better value to consumers, he adds. “Move out of the smaller-sized bags that the customer no longer wants. The 8-, 10-, 12- and 14-ounce bags do not serve their purpose.” Additionally, McIntosh advises transitioning from pillow packs to stand-up pouches and focusing on 48-ounce fruit blends. On the other end of the spectrum, McIntosh

says larger bags can accommodate single-serve inner portion packs of fruit for consumers seeking convenience, portability and portion control. McIntosh says he’d like to see store brands take the lead and drive sustainable packaging concepts. “There is a clear associated cost, [but] I think the first retailer to make this change would be a great store brand story.”

Fruit and vegetable category performance Vegetables

Canned/bottled fruit

Frozen fruit

All other beans

Private Brands

All Brands

Private Brands

All Brands

Private Brands

All Brands

Private Brands

All Brands

$1,081.3

$3,248.1

$757.2

$2,592.5

$717.8

$1,079.0

$301.9

$1,054.6

Change vs. Year Ago

-2.2%

-2.1%

-2.8%

-0.4%

-0.5%

-3.9%

-0.3%

-0.8%

Dollar Share

33.3%

100%

29.2%

100%

66.5%

100%

28.6%

100%

Unit Sales (in millions)

1,394.1

3,163.1

484.2

1,320.1

148.0

214.9

367.6

1,014.7

Change vs. Year Ago

+0.2%

-1.0%

-4.4%

-1.4%

-2.1%

-5.9%

+0.9%

-0.6%

Avg. Price Per Unit

$0.78

$1.03

$1.56

$1.96

$4.85

$5.02

$0.82

$1.04

Dollar Sales (in millions)

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While canned fruit and fruit cups offer convenience, sales in this sector are struggling. Canned and jarred fruit sales fell 7.5 percent from 2012 to 2017, and will continue to decline, according to Mintel. Consumers perceive canned and jarred fruit to be too processed and too high in sugar and therefore less healthy, Mintelâ&#x20AC;&#x2122;s report states. But consumers are still looking for ways to fit more fruit into their diets. Mintel advises retailers to consider convenient, value-added products such as fresh-cut fruit cups.

Capitalize on the popularity of steam-in-the-bag vegetables by adding nutritious ancient grains like quinoa, millet, sorghum, amaranth, teff, freekeh, chia seeds, faro, spelt and Kamut.

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About 40 percent of consumers seek out vegetables that are easy to snack on, Mintel notes. Private brands could innovate by offering ready-to-eat vegetables in convenient, portioned, portable packaging to drive sales.

Product selling points Capitalize on the popularity of steam-in-the-bag vegetables by adding nutritious ancient grains like quinoa, millet, sorghum, amaranth, teff, freekeh, chia seeds, faro, spelt and Kamut, McIntosh advises. High in fiber and minerals such as calcium, iron, niacin, magnesium and zinc, ancient grains can also be a significant source of protein. Consumers are shying away from frozen vegetable products

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Category Intelligence: Fruits & Vegetables that contain cheese or sauces, McIntosh notes. “They are looking to eat clean and all natural, which is why we’re seeing the surge in ancient grains.” Mixing vegetables with grains, seeds, nuts or meats transforms the product from a side dish into a meal, Mintel notes. In frozen fruit, consumers are moving away from straight strawberries and blueberries. McIntosh advises selling those in large value bags.

The growth is coming from mixed fruit and more tropical fruits like acai, kiwi, papaya, mango and pineapple, McIntosh says. Frozen fruit consumers are also interested in added ancient grains to provide clean protein content for their smoothies, he adds. “They are also interested in the antioxidant values of fruit, thus the growth in sales of high antioxidant products like acai and dragon fruit.” Noting that the fruit market continues to grow, Mintel advises retailers to drive sales by innovating their frozen and dried fruit products and identifying consumption occasions for consumers.

In the struggling non-fresh vegetable segments, Mintel advises retailers to help consumers discover new uses and preparations for vegetables. This can be done with on-packaging suggestions or recipes or through online links to information. Also, changing formulations to eliminate artificial ingredients, additives and preservatives could also drive sales, the report states. Then highlight the absence of these and emphasize the products’ health benefits, such as high fiber content. SB Cvetan is a freelance writer from Barrington, Ill.

