Store Brands - August by ensembleiq

Walmart takes on steak

The time is now for private brands

A Q&A with Yesway’s Derek Gaskins August 2019 | www.storebrands.com

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EW BEVERA

A BEVY OF

BEVERAGES Several products we received for our 2019 Editors’ Picks are outstanding on several levels — from innovation to taste to premiumness to packaging

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Volume 42 No. 8 August 2019

Editor’s Take

Viewpoint

New Horizon

Around the Industry

Getting Social

EndCap

CATEGORY INTELLIGENCE 26

Cheese, Yogurt and Eggs

Fresh Meat, Poultry and Seafood

30 32

Ready-to-Drink Beverages Wet Wipes

CONTENTS

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DEPARTMENTS

EW BEVERA

COVER STORY

Bevy of beverages Many products we received for our 2019 Editors’ Picks are outstanding on several levels — from innovation to taste to premiumness to packaging

FEATURES 24 COMPANY PROFILE Building the supply chain of the future CaseStack helps retailers solve big problems in a changing retail landscape

Store Brands (ISSN-0190-9851; USPS # 0488-370) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631. Subscriptions: One year, $125; two years, $146. One year, Canada $190; One year, foreign $275. Payable in advance with a bank draft drawn on a US bank in US funds.Single copies $20. Foreign, $85. 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 3200 Northbrook, IL 60065-3200. Copyright 2019 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. www.storebrands.com / August 2019 / Store Brands

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EDITOR’S TAKE 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631 (773) 992-4450

Group Brand Director

WALMART’S STAKE IN STEAK

John Schrei

248-613-8672

jschrei@ensembleiq.com

EDITORIAL Editor-in-Chief

Lawrence Aylward

(330) 635-2586

laylward@ensembleIQ.com

Managing Editor

Gina Acosta

(813) 417-4149

gacosta@ensembleIQ.com

Digital Editor

Walmart announced in April it is getting into the privatebranded Angus steak and roast business. The retailer is teaming with ranchers, a beef processor and a cattle-feeding company to supply steaks and roasts to 500 of its stores in the Southeast beginning this fall. But is this risky business? From a quality standpoint, I believe the Bentonville, Ark.based retailer can pull it off. That’s because Walmart has upped the quality of its private brands across the spectrum the last several years. That said, we’re not talking ground beef here. Providing store brand steaks and roasts is entirely different. This is something Walmart can’t mess up. From a quality control standpoint, all hands should be on deck. What we don’t know is the name of the line, which Walmart has yet to reveal. But I don’t see Walmart selling T-bones and New York strip steaks under its Great Value private brand line. Nothing against Great Value — there are some fine products in the line — but Great Value screams low cost … and loudly. Angus beef is regarded as high-end beef, although that classification may be waning a bit because of the proliferation of Angus beef products being sold at retail today under name brands and private label. Angus beef is mainstream. Still, consumers associate “Angus” with premium quality, whether they know the difference between Angus beef and other beef or not. So I envision that Walmart will make a splash with these products through a catchy brand name and upscale packaging that supports the product. And even if the products in the line aren’t sold under Great Value, they will most likely be of great value. A reason Walmart is doing this is to control costs. Walmart most likely will be able to sell these products at a lower cost. Another reason is transparency, which has become a huge factor in the food industry and in itself a differentiator. With its own supply chain, Walmart believes it is better equipped to offer transparency, which it is. A key to the line’s success could be education. The line’s debut will spur more questions from consumers in regard to product origination, preparation and the difference between Angus beef and regular beef. I’m sure Walmart employees have fielded similar questions before, but the answers this time around will have to be more distinct. If done right, this could be a huge victory for Walmart on many levels. It’s a bold initiative. If Walmart garners the reputation for the place to buy a good steak at a good price, its entire private label program could be viewed by consumers in a more positive light. If consumers believe Walmart can get steaks right, they will believe that Walmart can get potato chips and pasta sauce as private brands right, too. And they will purchase those products. There’s a lesson to be learned here for other retailers as well, which is to embrace premium products to enhance your store brand programs. Some retailers get this, but others don’t. Premium, like store-branded Angus steaks and roasts, is simply a decisive factor in the differentiation game.

Louisa Hallett

(904) 294-6764

lhallett@ensembleiq.com

Contributing Writers

Rich Mitchell, Dana Cvetan, Nevenka Jevtic

ADVERTISING & SALES Associate Brand Director (708) 565-5350

Maggie Kaeppel

mkaeppel@ensembleIQ.com

Senior Sales Manager

Judy Hayes

(925) 785-9665

jhayes@ensembleiq.com

Regional/International Sales Manager 248-514-9500

Tammy Rokowski

trokowski@ensembleiq.com

Senior Sales Manager

Theresa Kossack

214-226-6468

tkossack@ensembleiq.com

Business Development Manager 773-992-4410

Natalie Meehan nmeehan@ensembleiq.com

CUSTOM MEDIA Director of Client Services, Enterprise Solutions Kaeli Elisco (224) 632-8221

kelisco@ensembleIQ.com

AUDIENCE ENGAGEMENT Director of Audience Engagement

Gail Reboletti

greboletti@ensembleIQ.com

List Rental

MeritDirect

847-492-1350, ext. 318

Elizabeth Jackson ejackson@meritdirect.com

Subscriber Services/Single-copy Purchases 978-671-0449

STB@OMEDA.com

PROJECT MANAGEMENT/PRODUCTION/ART Vice President Production Derek Estey (877)687-7321 x 1004

destey@ensembleIQ.com

Creative Director

Colette Magliaro cmagliaro@ensembleIQ.com

Art Director

Regina Loncala rloncala@gmail.com

Advertising/Production Manager (973) 607-1322

Pat Wisser pwisser@ensembleIQ.com

REPRINTS, PERMISSIONS AND LICENSING Please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295.

EVENTS • MARKETING • DIGITAL • RESEARCH • CIRCULATION CORPORATE OFFICERS Executive Chairman - Alan Glass Chief Executive Officer - David Shanker Chief Financial Officer - Dan McCarthy Chief Operating Officer - Joel Hughes Chief Commercial Officer and President Retail - Jennifer Litterick Chief Innovation Officer - Tanner Van Dusen Chief Human Resources Officer - Ann Jadown Executive Vice President, Events & Conferences – Ed Several

Lawrence Aylward, Editor-in-Chief laylward@ensembleIQ.com 4

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Store Brands / August 2019 / www.storebrands.com

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SALT SAFETY INSIGHTS

All is not Rosy with Himalayan Salt. IMPURITIES FOUND IN RETAIL JARS:

FOOD GRADE HIMALAYAN PINK SALT:

ROCKS

narrow range of colors from clear, white, pale rose to brick red. Himalayan salt that contains foreign material is much more susceptible to a recall. It is the buyer’s responsibility to be aware of exactly what is in their salt. When buying Himalayan salt, be vigilant, be aware and ask questions. Take a close look at the salt – Is it clean? Is it food grade? You and your customers deserve the cleanest, purest, and safest salt possible.

CLAY

INSOLUBLES

INCLUSIONS

QUESTIONS TO ASK YOUR SALT SUPPLIER: FOREIGN MATTER

Salt is salt, right? Think again. It’s reasonable to believe every container of salt contains just what’s on the label. It’s even more reasonable to believe that, in today’s food-safety conscious world, the salt we buy — and put in and on our food — is pure, safe, and has gone through rigorous quality control. Consumers, restaurants, food processors, and wholesalers are often unaware that their salt contains unwanted impurities. The worst offenders are importers that sell unprocessed Himalayan salt. There is a loophole that many in unscrupulous importers use to sell salt that is not food grade and will never be properly cleaned or inspected before it is delivered to your facility. This is because salt can come into the country with, at most, a glancing inspection as a bulk ingredient destined for further processing but never receives the proper and necessary processing. The salt on your store shelf, in your facility or in your private label product could contain contaminants from rocks/clay to metal bits

1. Is their Himalayan salt processed in Pakistan or the U.S.?

Actual Store Bought Jar Comparison

2. Are they registered with the FDA and in compliance with new FSMA regulations? 3. Is their salt Organic Compliant? 4. Is the facility third-party audited and by what certifying body? 5. What other food safety certiﬁcations

Optically Clean®

Not Clean

to other foreign matter. Most importers do not know how to properly clean their Himalayan salt and are not in compliance with GMP (Good Manufacturing Practice) safety and quality standards. Some of it is downright filthy. Often, such impurities are readily detectable by the naked eye with opaque and off-color bits of foreign matter. Pure Himalayan salt is a beautiful rosy pink salt, found in only Pakistan, and boasts a delicate flavor. It contains important trace minerals, including calcium, potassium, and magnesium. Correctly processed high-quality Himalayan salt will be in a

do they hold?

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Call SaltWorks® Today for a FREE Technical Sample Kit! SaltWorks Inc • seasalt.com • (800) 353-7258

ADVERTORIAL

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VIEWPOINT

By Todd Maute

Private label industry veteran Todd Maute is a Partner at CBX, the New York-based brand strategy and design agency. He works with clients across multiple channels of trade including grocery, pharmaceutical, mass, pet specialty, consumer electronics, convenience, office, home improvement, clubs and auto parts supply; tmaute@cbx.com.

Store brands are taking the lead. Now they need to own it If you take a step back and consider some of the macro trends in the marketplace today, it’s clear that the world of store brands is on the cusp of a paradigm shift. The national consumer packaged goods (CPG) brands, which were the undisputed kingpins for decades, are in some cases losing momentum relative to the fast and vibrant trajectory of their private label counterparts. This happens to be coincident with the rise of consumer segments (millennials and Generation Z) that care less about the distinction between national and store brands than any group in living memory. The supply chain continues to undergo an astounding revolution, with ever-increasing diversity and innovation as manufacturers pull out all the stops to meet the robust demand for creative and appealing store brands. Consolidation means that retailers and manufacturers alike have more power and heft than in earlier eras, further fueling the aforementioned demand. Likewise, the rising prominence of private label among the likes of Amazon is further reinforcing the role of store brands at home and abroad, with plenty of potential for even stronger growth moving forward. Put it all together and the picture is clear: Private brands are positioned to become true leaders on multiple fronts after decades of following the nationals and responding to — rather than shaping — top trends. From a certain perspective, the paradigm has already shifted: In an analysis for Forbes, Pamela N. Danziger of Unity Marketing describes a certain epiphany by Warren Buffett: Having invested heavily in Kraft Heinz, the “Oracle of Omaha” complained that Costco Wholesale’s Kirkland Signature brand alone did sales of $39 billion in 2018 — substantially higher than all the Kraft Heinz brands combined. According to the “2019

Grocery Tech Trends Study” by RIS and Progressive Grocer, 81% of grocers recorded higher private label sales over the past five years, and 42% reported “major increases” during the same time. Nielsen described the rapid growth of store brands as “a complete reversal in growth trajectory” compared to the relatively sluggish expansion of manufacturer-branded items. But now that private label is positioned for higher performance, everyone involved in this field needs to do some soul searching. Leaders should never rest on their laurels. For decades, store brands were about following the nationals. Now is the time to look within and ferret out any remnants of that old mentality. This mindset, after all, is about settling for second best. To capitalize on today’s remarkable confluence of trends, companies need to make an across-the-board commitment to best-in-class store brands that are designed (and supported) to lead, not follow. For retailers, that means regarding suppliers as collaborative partners, as opposed to seeing them as vehicles for improving price perception. It’s also critical that the priorities, strategic thinking and resource allocations for retailers’ disparate teams (in marketing, merchandising, store operations and more) be aligned with the master brand strategy — the overarching purpose of what you are trying to do as a retailer. Strategic partnerships with design firms are a key part of bringing that vision to life and communicating it through packaging and other critical touch points. We’re seeing examples of this regularly with the awardwinning store brands of Trader Joe’s, Wegmans, H-E-B and Costco Wholesale. However, many retailers still have a long way to go before they can spark the same kind of excitement among their best customers. Time is of the essence here. Many of today’s top CPG companies have had 60 or 70 years to reach their peak, but still-growing Amazon became one of the richest companies in the world in a couple of decades. How much will the pace accelerate? The industry is evolving faster than ever, so there is the need for speed. Those that commit to innovation and strong branding stand to capture the spoils of the new paradigm. SB

Store Brands / August 2019 / www.storebrands.com

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BY SARAH ALTER

NEW HORIZON

Sarah Alter is president and CEO of the Network of Executive Women (NEW), a learning and leadership community representing 12,500 members representing 900 companies and 22 regional groups in the United States and Canada. Learn more at newonline.org.

TURNING PLODDING PROGRESS INTO A QUANTUM LEAP FEMALE CEOS AND BOARD MEMBERS CONTINUE TO RISE, BUT NOT FAST ENOUGH Editor’s note: This is the fourth of six columns that Store Brands is running in 2019 from the Network of Executive Women (NEW). In my travels lately, there’s a lot of discussion around a recent Fortune 500 report. The headline: 33 female CEOs now sit in Fortune 500 ranks. I applaud progress — that’s more women than ever — but without taking a breath, the next words out of my mouth are: “That’s 6.6%. About 43.4% too low, if we are striving for 50%.” When I was young, I didn’t dream of becoming a nurse or a teacher. Both are honorable professions, but weren’t in my wheelhouse. I wanted to be in business. And not just in the rank and file — I wanted to be a CEO. I didn’t have female CEO role models, though, because there were so few. There still are far too few. Now that I am a CEO, I can look back on the road traveled. And I’m determined to be one of the executives who smooths the road for the women that come after me. If progress in the CEO ranks has been slower than desired, progress for women at the board level has also been sketchy. This year’s board representation numbers for the Fortune 500 show a trend — the same small group of women are being tapped for multiple boards. We’re not expanding in number, more so in number of board positions held by the same women.

Boards want experience. They want C-suite experience. Yet women only comprise 6.6% of Fortune 500 CEOs. And my organization’s research shows a female leadership crisis: senior women are heading for the exits at a far higher rate than men. Female higherlevel managers, executives and C-suite members leave their jobs nearly four times as often as men (26.9% vs. 7.3%). So it becomes a chicken-and-egg conundrum. California took the lead to legislate greater equality on boards, which should help get more qualified women into C-suite positions. Board equality legislation is also moving through the legislature in my home state of Illinois, and being considered in New Jersey as well as a few other states. But I have to be honest, I’m always disappointed when it takes a law to force companies to do what is good, right and just plain smart. The future could be so bright. It turns out I was far from being a unicorn in my 12-year-old aspirations. Almost three out of four women (74%) want to become executives early in their careers, according to the Leaders & Daughters Global Survey of 7,000 women in seven countries on five continents. But from my own experience, it’s potholes in the road to the executive

suite. NEW research shows a few issues across the board cause women to leave companies in droves. But just a few key actions could help them stay: Confronting bias. Combine a lack of female role models in executive management with the sense of isolation that can come from being the only woman in the room — add in a lack of sponsorship — and you have a recipe for female leaders heading to the exits. Only 36% of women surveyed agree there is minimal favoritism within their companies. The similar-to-me bias, unless addressed head on within corporate culture, means many executives will hire and promote candidates with similar interests, backgrounds and experience to them. Offering transition support/career pathing. When females report on the support they receive from those above them in the corporate hierarchy, only half say they receive support when they accept a new challenge or job. Men’s perception of support from peers and their managers ranks higher at 63%. And while six out of 10 women say their supervisor entrusts them with a range of assignments that help prepare them for their next roles, the remaining 40% are not receiving the corporate stretch roles and breadth of experience necessary to place them in contention for positions of higher responsibility and authority. Modernizing work schedules. While the world has changed dramatically from the years when men worked and women stayed at home to take care of children and domestic duties, work schedules have not, to the detriment of women with children especially. As Melinda Gates wrote, “We’re sending our daughters into a workplace designed for our dads.” As institutional investors push for greater diversity on boards and Csuites because of the business case for it, I think we’ll see more progress. And I do think we’ll reach the tipping point sooner than later, where plodding progress becomes a quantum leap. SB

www.storebrands.com / August 2018 / Store Brands

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AroundtheIndustry

Organic sales topped $50 billion in 2018 Increase in sales is good news for private brands Organic fruits and vegetables are still “the stalwarts” of organic products, according to the Organic Trade Association.

The U.S. organic market continues to grow with no signs of slowing down, which is great news for private brands. For the first time, the U.S. organic market broke through the $50 billion mark in 2018 with sales hitting a record $52.5 billion, an increase of 6.3% from the previous year, according to the 2019 Organic Industry Survey recently released by the Organic Trade Association (OTA). According to OTA, the traits of organic products — clean, transparent, fresh, sustainable, environmentally friendly, animal humane, high quality — helped push organic sales to record levels. The sales were made in both the organic food market and the organic non-food market. Organic food sales reached $47.9 billion, an increase of 5.9%. Sales of organic non-food products jumped by 10.6% to $4.6 billion. For several years now, organic has been a growth area for private brands. Many retailers have adopted their own organic store brand lines and are seeing great success. Cincinnati-based The Kroger Co. continues to expand its Simple Truth natural and organic private brand, which has achieved more than $2 billion in annual sales. Boise, Idaho-based Albertsons Companies continues to expand its O Organics line, which has more than $1 billion sales. Other retailers are also consistently expanding their organic private brand lines. The growth rate for organic continued 8

to easily outpace the general market, according to OTA. In 2018, total food sales in the U.S. edged up just 2.3% while total non-food sales rose 3.7%. OTA noted that the USDA Organic seal is gaining new appeal as consumers realize that organic is a certification that is not only monitored and supported by official standards, but is the only seal that encompasses the spectrum of non-GMO and no toxic pesticides or chemicals, dyes or preservatives. “Organic is now considered mainstream, but the attitudes surrounding organic are anything but status quo,” said Laura Batcha, CEO and executive director of the OTA. “In 2018, there was a notable shift in the mindset of those working in organic toward collaboration and activism to move the needle on the role organic can play in sustainability and tackling environmental initiatives.” Organic fruits and vegetables are still “the stalwarts” of organic products, according to OTA, with sales increasing 5.6% in 2018 when compared to 2017. The overall fruits and vegetables category, including both organic and conventional products, grew by just 1.7% in 2018. Fruits and vegetables now account for 36.3% of all organic food sales. Organic fruits and vegetable make up close to 15% of all the produce sold in the U.S., and have doubled their market share in the last 10 years, according to OTA. SB

SHORT TAKES Is Amazon gearing up in grocery?

Where is Seattle-based Amazon headed in the grocery industry? The question is explored in a July 28 story by the New York Times. In the story, industry consultant Brittain Ladd, who previously worked on Amazon’s grocery operations until 2017, said: “People really need to understand — Whole Foods is the beginning, it’s not the end. It’s not everything.”

Amazon acquired Austin, Texas-based Whole Foods Market two years ago for $13.4 billion. Several months before Amazon’s acquisition of Whole Foods Market, according to the New York Times, a memo circulated inside Amazon that imagined “an ambitious new grocery chain” started by the retailer to offer “robust produce, fresh food and prepared meals sections.” Nonperishable items would be stored on a separate floor, away from customers, “where shoppers could order those items with an app, and while they shopped for fresh food, the other products would be brought down in time for check out,” the article stated. But when Amazon acquired Whole Foods Market, the talk inside Amazon surrounding an “ambitious new grocery chain” basically ceased, the New York Times said. “But two years later, instead of Whole Foods being the answer to Amazon’s grocery ambitions, it seems to have only whetted executives’ appetite,” according to the story. Amazon is thinking again about aggressive investment in groceries and is considering designing stores specifically with pickup and delivery, and with a smaller area dedicated to fresh shopping — just like the old memo said, the report stated.