Store Brands / August 2017 / www.storebrands.com

Category Intelligence: Wet Wipes

Clean-cut opportunity Wet wipe activity is accelerating with newer applications to generate stronger revenue for store brand merchandisers By Rich Mitchell

et wipes are riding an expansion wave. While flushable wipes and hand and face moist towelettes generate only 3 percent of total household paper product category revenues, they are registering the highest growth rates, states market research firm Mintel in its February 2016 “Household Paper Products – US” report. Retail sales of flushable wet wipes rose 11.5 percent from 2013 to 2015, versus 0.6 percent for the total household paper products category, Mintel notes, adding that wipes are benefiting from their position as a value-added option that provides comfort and a better clean. Flushable wet wipes’ market share in the category rose from 2 percent to 2.2 percent during the period. Sales for hand and face moist towelettes were up 12.2 percent from 2013 to 2015, the result of strengthening consumer interest in disinfection and the towelettes’ positioning as a convenient option for ad hoc cleanup of small messes, Mintel adds. Market share went from 1.1 percent to 1.2 percent. Yet, overall low household usage rates suggest that wet wipes have room to grow in the coming years, Mintel reports. Items with added skin care benefits, for instance, are generating strong interest from value-driven shoppers who can simplify tasks and save money by eliminating the need for separate product purchases, Mintel states. The large base of consumers aged 25 to 34 also are more apt than those 35 and over to purchase moist products, likely because younger consumers are starting households and forming their own usage habits, Mintel notes. Such shoppers are embracing products with “clean” ingredients, including items that are free of formaldehyde and carcinogens, says a spokesperson for US Nonwovens, a Brentwood, N.Y.-based wet wipes supplier. “Formulary is where things consider healthoriented elements change the fastest,” adds Eve in wet wipes such Yen, founder and president of Diamond Wipes International as Vitamin C, Inc., a Chino, Calif.-based wet coconut oil and wipes manufacturer. “Many pomegranate. customers have been wanting to see their formulations developed

free of questionable ingredients, and ‘natural’ and ‘organic’ are the most discussed terms. The overarching desires are that of safety, as well as sustainability and wanting to do good even when shopping for everyday items.”

A closer look Indeed, more shoppers are reading labels when selecting wet wipes, says Jeffrey Mamiye, vice president at Jean Pierre Inc., a New York-based wet wipes supplier. “Consumers want products with better-for-you ingredients and fewer chemicals,” he states. “Many retailers are asking suppliers for private label items that have only organic and natural ingredients.” Health-oriented elements that are becoming increasingly prominent in wet wipes include Vitamin C, coconut oil and pomegranate, Mamiye says, noting that Jean Pierre’s “hottest” selection is a wet wipe with charcoal which is intended to detoxify and open and clean pores. “Sensitive and plant-based formulas are becoming more and more popular,” notes Mauricio Menache, CEO of GoodFibers USA, a Beverly Hills, Calif.-based wet wipes supplier. “We’re also seeing growth in the use of 100 percent plantbased substrates in wipes as new brands promote biodegradability.” In addition to studying ingredients, shoppers are seeking convenient options and looking for “to-go”

Don’t

dismiss sensitive and plant-based formulas, which are becoming more popular in wet wipes.

www.storebrands.com / August 2017 / Store Brands

Category Intelligence: Wet Wipes sizes — either singles or small packs — that they can easily carry, Mamiye states. “Where in the past the trend was for 25 or 30 count packages, shoppers now want smaller packs with 10 or 16 counts,” he says.

How to stand apart To effectively spotlight attractive elements of

Wet wipe category performance Baby wipes Private Brands

All Brands

Moist towlettes Private Brands

All Brands

$485.3

$1,210.5

$295.4

$676.2

Change vs. Year Ago

-3.0%

-3.7%

+20.1%

+22.3%

Dollar Share

40.1%

100%

43.7%

100%

Dollar Sales (in millions)

Unit Sales (in millions)