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AroundtheIndustry

Why not Indian Food as a private brand? By Lawrence Aylward

I stopped by the Deep Indian Kitchen booth at the Fancy Food Show in July in New York. Glad I did. At the booth, I was able to sample several foods from the Union, N.J.based company made from authentic Indian recipes, including chicken tikka masala, a dish featuring slow-roasted marinated boneless chicken breast simmered in a robust, creamy sauce; and chickpea masala, featuring chickpeas sautéed with onions, tomatoes, peppers and exotic spices. Talk about a mouthful of bold, sensational flavors, which these dishes provided. And get this: They are frozen foods that can be heated in a microwave. Indian food is not new to this country or to grocery. But with an increased interest in ethnic and exotic foods,

Indian food just might be catching on more than ever before. The category could be a big differentiator for grocery retailers looking to expand their private brands. Deep Indian Kitchen is helping to lead the increased popularity of Indian food. The company, in addition to operating five restaurants in New York, also offers its branded products in about 11,000 grocery stores. Deep Indian Kitchen also offers its products for store brands. Deep Indian Kitchen has four plants — two in India, one in Union and a dairy plant in upstate New York. “One of the things that sets us apart is that we actually mimic the process of how you would cook at a home-style kitchen in India, which is all about layer-

ing on flavors,” Ann Ittoop, Deep Indian Kitchen’s director of digital marketing, told me while I sampled and raved about the company’s chicken tikka masala. “Our sauces take hours to produce. We are all about the process.” Ittoop says the company is using its restaurants as a bellwether for Indian food trends that could end up in grocery. “We get to see how people, especially non-Indian people, interact with certain spices and flavors. We watch what they order [at the restaurants]. It helps us understand how they might shop in the frozen-food aisle.” Indian food isn’t just becoming more popular in general, it’s also gaining more acceptance in the frozen-food aisle, Ittoop says. “It’s really taking off there. So that’s really where we are invested right now,” she notes. Premium private brands are the fastestgrowing segment in store brands, according to market researcher Nielsen. Indian food made from authentic recipes would be considered premium. Retailers should get the picture. SB

www.storebrands.com / August 2019 / Store Brands

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AroundtheIndustry

Industry mourns death of Robert ‘Bob’ Vosburgh, PLMA news director

“Bob’s insight and experience will be impossible to replace,” said Brian Sharoff, president of the PLMA.

Private Label Manufacturers Association (PLMA) President Brian Sharoff called Robert D. Vosburgh Jr. “a reporter’s reporter, that is the highest praise journalism offers.” Vosburgh, a veteran supermarket trade journalist and most recently a familiar spokesperson for the U.S. store brands industry through his online video work for the PLMA, died on July 15. A resident of New Milford, Conn., he was 54. “Bob’s insight and experience will be impossible to replace,” Sharoff said. “He understood the industry and the subtle and not-so-subtle ways in which it operates.” Vosburgh joined PLMA in 2013 and served as news director of PLMALive!, where he oversaw various aspects of the organization’s video and digital platforms. A major focus of his was PLMA Category Profile reports, an ongoing series of informative and well-received videos that examined individual private label categories. He compiled dozens of such reports over 10

the past four years, which were watched by visitors to PLMA’s website. He annually filed a series of live reports on new and innovative store brands products from the exhibition floor during PLMA’s trade shows in Chicago and Amsterdam. He also contributed to monthly news desk reports, wrote scripts and recruited experts for a wide range of PLMA presentations. Prior to joining PLMA, Vosburgh was longtime group editor at Penton Media’s trade publication Supermarket News (SN), now a publication of Informa, where he oversaw coverage of fresh foods and natural/organic. Vosburgh received a number of prestigious business journalism awards during his career. Early in his career, Vosburgh was an on-air reporter and the New Jersey state correspondent for WCBS News radio 88 in New York; and prior to that an editor and anchor for WPDH and WEOK radio in Poughkeepsie, N.Y. He was a 1987 journalism graduate of New York University. SB

SHORT TAKES Continued

Own Brands drive Albertsons Companies’ 1Q sales

Boise, Idaho-based Albertsons Companies reported a same-store sales increase of 1.5% and profit increases during the first quarter, attributing much of that growth to its Own Brands program, which reached a sales penetration of 25.3%. Gross profit margin increased to 28% during the first quarter of 2019 compared to 27.7% during the first quarter of fiscal 2018. The company said its gross profit margin increase was primarily attributable to its better-thanexpected fuel margins during the first quarter of fiscal 2019. Excluding the impact of fuel, gross profit margin increased 10 basis points compared to the first quarter of fiscal 2018. The company said its net income was $49 million during the first quarter of fiscal 2019 compared to a net loss of $17.7 million during the first quarter of fiscal 2018. Albertsons Companies operates stores in 35 states under 20 banners. In other company news, Albertsons Companies promoted David Nelsen to group vice president of manufacturing. Nelsen has been with Albertsons Companies’ manufacturing team since 2001 and has held a variety of leadership roles there.

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Trader Joe’s cuts prices, gains sustainability

Monrovia, Calif.-based Trader Joe’s is cutting prices in its stores’ produce departments. According to the company’s latest podcast, titled “Produce,” the company’s ability to reduce its plastic packaging is not only better for the environment but also for the wallets of its consumers. Produce Category Manager Jack Salamon said during the podcast that produce items such as potatoes, onions and apples can easily be sold as loose items, or items not bagged or bundled within plastic containers. Salamon explained the company is seeking alternative-packaging options for its produce products that can’t be sold without packaging, such as strawberries, to even further reduce its plastic waste. Alternative-packaging options include thinner, biodegradable and compostable materials.

Store Brands / August 2019 / www.storebrands.com

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AroundtheIndustry

Albertsons Companies continues to expand Open Nature Retailer has launched 175 new products in the store brand line over the last 52 weeks

Albertsons Companies is capitalizing on the scorching free-from trend in private brands by continually adding products to its Open Nature store brand, its natural and free-from line. The Boise, Idahobased retailer, which operates more than 2,300 stores in 35 states and the District of Columbia under 20 banners, has launched 175 new Open Nature products over the last 52 weeks. Throughout the month of July,

the Albertsons Companies family of stores, which includes Albertsons, Safeway, Vons, Jewel-Osco and others, highlighted Open Nature with expanded promotions and visibility of the brand, which features products that are free from 110 food ingredients. For instance, Albertsons Companies expanded its Open Nature sun care line and now offers a complete line for the whole family. Sunscreen is available in SPF 30, SPF 50 and SPF 50 for kids. Last spring, Albertsons Companies launched Open Nature Pure Castile Soap in lavender and peppermint. The retailer touts that the soap is natural,

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AroundtheIndustry SHORT TAKES Continued Continued from page 11

100% biodegradable and made with natural oils, no harsh detergents or foaming agents, and no animal testing.

The retailer also launched five new styles of wellness teas under Open Nature and expanded its line of Open Nature Scandal-less ice cream to include birthday cake ice cream, chocolate caramel ice cream, peanut butter ice cream bar, mint ice cream bar, sea salt ice cream bar and chocolate ice cream bar. All are 100 calories or less per serving (270 calories total in the pints). Albertsons Companies said it has “lots in the pipeline for the autumn and winter timeframe” for Open Nature, with further inroads into areas the store brand has recently entered: pet food, wellness products for adults and children, and clean hygiene products. Albertsons Companies offers 12 store brands lines and more than 11,000 private-branded products in over 500 categories. SB

Amazon adds private label business essentials line

Seattle-based Amazon has developed its latest private label line that focuses on business-to-business essentials, such as bulk orders of toilet paper and paper towels. According to AdAge, Amazon’s latest private brand, AmazonCommercial, was released quietly on the company’s Amazon. com website in June. Currently, there are only a couple of products under the new brand, including extra-large rolls of toilet paper, large stacks of paper towels and crates of tissues — the kind of paper goods typically found in office bathrooms. AmazonCommercial is “a line of professional-grade products created with business customers in mind,” said an Amazon spokeswoman in an e-mail statement to AdAge. “The brand currently offers janitorial and sanitation products.”SB

Solving Big Problems, Inspiring Bold Ideas EnsembleIQ is a premier business intelligence resource that believes in Solving Big Problems and Inspiring Bold Ideas. Our brands work in harmony to inform, connect, and provide predictive analysis for retailers, consumer goods manufacturers, technology vendors, marketing agencies and service providers.

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GETTING SOCIAL

Q A with Derek Gaskins

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Senior Vice President of Merchandising and Procurement for Yesway

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How did you come into the world of private brands? When I left the consumer packaged goods world with Procter & Gamble and entered retail with Giant Eagle. Giant Eagle, like other retailers, was committed to developing own brands. I helped launch multiple retail formats such as GetGo, Market District and Giant Eagle Express, and private label was central to those brand plans. I continued to refine my focus as I transitioned to other retailers such as Circle K, Rutter’s and now Yesway. Yesway, in many ways, is a startup in the convenience retail space, so we have a commitment to develop the brand first, and private label and our loyalty platforms are strong engines to do so. Derek Gaskins (left), with Yesway Chairman and CEO Thomas Nicholas Trkla, believes private brands equate to opportunity.

Describe the private brands industry in one word. Opportunity. What do you like most about the industry? The diversity of categories, products and services that can become opportunities for growth. At Yesway, we’re looking at a broad spectrum, and it helps fuel my passion because the opportunities are so vast. Everything from snacks, candy, beverages, home and beauty aids, general merchandise, etc., are potential areas of opportunity for own brands development. What do you dislike most about the industry? Fragmentation. Convenience and small-

format operators are challenged to find manufacturers flexible enough or willing to engage. What one great thing does the industry have going for it? Consumers have voted with their dollars, and have a clear affinity for retail brands and private label programs that deliver them value, quality or a differentiated experience. I like that different regions of the globe are also in different life stages, as one can quickly learn or see what’s coming by looking and thinking globally. What is the industry’s biggest challenge? Shifting the paradigm to create opportunities beyond the few really big retail brands. Regional, local and small-format channel brands resonate with consumers, and if more suppliers could work with them the growth would be exponential. Who is your hero and why? My father. He instilled a passion in me for continuous improvement, and a commitment to excellence in all that I do. That has served me well academically and professionally as I have continued to achieve and grow.

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What trait in yourself do you attribute most to your success? Passion. I have a determination to make things happen, and that has served me well in all facets of life. What is the biggest obstacle you have ever overcome? The death of my mother. I am still working to fully surmount it. She was my chief encourager, motivator and of course nurturer. She believed in me before I even did, and always had a way of making me feel I could

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GETTING SOCIAL accomplish literally anything. Her death impacted me and my family tremendously. It is a huge void, and I find myself from time to time missing that perpetual source of inspiration. What’s the best advice someone ever gave you? Two mantras/family mottos that my parents gave me have become guiding principles for my life. I use both to push through challenges and shine: • To be distinct, you must be different. To be different, you must strive to be what no one else but you can be. Strive for excellence. • Day by day, in every way, keep getting better and better. It’s 5 o’clock (or later), what do you do for fun? I thoroughly enjoy live music and an upscale lounge atmosphere. Musically, I enjoy Prince, Sade and the homegrown live music from Washington, D.C., called gogo. So I would probably find a great lounge and vibe to incredible music for fun.

At Yesway, we’re looking at a broad spectrum, and it helps fuel my passion because the opportunities are so vast. people living under post-reconstruction abhorrent Jim Crow laws.

You have a week off. Where do you go and why? The beach. I love the ocean, and it helps me recharge. Ideally, I would go to Anguilla, Aruba, Exuma or another one of the quieter Caribbean destinations to enjoy the water, culture and people as much as possible. If you were born 100 years ago, what would you do for a living? Aside from the obvious fear of being black and born in that era, I would probably be a business person and look for economic growth opportunities as the nation entered the roaring 1920s. I would use a platform of community economic empowerment to champion for civil rights and freedoms for black

What’s the best book you’ve ever read? “The Autobiography of Malcom X” by Alex Haley. It changed my life as a young teen growing up in Washington, D.C. The words literally jumped off the page, and I could vividly envision the world he described. What song do you love to crank up in the car? “She’s Always in My Hair” by Prince. It is a B-side track to the popular “Raspberry Beret” that cranks. Nothing like letting the windows down, or riding in a convertible with it playing as loud as possible! SB

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A BEVY OF BEVERAGES Many products we received for our 2019 Editors’ Picks are outstanding on several levels — from innovation to taste to premiumness to packaging BY LAWRENCE AYLWARD AND GINA ACOSTA

e received more than 30 entries across a range of categories for our 2019 Editors’ Picks Awards for Beverages. It was nothing like the near 250 entries we received for food entries earlier this year, but we expected that. A few things about our Editors’ Picks Awards, which debuted in 2016. This year we decided to split the categories into three separate segments, considering entries were growing rapidly year by year. We anticipated we would receive more entries in the food segment and fewer entries in the beverage and non-food segments, the latter of which will be reported on later this year in Store Brands. While we awarded gold, silver and bronze honors for the top three products in each food category, we decided not to do that for beverage and nonfood products because of the expected fewer entries. Rather, we are reporting on each product submitted and commenting on its role and potential impact as a private brand. To be eligible for entry, the beverage products must have been introduced in 2018. We judged the entries on taste, innovation, ontrend impact and presentation. While we realize we didn’t receive every or even most of the beverages introduced for private label in 2018, many of the products we did receive are outstanding on many levels — from innovation to taste to premiumness to packaging. Some were also just average products and bordered on being national brand equivalents. Here’s a rundown of the beverage products according to their categories, along with the retailers of the products and the manufacturers:

Store Brands / August 2019 / www.storebrands.com

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MILK AND DAIRY

The Kroger Co.’s Private Selection Belgian Chocolate Milk Manufactured by The Kroger Co.

The Kroger Co. cuts to the chase on the packaging of the 32-ounce plastic bottle of its Private Selection Belgian Chocolate Milk. On the side of the bottle, a callout reads, “A rich decadent indulgence with authentic Belgian chocolate.” Private Selection is Kroger’s premium brand. This product is all about premium, from its engaging packaging to its superrich chocolaty flavor. Now, we all know that more consumers are clamoring for healthier beverage products, which is all fine and good, but this product just might get them off their collective health kick — even if for a brief time. Yes, an 8-ounce serving contains 30 grams of sugar, including 17 grams of added sugar. A serving also contains 6 grams of saturated fat, which is 30% of the daily value. But “decadent indulgence” never tasted so good. This premium product goes down smooth and easy, like a bike ride down a gentle, hilly country road on a warm sunny day. It retails for $3.29. ALDI’s Friendly Farms Organic DHA Omega-3 Whole Milk and Friendly Farms Organic DHA Omega-3 2% Milk Manufactured by Aurora Organic Dairy

EDITORS JUDGED THE ENTRIES ON TASTE AND MOUTHFEEL, INNOVATION, ON-TREND IMPACT AND APPEALING PRESENTATION.

Quite frankly, this is some of the best milk we’ve ever tasted. Both versions, which feature highly refined fish oil on the ingredient label (source of the omega 3), exhibit a rich texture (but not too rich) and subtle but savory taste. As most everyone in the industry knows, ALDI has been on a mission to enhance its private brands, which constitute more than 90% of the retailer’s offerings. The Friendly Farms private brand, including these products, reflect that upgrade well. So does the own brand packaging of the products, which stands out in the cooler. The packaging also includes a product story on the side of each carton, stating: “Friendly Farms Organic strives to capture the simplicity and pureness of nature in our products every day. That’s why we support the organic movement, bringing your family honest goodness you can count on.” Both products retail for $3.49 a half gallon. With regular milk going for $2 a gallon in some regions, $3.49 may appear expensive. But many consumers are willing to pay for the upgrade, which is what this milk offers. www.storebrands.com / August 2019 / Store Brands

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Southeastern Grocers’ SE Grocers Italian Sweet Cream Coffee Creamer Manufactured by Byrne Dairy ST N

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Sold under the SE Grocers store brand, this 32-ounce coffee creamer offers a sweet (but not too sweet), delectable and fresh taste. It is naturally and artificially flavored, and contains no artificial colors. It retails for $2.79.

PLANT-BASED AND DAIRY-FREE DRINKS

Southeastern Grocers’ Naturally Better Almond Milk (chocolate-almond flavor) Manufactured by HP Hood

Southeastern Grocers (SEG) almond-chocolate flavored almond milk is a fine example of an exceptional product in this category. The guess here is that four of five people would taste it and assume it’s run-of-the mill chocolate milk and not a dairy substitute. More consumers are demanding plantbased products, and others are still skeptical of them. This product, sold under the retailer’s Naturally Better store brand, will more than appease the former and make believers out of the latter. The product is not only good tasting, it’s on-trend. It has no artificial colors and flavors, and is gluten free, lactose free and soy free. It’s also an excellent source of calcium and Vitamin E. A half-gallon retails for $2.47.

ENHANCED AND FLAVORED WATERS

Kroger Simple Truth Organic Seltzer Water Manufactured by The Kroger Co.

There aren’t too many organic options in the private label sparkling water category, but Kroger’s Simple Truth Organic Seltzer Water hits a home run from the moment you pop open the can. The line offers flavors such as orange vanilla, strawberry watermelon, cucumber melon, mixed berry and lemon lime. The fruity aroma of these beverages really set them apart from the competition. And the taste was also really good. Our favorites were strawberry melon and orange vanilla. The aroma and taste of the strawberry melon flavor was especially delicious. In its first-quarter fiscal report, Kroger CEO Rodney McMullen said that “by the end of this year, everyone in America will have the ability through our modalities to shop with Kroger whether they decide to come to our store, use our pickup or delivery service, or our Kroger Ship.” We imagine that many shoppers who are not already able to shop from Kroger’s impressive Simple Truth line will avail themselves of the option to do so very soon. With the sparkling water category projected to keep growing, these seltzer waters are poised to be among the most popular products flying off physical and digital shelves. Kroger Fizz and Co. Seltzers Manufactured by The Kroger Co.

The Kroger Co. introduced two new flavors to its Kroger brand Fizz & Co. Seltzers line in 2018 — seltzer water with a hint of the Dr. flavor and seltzer water with a hint of root beer flavor. The Kroger brand is the retailer’s national brand equivalent line. Both products sport clean labels and feature zero sweeteners, calories and sugar. They are also caffeine free. Kudos to Kroger for successfully adapting two longtime and popular flavors to seltzer water. The Dr. flavor is courtesy of Kroger’s Dr. K soda line, which tastes a lot like Dr. Pepper. Root beer, of course, has been around longer than Kroger, which is a 136 years old. Surprisingly — or not — these flavors work very well in seltzer water. Their tastes are evident, yet subtle, and are refreshing and quenching. The Fizz & Co. Seltzers retail for $2.99 a six pack. 18

Store Brands / August 2019 / www.storebrands.com

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AMAZING THINGS HAPPEN WHEN YOU MAKE GOOD CHOICES. Deliver the best coffee in your brand and win with product superiority and innovation. Give shoppers the quality they want and deserve. It’s earned Massimo Zanetti a 2019 Editor’s Pick from Store Brands magazine. Massimo Zanetti provides consistency and quality in

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every cup from green coffee procurement to expertise in roasting and packaging. Partner with us on your brand of coffee and deliver exceptional quality that keeps shoppers coming back. Contact us at 757-215-7300 or visit www.mzb-usa.com for more information.

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Signature SELECT Soleil Sparkling Water

Albertsons Signature SELECT French Style Sparkling Lemonade

Manufactured by Albertsons Companies

Manufactured by La Galvanina

Albertsons Companies’ Signature SELECT is one of several premium labels in the retailer’s family of Own Brands. It’s no wonder that the retailer is positioning Signature SELECT to take a firm spot in the rising demand for sparkling water among consumers. According to Technomic, Americans spent about $1.7 billion on sparkling water in 2018. For its sparkling water line, called Soleil, Albertsons offers on-trend flavors such as cherry lime, pineapple coconut, blackberry vanilla and mango passionfruit. The beverages come in cans that look like they belong in hand on the beach: tropical flowers and fruits surround a cursive “Soleil” label. Calorie free, sweetener free and sodium free are called out, so shoppers know the drinks are better for you. Last year, Albertsons debuted 1,100 new private brand SKUs and said it plans to add more than 1,000 during fiscal 2019. Some of those new SKUs will include new flavors of Soleil. After tasting some of the flavors mentioned above, our favorites were cherry lime and pineapple coconut. But all of the sparkling waters are so flavorful, they could almost pass for soda. Almost.