116.9

308.2

97.5

199.3

Change vs. Year Ago

-4.3%

-0.6%

+15.3%

+10.8%

Avg. Price Per Unit

$4.15

$3.93

$3.03

$3.39

Store Brands / August 2017 / www.storebrands.com

their store brands, retailers can call out the most prominent benefits on packages, while also leveraging off-shelf displays to create impulse purchases, the US Nonwovens spokesperson says. Attaching buzzwords to packages, such as “charcoal,” “Vitamin C,” “collagen” and “micellar water” also will spark interest, Menache states, as will offering wet wipes with unique ingredients such as charcoal. It is important, however, that retailers have the risk tolerance to create private brand wipes “that the national brands haven’t thought of and are aligned with current or near future consumer trends,” the US Nonwovens spokesperson states. Growing trends include the use of hard lid closures on packages which offer protection and make the wipes easier to dispense, Mamiye notes, while Menache adds that the industry is moving away from plastic canisters and tubs and is instead focusing on the flow-wrap format which reduces waste and, ultimately, cost. Such activities are likely to increase as retailers “are more willing to entertain the idea of developing unique wipe products as opposed to national brand equivalents,” Menache says.

Yet, retailers still can effectively compete on price with traditional products, Mamiye notes. “People will buy store brands if you can save them 30 percent,” he states. “But they are really looking for a good value which doesn’t need to be a ‘compared to’ product. Just something different can entice the customer.” To accentuate price differences, retailers should merchandise store brands next to the national brands and state the differential with shelf signage, he says. In addition, retailers can enhance the prominence of private brand wet wipes by situating selections alongside store brands from related categories, Yen notes. “There is much said about millennials being brand-agnostic, but we are still confident that shoppers shop brands,” she says. Other effective merchandising tactics include the use of end caps, which “convey importance,” Mamiye states, while leveraging perforated product displays can eliminate stocking time and messy shelves, Menache adds. Input from suppliers also can often enhance merchandising strategies, the US Nonwovens spokesperson states. That includes recommendations of in-store locations in which to market products and how best to use digital and in-store promotions.

Favorable future Many retailers, meanwhile, already are seeking to make their packaging more appealing by incorporating sharper images and stronger reseal and lid elements to ensure wipes stay fresh and sealed, the US Nonwovens spokesperson notes. “Improved technology and science will also enable manufacturers to offer new substrates that meet ever-changing consumer desires,” the spokesperson adds. “Bloggers from social media will tell us what consumers like and dislike and their unmet needs.” In addition, there will be more unique wet wipes emerging in the household cleaning sector, along with products that are dispersible and easily disintegrate, Yen says. New applications for wipes across different categories, meanwhile, are set to take hold over the next few years, Menache adds. “We’ll continue to see a rise of 100 percent plantbased substrates and formulas being used in wipe products,” he notes. SB Mitchell is a freelance writer from Wilmette, Ill.

www.storebrands.com / August 2017 / Store Brands

EndCAP Category Closeup: Ice Cream

Premium Preference 1

22% of consumers purchase ice cream that they consider premium

34% of Americans are willing to pay more

Ice Cream Sales

52 weeks from June through June

for ice cream they consider premium 3

Private Brand in Billions

Dollar Sales By Year

35% of consumers agree that premium ice cream tastes better than regular

Total Branded in Billions

1.18

1.17

1.16

1.22

1.17

2012-13

2013-14

2014-15

ice cream

2015-16

49% of consumers eat ice cream as a snack

2016-17

4.37 4.42 4.51 4.69 4.94

Source: Nielsen

Source: Mintel

Private brands are (ice) cream of the crop

(Sales in million U.S. dollars) The leading ice cream brand in the United States in 2016 was shared by private brands followed by Breyers and Ben & Jerry’s. One retailer known for its premium ice cream is Publix, which offers flavors such as peach cobbler, peanut butter pie, banana pudding and New Orleans praline. Of course, chocolate, vanilla, cookie dough, and cookies and cream are among the most popular ice cream flavors in the United States. Private brand

1,128.5

Breyers

499.9

Ben & Jerry’s

465.4

Häagen-Dazs

418.8

Wells Blue Bunny

284.2

Dreyer’s/ Edy’s Grand

251.5

Dreyer’s/Edy’s Slowchurned

249.3

Bestfoods North America

Dollar Sales By Year

Private Brand in Millions

Total Branded in Billions

272

1.14

372

1.15

365

1.15

381

1.19

369

1.24

2012-13

2013-14

222.4

2014-15

207.2

2015-16

2016-17

238.7

Source: Statista 2017 58

52 weeks from June through June

Turkey Hill Blue Bell

Ice Cream Unit Sales

Store Brands / August 2017 / www.storebrands.com

Source: Nielsen

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