The first thing to notice about Albertsons Companies’ Signature SELECT Sparkling Lemonades is that they come in beautiful colors and are housed in heavy glass bottles, which speaks volumes to the shopper of premiumness. The beverages come in four flavors: pink lemonade, limeade, berry lemonade and lemonade. All of the beverages are made in France, and this is called out nicely on a pretty yet minimalist label. All of the lemonades were delicious, but our favorites were the pink lemonade and the berry lemonade. The gorgeous colors of the beverages can’t be underestimated. We had a hard time determining what was more beautiful: the color of the beverage or the taste. One could dress up these drinks by pouring them into champagne flutes and serving them at a spring soiree on the golf course. But they would also work for a casual summer cookout on the back patio. The line of sparkling lemonades could be labeled as an indulgence product in terms of calories and sugar. A serving (there are three servings per each 33.8-ounce bottle) contains 47 grams of sugar and 190 calories. But clearly indulgence was the intention by Albertsons Companies, and it does not outweigh innovation. Each bottle retails for $2.99.

Albertsons Companies’ Signature SELECT Refresher Water

Boxed’s Prince & Spring Lyt Water

Manufactured by Star City Beverage

Manufactured by Mayer Brothers

An excellent example of a store brand taking bottled water to another level — and under a premium private brand line, which is Signature SELECT. The differentiation point: Albertsons Companies Refresher purified water contains alkaline and electrolytes. The “alkaline” in alkaline water refers to its pH level, and some advocates of alkaline water believe it can neutralize the acid on one’s body, which can help slow the aging process, regulate the body’s pH level and prevent chronic diseases, according to Healthline.com. Electrolytes contain potassium and magnesium and help the body absorb water more quickly to help prevent dehydration. Albertsons Companies’ banners sell the 1.5-liter version of Refresher for $1.99 with a promotional price of $1.49.

It’s not just bottled water, according to Boxed, the growing online retailer of consumer packaged goods, including for private brands. It’s “vapor distilled water & electrolytes for taste.” And it’s under Boxed’s burgeoning Prince & Spring private brand line. Let’s start with the tall and sleek look of the 33.8-ounce plastic bottle. It’s so stately that you almost don’t want to drink it. In large sans serif type, the acronym LYT appears vertically on the bottle in bright blue type. But what does LYT stand for? Clearly, the name shouts radiance and resplendency, which is its intention. But a closer look on the side of the bottle reveals three words in call caps: LOVE YOURSELF TODAY … or LYT. And then there’s a story to tell: “Whether you’re at the gym, happy hour or on the go — live for today! Give your body a boost and

Store Brands / August 2019 / www.storebrands.com

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Boxed’s Prince & Spring Stellar Seltzer Manufactured by Polar Millennial-friendly Boxed sells bulk groceries on a digitally native platform that appeals to younger consumers. Its Prince & Spring private brand is the wholesaler’s answer to Costco’s Kirkland Signature. The Prince & Spring sparkling water line, called Stellar Seltzer, delivers the same kind of fresh, innovative experience to sparkling water lovers. Boxed rolled out Stellar Seltzer in March and it quickly became the topselling choice among the 30 seltzer and sparkling waters Boxed offers, including La Croix and PepsiCo’s Bubly. Boxed knows that millennials and Gen-Zers are attracted to eye-catching design, and the product delivers on that. Each can is decorated with Prince & Spring’s sleek personality, inviting consumers to toast colleagues at work or

friends at a party, all with no alcohol, of course. Stellar Seltzer comes in four calorie-free and sweetener-free citrusy flavors: tangerine, lemon, lime and grapefruit. We loved the lemon. It sells for $9.99 a 24-can case on Boxed’s website.

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quench your thirst with LYT Water. Infused with minerals for a crisp, fresh taste, it will hydrate your body and revitalize your soul. It’s more than water. It’s LYT.” OK, maybe the copy is a little overboard (“revitalize your soul”), but so what? This is private brand personalization at its finest. LYT tastes like water … dang good water! But the packaging and presentation have a lot to do with that. There are 12 bottles of 1-liter each water to a case, which sells for $15.99 on Boxed’s website.

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Schnucks Sparkling Water Manufactured by Keurig Dr. Pepper

Schnucks Markets, which has a blockbuster private brands program, launched its own brand sparkling water line in 2018. Schnucks Sparkling Water comes in a variety of delicious flavors including pure, lime, orange, grapefruit, berry and lemon. There are no artificial flavors or colors, no sweeteners, no calories and every variety is sodium free. The Schnucks grapefruit flavor smells exactly like the fruit picked fresh off the tree. The taste is tart but not too tart. Effervescence level is perfect too. Like many of Schnucks’ private brand products, the sparkling waters are dressed in cans that aim to impress the shopper. Each can has a modern, irreverent look clearly designed to appeal to younger consumers. It sells for $3.99 a six pack.

SMOOTHIES

Metro’s Irresistibles Smoothie Blueberry Blackberry Burst Manufactured by A. Lassonde Inc.

It starts with the attractive packaging, which features bold colors and a callout that shouts “25% less sugar & calories.” A description of the product below its title states, “A refreshing blend of banana, apple and blackberry purees with concentrated fruit juices.” A photo of the product in a mason jar appears at the bottom of the half-gallon-sized container. Its touted by its manufacturer as being a product that the whole family will love. Agreed. Canadian retailer Metro offers a product under its Irresistibles premium line that’s a smooth-tasting product without a lot of sugar (19 grams per 1-cup serving). It’s loaded with Vitamin C (100% per serving) and also a solid source of potassium, magnesium and copper. It’s a healthy alternative — and a palatable one — to sugarloaded smoothies. The product retails for $3.49.

www.storebrands.com / August 2019 / Store Brands

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CONSUMERS WANT MORE NATURAL AND LESSPROCESSED FOODS. JUICES

Southeastern Grocers’ Naturally Better Organic Apple Juice Manufactured by Lassonde Pappas

Some people swear that organic products really do taste better than non-organic products. And we swear that Southeastern Grocers Organic Apple Juice, sold under its Naturally Better store brand, does taste better than regular apple juice. The product is made from 100% organic apple juice concentrate and sells for $2.69 (64 ounces). It contains no added sugars. It has a full-bodied and nourishing taste. Southeastern Grocers touts its Naturally Better line of organic and natural products as being free from more than 80 artificial ingredients. The retailer’s organic apple juice is a fine example. Southeastern Grocers’ Prestige Tropical Juice Blend Manufactured by Sun Orchard Fruit Co.

Southeastern Grocers’ Prestige store brand includes a “selection of specialty and indulgent products at a price that is still affordable,” according to the retailer. Its Tropical Juice Blend, which combines 100% tangerine, mango and guava juice — and not from concentrate — fits 22

the bill. The clean label product has three ingredients: tangerine juice, mango puree and guava puree. Retailing for $2.99, it’s a sturdy juice with an anthology of tastes. Schnucks Orange Juice Manufactured by Johanna Foods

It’s just orange juice, but it’s not just orange juice. Regional retailer Schnucks recently introduced orange juice not made from concentrate. And the word “not” appears in call capital letters on the label. Consumers want more natural and lessprocessed foods. So Schnucks and Johanna Foods answered their call with a product containing just one ingredient on the label: orange juice … and without the pulp. There are no added sugars and no added nothing. It also tastes like orange juice should taste — smooth, refreshing and healthy.

ENERGY DRINKS (LIQUIDAND MIXES)

Southeastern Grocers Black Cherry Water Enhancer Manufactured by Heartland Food Products Group

Sold under the SE Grocers private brand, the Black Cherry Water Enhancer contains caffeine and Vitamin B to provide a sugar-free and flavorful energy boost. The 1.62-ounce bottle contains 24 servings and retails for $2.49. Southeastern Grocers Peach Mango Drink Mix Manufactured by TreeHouse Foods

Sold under the SE Grocers private brand, this box of Peach Mango drink mix comes in 10 separate on-the-go packets that can each be mixed with 16-ounces of water. The sugar-free product contains caffeine and Vitamin B for an energy boost. It retails for $1.89.

COFFEE

Albertsons Companies’ Signature RESERVE Hacienda La Pradera (Costa Rican Whole Bean Coffee) Manufactured by Distant Lands Coffee

The premiumness of this product begins with the glossy black packaging, a signature of Albertsons Companies’ Signature RESERVE brand. On the back of the 12-ounce package, there’s a quick story about the product’s origin under the headline “A rare discovery.” The story

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reads: These limited crop beans are sourced from the Tarrazu region of Costa Rica from the Hacienda La Pradera farm, famous for its ideal growing conditions and rich, volcanic soil.” And then there’s the aroma of the beans upon opening the package: Magnifico! The taste is just as impressive: It has a rich and balanced full-body flavor with the right acidity. Amazon’s Highland Village Reserve Organic Peruvian Cajamarca Coffee Manufactured by Massimo Zanetti Beverage USA

We love everything about this Amazon own brand — from its exceptional packaging to its aroma to its taste. It’s a big bag of beans too — 2.5 pounds that retails for $25. Manufactured by Massimo Zanetti Beverage USA, there’s a story on the package behind the Highland Village Reserve private brand explaining that the “best 100% Arabica coffees are grown in mountainous regions at high altitudes” where “small family farmers meticulously tend their coffee crops year after year.” On the back of the package, the product touts its Fair Trade

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certification (Fair Trade USA enables sustainable development and community empowerment by cultivating a more equitable global trade model that benefits farmers, workers, fishermen, consumers, industry and the Earth) and how Fair Trade dollars are invested into communities that produce coffee. And then there’s the taste. Grown in the high Andes Mountains in Peru, it features a fullbodied and smooth taste with a fine aroma. BJ’s Wholesale Club’s Wellsley Farms Ground Coffee Developed and Distributed by International Marketing Systems (IMS)

When it comes to coffee, everyone has their favorites. But BJ’s Wholesale Club has found a way to appeal to all coffee lovers with its Wellsley Farms Guatemalan French Roast and Wellsley Farms Donut Shop coffee varieties. The Guatemalan French Roast has a great aroma (during brewing, the smell fills the room), a strong bold taste and a well-balanced flavor profile (not too light, not too strong). We served this to guests who said they have tried so many different brands and types of coffee, and they loved the smooth taste of this product. However, the favorite of the two was definitely the Donut Shop variety. This coffee blew us and our guests away with its smooth, even caramel-like taste. We could see shoppers keeping their BJ’s membership just so they can buy this coffee. All of the Wellsley Farms coffees we tried were made from 100% Arabica beans and were certified Fair Trade by Fair Trade USA. Both retail for $11.99 per 2-pound bag. BJ’s Wholesale Club’s Wellsley Farms Organic French Roast k-Cups Developed and Distributed by International Marketing Systems (IMS)

The price — $32.99 for 100 pods — isn’t the only selling point. This dark roast coffee offers a bold and robust flavor. Consumers have to ask themselves: Why buy a brand when I can have this? SB www.storebrands.com / August 2019 / Store Brands

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COMPANY PROFILE

Building the supply chain of the future CaseStack helps retailers solve big problems in a changing retail landscape By Gina Acosta

efficiently taking products from CEO Dan Sanker’s $262 million manufacturing plants through all retail company CaseStack is the market channels. leader in providing logistics Sanker worked for Procter & services from small and midsize Gamble, Nabisco, Deloitte and KPMG consumer packaged-goods before founding CaseStack in 2000 companies to retailers such as in California. Today the company has Walmart, Whole Foods Market, nearly 300 employees, most of them based The Kroger Co., Target and Amazon. in Fayetteville, Ark., since Sanker relocated to But if you ask Sanker what his business is CEO Dan Sanker founded northwest Arkansas in 2007. CaseStack really about, he says it’s not about logistics. CaseStack in California in still has a large office in Santa Monica, “Really the basis of the company is about 2000. Over the 12-month Calif., a smaller office in Cincinnati and collaborating with partners,” says Sanker, a period ended June 30, 2019, warehouses throughout the country. collaborative business expert who published CaseStack’s revenue was The company has been recognized as a book in 2012 called “Collaborate! The $262,000,000. No. 1 in the Deloitte Technology Fast50, Art of We.” “My feeling in all business is, made the Inc 5000 list of fastest-growing everybody has been doing a great job for companies in America nine times and has years of beating each other over the head been recognized as one of the Best Places to Work in to try and save a nickel. There’s not a lot of nickels left. two states: California and Arkansas. CaseStack has also So where’s the savings and the opportunity going to been recognized as Global Logistics & Supply Chain come from? It’s going to come from the stuff that’s lost Strategies “100 Great Supply Chain Partners” and Food between business organizations and companies, but is Logistics Top 100. not easily identifiable.” The company works with “all the big retailers,” Sanker says, and “a couple thousand” CPGs. “We are a great solution for today’s ever-changing retail landscape,” Sanker says. “At CaseStack, the long tail SKUs get treated exactly the same way in the supply chain as the core SKUs. So that way, retailers can have any small item that the e-commerce players have but even more efficiently.” — CASESTACK CEO DAN SANKER At the end of June 2019, CaseStack had revenue of $262 million with most of that coming from Identifying those opportunities is exactly what consolidation services and the remainder through its Sanker and his team at CaseStack excel at. The LTL brokerage services. company specializes in providing consolidation Last year CaseStack spun off startup SupplyPike, a services to small and midsize consumer goods cloud-based supply chain management platform that companies, which may not have sufficient volumes connects all the information in a company’s supply for a full truckload. The company is also known for chain into one integrated system. its collaborative retailer logistics programs designed Also in 2018, CaseStack agreed to be acquired by to maximize efficiencies and reduce environmental the Hub Group, a larger, publicly traded transportation impacts using supply chain management cloud-based logistics provider based in Oak Brook, Ill. CaseStack technology products. It has become the leading is now a subsidiary that can provide its customer base provider of collaborative supply chain management with additional services, assets and technology provided services for consumer packaged goods (CPGs), by Hub Group.

“We are a great solution for today’s ever-changing retail landscape.”

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Today CaseStack has nearly 300 employees, most of them based in Fayetteville, Ark.

“We believe Hub is the perfect fit for us. Our core values, including collaboration, determination and excellence, are aligned,” Sanker says. Hub has annual revenues of $3.5 billion and employs more than 4,000 people. The company provides multi-modal transportation services throughout North America including intermodal, truck brokerage, dedicated and logistics services. “This acquisition further advances our vision to diversify and enhance our service offering to our customers,” says Dave Yeager, Hub Group’s chairman and CEO. “We are very impressed with the business that the CaseStack management team has built. We believe there will be significant opportunities to enhance network optimization with our customers. Similar to Hub, CaseStack brings an established high service, performance-driven culture.” For CaseStack, the merger with Hub will ensure there are opportunities to continue growing and innovating. Now with more stringent on-time, in-full demands from retailers such as Walmart and Kroger, CaseStack can leverage Hub’s larger financial resources to keep helping suppliers remain in compliance amid higher freight-shipping costs in the supply chain. But Sanker stresses the importance of Hub Group’s core belief in collaborative business practices. “Collaboration is fundamental to who they are as a company,” Sanker says. “And they are a hardworking group just like our group. There have a lot of intellectual curiosity. And integrity and trust are codified in their values. It’s not so much about their assets or their trucks. It’s really about core values that are compatible.” Sanker recently took his collaborative business strategy expertise to Congress. He was invited by the Subcommittee on Digital Commerce and Consumer Protection to serve as a witness during its “Review

COMPANY PROFILE

of Emerging Tech’s Impact on Retail Operations and Logistics” last year. He spoke on topics such as the future of the supply chain management workforce, blockchain and IoT (Internet of Things) in supply chain, and supporting high school students with reallife tech opportunities. He also detailed six main challenges that will impact the future of the supply chain for retailers and CPGs: Education: The need for better trained workers in technology; providing a path for kids to make the leap from technology users (i.e., game and app players) to technology makers. Sustainability: The need to inject more sustainability into retail and CPG supply chains. Capacity: The constraints of capacity when it comes to e-commerce requirements (i.e., higher costs) and the regulation needed to lessen impacts on the market. Automation: Drones, droids, autonomous and semi-autonomous vehicles, third-party delivery, crowdsourcing and other scenarios. Blockchain: How it will improve transparency, scalability and security in the supply chain. Entrepreneurial programs: The need to have more programs that help foster innovation and entrepreneurship and drive technology that will continue to keep us all stronger. Despite the challenges, Sanker says retail and CPG are quickly adapting. “It’s really hard to be a retailer right now. And it’s really hard to be a consumer packaged goods company,” Sanker says. “Suddenly out of nowhere comes a product that just takes over your category. But they’re doing it, they’re doing a great job. A lot of people wrote off bricks and mortar for dead. But that’s not what’s happening. Companies are adapting really quickly and in really innovative ways that use their strengths.” SB

www.storebrands.com / August 2019 / Store Brands

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CATEGORY INTELLIGENCE CHEESE, YOGURT AND EGGS

RICHES GALORE

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Category’s consumers want premium and specialty items, and more

DO consider offering healthier cheese that is organic, low in fat and sodium, and made from milk that is free of artificial hormones.

In the cheese universe, marketers are hustling to give the people what they want: new flavor experiences, indulgence and great taste, according to market researcher Packaged Facts. Expanding on cheese’s status as a source of protein, vitamins, calcium and other minerals, a growing number of consumers are demanding even healthier cheeses that are organic, low in fat and sodium, and made from milk that is free of artificial hormones and comes from grass-fed cows, Packaged Facts reports in “U.S. Food Market Outlook, 2019,” published in April. Capitalizing on the snacking trend that has given us cheese in bite-sized bars and balls, sticks, cubes, string cheese and cheese paired with other foods for snacking, manufacturers continue to offer forms and packaging that are portable, easy to store and use, the report notes. Chips, crisps and puffs made from natural dried cheese are also emerging in the snack space. Boldly flavored cheeses — smoky, spicy and peppery — are one of the category’s leading trends, according to Packaged Facts.

DON’T discount the importance of innovation and premiumization in the yogurt segment.

Also boosting the category’s profile are new premium and specialty varieties with an emphasis on artisanal production, aging, special handling and ethnic origins, Packaged Facts reports. Shredded cheese is the largest subcategory due to its popularity in home cooking, particularly its use in pizzas, main dishes, nacho chips and quesadillas, the report notes. As they are in other categories, consumers are looking for transparency in cheese production practices, Packaged Facts says. They are increasingly concerned about the safety and quality of dairy products as well as the welfare of the animals. They want cheese made from milk that is free of artificial hormones. They seek products from humanely treated animals raised in clean and spacious environments and fed a vegetarian diet. They prefer old-fashioned grazing practices and animal husbandry methods to large-scale industrialized dairy operations, the report states. Private label is well-established in the cheese category, garnering a 42% share of the market, according to Packaged Facts, which projects retail dollar sales of the natural and specialty cheese market to grow by a compound annual growth rate (CAGR) of 2.5% to reach $18.4 billion in 2023. Lovers of ALDI and Trader Joe’s can be found online heaping praise on the low-cost retailer’s cheese section. Molly Thompson, writing for thisisinsider.com, praised ALDI’s 2019 Valentine’s Day offerings of heart-shaped and chocolateflavored cheeses in a Feb. 12 post. Heart-shaped, limited-edition Happy Farms Preferred Wensleydale cheese with raspberries and white chocolate and Happy Farms preferred mature cheddar classic English cheese were wrapped in red wax coatings for the lovers’ holiday. Writing for thekitchn.com, Jelisa Castrodale lauded ALDI’s cheese case for its award-winning specialty and imported cheeses such as New Yorkaged white cheddar, cranberry cinnamon goat cheese, gruyère and lustenberger from Switzerland, Italian asiago, Australian grass-fed cheddar and the retailer’s Spanish cheese plate. Continuing on to Trader Joe’s, Castrodale extolled its 1,000-day gouda, Cotswold double Gloucester cheese with onions and chives, and wild blueberry vanilla chevre.

Store Brands / August 2019 / www.storebrands.com

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BOOSTING YOGURT With less than a 10% market share, the private label yogurt segment is relatively underdeveloped, according to “U.S. Food Market Outlook, 2019.” To compete, Packaged Facts advises store brands project the same premium image as national brands. Innovation, the report adds, should be the essential marketing strategy. Make yogurt special, Packaged Facts counsels: healthier, more nutritious, uniquely flavored or textured. Drinkable and snack-sized formats as well as dairy-free plant-based varieties made from coconuts, almonds, cashews or peas are also promising ways to innovate, the report adds. Consumers increasingly prefer regular (full-fat) yogurt, according to Packaged Facts. They are also choosing low-fat yogurt (along with full-fat) over sugar-free and non-fat types, the report explains. Though credited with revitalizing the category not so long ago, Greek yogurt is no longer the new kid on the block driving growth, the report states. Major growth opportunities still exist in the category, however, Packaged Facts insists. Icelandic, French and Australian styles, yogurt made from the milk of sheep and goats as well as cows, and yogurts with varying levels of sugar and indulgent attributes can be marketed to increase sales, Packaged Facts reports. EGGS-TRA SPECIAL Consumers have gained new respect for eggs as a source of high-quality protein (one egg contains 6 grams), while retail trends show a higher demand for premium egg products, according to Packaged Facts’ May 2018 report, “Eggs: Culinary Trend Tracking Series.” Specialty egg offerings such as organic, cage-free and brown eggs with ALA (alpha-linolenic acid) omega-3 fatty acids attract a significant share of health-conscious food shoppers, the report notes. Citing survey data from Simmons Research, the percentage of shoppers buying organic eggs rose from 22% in 2010 to 26% in 2017, according to Packaged Facts. The report details innovative and popular foodservice trends in which eggs figure prominently, especially in gourmet reinventions of old classics such as deviled eggs, eggs benedict and meringues, and in beloved ethnic dishes such as chilaquiles and migas (Mexican breakfast egg dishes), frittatas (open-faced Italian omelets), Okonomiyaki (Japanese savory pancakes,) Shakshuka (Middle Eastern style poached eggs in savory sauce) and sous vide slow-cooked eggs. SB Cvetan is a contributing writer to Store Brands.

Natural Cheese

Private Brands

All Brands

Dollar Sales (in millions)

$5,835.9

$12,865.3

Change vs. Year Ago

5.0%

1.1%

Dollar Share

45.4%

100%

Unit Sales (in millions)

1,923.4

3,823.3

Change vs. Year Ago

7.0%

2.4%

Avg. Price Per Unit

$3.03

$3.36

Natural Cheese/Shredded Private Brands

All Brands

Dollar Sales (in millions)

$2,971.5

$4,767.6

Change vs. Year Ago

4.0%

1.1%

Dollar Share

62.3%

100%

Unit Sales (in millions)

970.8

1,574.7

Change vs. Year Ago

6.7%

3.3%

Avg. Price Per Unit

$3.06

$3.03

Yogurt

Private Brands

All Brands

Dollar Sales (in millions)

$561.4

$7,091.1

Change vs. Year Ago

-0.2%

-3.6%

Dollar Share

7.9%

100%

Unit Sales (in millions)

442.5

4,186.3

Change vs. Year Ago

-4.4%

-5.9%

Avg. Price Per Unit

$1.27

$1.69

Fresh Eggs

Private Brands

All Brands

Dollar Sales (in millions)

$3,769.5

$6,257.1

Change vs. Year Ago

19.7%

14.8%

Dollar Share

60.2%

100%

Unit Sales (in millions)

1,620.1

2,361.1

Change vs. Year Ago

0.9%

0.4%

Avg. Price Per Unit

$2.33

$2.65

Source: Market Advantage, IRI Liquid Data, IRI, a Chicago-based market research firm. Total U.S. multi-outlet (grocery, drug, mass market, military and select club and dollar retailers) for the 52 weeks ending Feb. 24, 2019.

www.storebrands.com / August 2019 / Store Brands

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CATEGORY INTELLIGENCE MEAT, POULTRY AND SEAFOOD

THE POWER OF PROTEIN

DO make sure you have pre-marinated and semiprepared options. DON’T forget to educate shoppers about different cuts and styles.

If there’s one place in the store where retailers can expertly showcase their private brands, it’s in fresh food. Sales of fresh food in the supermarket perimeter continue to climb, driving 49% of dollar growth across consumer goods categories at retail, according to a report from market research firm Nielsen. In all, fresh and perishable foods account for $177 billion in sales. Specifically, consumers continue to choose fresh meat, poultry and seafood as their preferred sources of protein, which is still king when it comes to dietary trends. Eighty-one percent of millennials, 74% of Gen Xers, 66% of baby boomers and 50% of silents said protein content is extremely or very influential when making grocery purchases, according to the “2018 Progressing Protein Palates” report from marketing agency Acosta. For the past 14 years, the Food Marketing Institute’s (FMI) “The Power of Meat” report has provided insight into shopper preferences and behaviors when buying meat and poultry. The group’s “The Power of Meat 2019” report focuses on the changes in the fresh meat categories and the implications for food retailers. FMI also launched its first “The Power of Seafood” report this year. BEEFY GROWTH According to “The Power of Meat 2019,” meat eating is still the norm, with 86% of shoppers reporting that they eat traditional meat. In this $67 billion category with a household penetration of 98.9%, two-thirds of shoppers mainly prepare fresh meat and poultry. “Meat has grown a little bit and most of that growth has come from beef,” says Rick Stein, vice president of fresh foods at Arlington, Va.-based FMI. “Beef was really high priced about two years ago due to short supply. And as the herd counts went up the prices started coming down and beef started coming back in a big way. So pounds are up, dollars are up. Seafood continues to be a very small piece of the pie but it continues to grow as well.” While plant-based “meat” sales are increasing and some traditional meat suppliers are looking to get a piece of the plant-based action by offering their own versions of “alt-meats,” traditional meat sales are still growing. Meat sales rose 2.3% in retail, to top $90 billion through May 25 of this year, according to Nielsen. And FMI says 24% of consumers prefer private label meat and poultry products. Private label products can work well in combination with regional and national

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brands to offer a customized meat offering for a majority of consumers. In terms of which cuts to offer, “In beef, middle meats are driving most of the growth, and that’s your rib eyes and your most tender cuts of beef,” Stein says. But ground meat is continuing to hold its own. “Ground beef is staying strong,” Stein adds. “And because we have a multicultural nation, we are starting to see more unique cuts like flank steak, tri-tips ... those are starting to increase. And we are seeing more and more of those cuts pre-marinated.” The interest in marinated meats is a reflection of the American consumer’s never-ending quest for convenience. Sales of value-added meat and poultry that provide shortcuts of some kind have risen 5% over the past year. “Taking a traditional cut of meat and adding value to it by altering its flavor, making it a ready-to-cook product or pre-seasoning it is one way retailers are offering a private label fresh meat product,” says Kent Harrison, vice president of marketing and premium programs for Dakota Dunes, S.D.-based Tyson Fresh Meats, which manufactures for private label. “Our team is constantly looking for ways to introduce consumers to products and cuts that they might not be as familiar with. Developing flavored, preseasoned, ready-to-cook meats can entice consumers to be adventurous and try something new.” Stein says the value-added meat and poultry categories can’t get enough attention from retailers, especially those looking to boost their private label meat sales. Another trend that food retailers should take into account as they merchandise private label meat products is meal kits. These meal solutions, many of which are now private branded, can be a way to introduce shoppers to new types and cuts of meat. “Many retailers have embraced different products and flavor profiles to distinguish their brands,” says Darlene Holmes, a spokesperson with Baltimore, Md.-based Deli Brands of America, which manufactures meat products for private label. “Offering niche products such as meal kits are also popular among various retailers due to demand and diverse demographics in their areas.” DRUMMING UP SALES When it comes to poultry, the National Chicken Council’s “2019 Chicken Consumption Survey” reveals that

Store Brands / August 2019 / www.storebrands.com

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overall chicken sales in retail last year grew by almost 1%. Fresh chicken continues to be a primary driver of revenue, with $10.6 billion in sales at retail in 2018. Better understanding today’s chicken shopper can help re-ignite sales growth. “For the longest time, chicken was predominantly branded,” Stein says. “But right now what we’re seeing is retailers are starting to have additional rows in the case of what they would have as their own brand at an advantageous price point. And consumers are buying that up so you know price still dominates the consumer’s mindset when they’re shopping for fresh chicken.” To encourage growth in private brand sales, retailers should also focus on those value-added, convenient cuts, such as stir-fry chicken chunks, chicken kebabs and chicken fajita strips. Sales in that category were up 14% last year, according to Nielsen. Also, don’t ignore meal kits. In the last year, in-store meal kits overall have seen a 26% increase in sales, growing to $154.7 million in retail sales, according to Nielsen. SEA CHANGES As for today’s seafood shoppers, a significant finding from FMI’s “The Power of Seafood” is that although

the seafood sector is comparatively smaller than fresh meat and poultry, it’s nonetheless lucrative. Most consumers shop for seafood at their primary grocery stores, but 31% say they shop for seafood elsewhere. Favorites such as shrimp, salmon and tuna are still king, representing 60% of the market, according to FMI. But that’s likely because consumers are wary of new types of seafood. “The Power of Seafood” report reveals that less than 30% of seafood consumers say they are knowledgeable about seafood. “Lots of folks, especially younger consumers, don’t [know] how to prepare [seafood]. They don’t know all the different cuts of meat or different types of seafood,” Stein says. “So they require a lot more education. That’s why quite often they’re looking for [employees with that] expertise, whether it’s at the full-service case or at the seafood counter, to explain it to them. And that’s also why they sometimes want a recipe to go with it or preparation methods.” As retailers look to grow private brand sales in seafood, as well as in fresh meat and poultry, retailers should be taking a fresh look at what they sell in each category, how it relates to today’s lifestyles and generations, and how to make the products easier for these shoppers to buy and eat. SB

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www.storebrands.com / August 2019 / Store Brands

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CATEGORY INTELLIGENCE READY-TO-DRINK BEVERAGES

SO MANY CHOICES

fo en m

Category grows on the strength of better-for-you formulations

DO consider offering enhanced water, such as sparkling water, as a private brand. The category is expanding and growing.

The future outlook for the ready-to-drink (RTD) beverage category is “great,” says Tyler Kneubuehl, director of marketing and analytics for Berner Food & Beverage LLC, a Dakota, Ill.-based company that manufactures shelf-stable ready-to-drink teas, coffees and protein energy shakes in single-serve glass bottles and aluminum cans. “RTD beverages continue to see growth [and] private label is in a better spot now more than ever, due to customers being more informed,” Kneubuehl contends. “With information at their fingertips, they’re able to make educated decisions about what to consume, instead of basing their choices off major marketing programs.” Private label should continue to see consistent growth in this category in the years to come, Kneubuehl adds. “A lot of private label’s success will be built around the in-store experiences that retailers provide,” he explains. “The better the connection [and trust] that retailers can build with their customers, the better chance they have to convert them to private label customers — and reap the benefits of those higher-margin products.”

DON’T discount dairy alternative drinks, a category that continues to grow.

The RTD category is headed toward providing sustainable packaging and ingredient sourcing, Kneubuehl adds. “Customers are informed now more than ever — not just about labels, but about the products full circle — and how it affects them and the environment.” WATER ON THE RISE One of the fastest-growing beverage categories is bottled and enhanced waters, especially sparkling waters, according to Tom Pastre, author of the March report, “U.S. Beverage Market Outlook 2019,” for market research firm Packaged Facts. The ideal clean-label product, water products logged $19 billion in sales in 2018, and Packaged Facts projects that sales will soar to nearly $26 billion by 2023. Health-conscious consumers who are wary of tap water and who are avoiding sugary drinks are driving this growth, Pastre reports, adding that bottled water (including flavored sparkling waters) overtook carbonated soft drinks as the leading U.S. beverage category on a volume basis back in 2016. Packaged Facts advocates continued development of sparkling water as a healthier alternative to sugary sodas and the use of natural flavorings with reduced or no sugar. Infusions of fruits and vegetables are one way to accomplish this, the report notes. Premium, high-priced waters are also boosting the category, Pastre reports. These include waters enhanced with vitamins, minerals, probiotics, caffeine, protein and other added benefits such as hydrogen-infusion (said to increase hydration and deliver benefits such as increased athletic performance) and alkaline waters (which proponents claim slow the aging process) as well as the emergence of CBD-infused waters, according to Packaged Facts. Water in single-serve plastic bottles accounts for about two-thirds of total water sales. There is some consumer backlash over plastic bottling, as well as government and business efforts to limit or even ban its use, and as a result major water producers are working on more sustainable packaging, Packaged Facts notes. ACTIVATING CONCOCTIONS Energy and sports drinks are also growing rapidly. Retail sales of $22 billion in 2018 are poised to approach $28 billion by 2023, Packaged Facts says. These functional beverages previously aimed mostly at young men and fitness buffs are evolving with clean-label

Store Brands / August 2019 / www.storebrands.com

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formulations that have reduced or no sugar and natural energizing ingredients such as guayusa, green tea, matcha and yerba mate. Healthier formulations and expanded flavor options are broadening the segmentâ&#x20AC;&#x2122;s appeal, and making sports and energy drinks more competitive with other growing beverage segments such as sparkling and functional water and RTD tea, according to Packaged Facts.

development of value-added innovations such as ultra-filtered, high protein or more easily digested a2 protein milk, the report states. Indulgent added flavors such as coffee, vanilla, chai spice and salted caramel might also entice adults back to milk, Packaged Facts advises. In the dairy alternative sector, beverages made from nuts other than almonds, oats, grains and coconut have been trending, the report notes.

TEA TIME Convenient RTD teas, especially refrigerated varieties that consumers perceive as more healthful like kombucha, are driving overall growth of the tea category, Packaged Facts states. RTD teas comprise almost 80% of the packaged tea market. While most of these are shelf stable, refrigerated products have been growing much faster and are gaining market share, according to Packaged Facts. Higher-priced premium teas with reduced or no sugar that provide additional health benefits will drive category growth, while backlash against sugared teas will continue to grow, Pastre reports. New product trends include increasing functionality, developing clean labels, further development of cold brew and other techniques, and expanding the opportunity for premium tea drinking experiences with teas from exotic countries of origin, new tea types, flavors and beverages, the report states.

POP, POP Consumers like carbonated and sparkling beverages, but more are clamoring for healthier, clean-label versions with functional benefits like added antioxidants, Packaged Facts reports. Replacing traditional bubbles with different and unique textures that are foamy or creamy could bring new excitement to the mature carbonated soft drink category; as would unique, innovative flavors and flavor blends, as well as the addition of herbs and spices, the report notes. Beverage mashups also have the potential to reenergize the category with creations like caffeinated energy sodas, sodas with juice and flavored sparkling soda-like drinks, the report points out. SB

JUICE CHALLENGES The juice segment has grappled with the same image problem that soda has due to the relatively high sugar and calorie content of many of its products. Lifestyle changes have also affected juice sales. The decline of at-home breakfast consumption has hurt sales, particularly of orange juice. However, sales of coconut water, cold-pressed and green juices, (seen as more healthful and consumed throughout the day,) are thriving, Packaged Facts notes. Utilize enhanced functionalities (such as probiotics for gut health) and create unique drinking experiences by developing techniques to create different textures such as nitro (from RTD coffee) to boost juice sales, Packaged Facts advises. DAIRY AND DAIRY-ISH Dairy milk consumption is declining, but dairy alternative beverages, which account for 10% of total market sales, are steadily increasing, according to Packaged Facts. Almond, coconut and plant milk blends are leading the charge and are expected to garner 15% of market share by 2023, the market research firm estimates. Dairy milk sales could benefit from further

Cvetan is a contributing writer to Store Brands.

Carbonated Beverages

Private Brands

All Brands

Dollar Sales (in millions)

$764.1

$19,657.2

Change vs. Year Ago

-2.4%

3.7%

Dollar Share

3.9%

100%

Unit Sales (in millions)

553.1

7,774.1

Change vs. Year Ago

-0.3

-2.3%

Avg. Price Per Unit

$1.38

$2.53

Bottled Juices/Shelf Stable Private Brands

All Brands

Dollar Sales (in millions)

$886.2

$5,480.6

Change vs. Year Ago

-1.7%

-0.9%

Dollar Share

16.2%

100%

Unit Sales (in millions)

401.9

2,278.6

Change vs. Year Ago

2.6%

-1.4%

Avg. Price Per Unit

$2.20

$2.41

www.storebrands.com / August 2019 / Store Brands

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CATEGORY INTELLIGENCE WET WIPES

CLEANING UP

ca ho to pl

Niche uses, eco-friendly features spark moist towelette category growth

It turns out there are more ways to clean up than one might have previously imagined. Specialization has come to the wet wipes category, with formulas for different ages and genders as well as for pets and workers in professions where cleanliness is vital, such as in the emergency services and foodservice fields. “There’s been innovation in more specialized, niche applications, in all-purpose cleaning wipes, new extensions of brands and different types of cleaning wipes. There’s a wipe for almost every occasion,” observes Greg Fries, senior vice president of retail brands for Guy & O’Neill in Fredonia, Wis. Fries sees strong overall growth in the moist towelette category, fueled by continuing development of new applications and expanded use of clean chemistry in the natural space. Guy & O’Neill manufactures a full line of wet wipes for private label, including household disinfecting, “green” household, automotive, makeup removal, personal care, bathing, feminine hygiene and adult incontinence.

Product innovation, once driven by the national brands, is now coming from the private label realm, says Jessica Lum, president of Diamond Wipes International, a Chino, Calif.-based womanowned manufacturer and distributor of wet wipes made in the U.S. The company’s products are certified by the Rainforest Alliance and the Forest Stewardship Council. “There’s a lot of room for private label to grow in this category,” Lum says. “In the past few years, we’ve seen retailers closing the gap between private label and brands. Retailers are building their brands, and we see an increase in demand for innovation and partnership. We are going to them with innovations, and they are coming to us with innovations.” Lum sees profit potential in the beauty and baby sectors, where innovation is happening and consumers are passionate in their desire for high quality and product safety. Diamond Wipes produces more than 200 different types of wipes, including beauty, personal

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DON’T forget the importance that sustainability will continue to drive in the category.

Store Brands / August 2019 / www.storebrands.com

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care, household and decontamination for the retail, hospitality, foodservice and facility sectors. Its Ode to Clean household cleaning wipes use a 100% plant-based formula and a biodegradable substrate. The baby wipes sub-category is growing, and skincare (particularly facial and makeup-remover types) is gaining strength, especially in store brands, says Aileen Vitale, manager for sales and marketing for Anthem, a manufacturer and supplier of skin care, body care and hair care products in Clifton, N.J. Also on the uptick are deodorant wipes, a growing segment across gender, Vitale adds. “Again, consumers are looking for fast, effective ways to cleanse, refresh and stay fresh on the go.” Other categories will see growth just by the shift in age demographics, in particular adult personal care wipes and incontinence wipes, as the population that falls into the senior age category increases thanks to the aging baby boomer generation, Vitale adds. SUSTAINABILITY’S THE THING Sustainability is where the category is headed, with innovation efforts focused on developing products derived from plants as opposed to plastic, says Mauricio Menache, CEO of GoodFibers in Phoenix. National brands in the moist towelette space have been slow to adopt natural and sustainable alternatives, opening up a tremendous opportunity for private brands, Menache declares. He adds that the future in wipes is in technology where they can be made with 100% plant-based materials. GoodFibers is increasingly convincing retailers to move away from the national brand equivalent strategy and instead focus on driving real innovation in the category with their own brands, Menache says. “This strategy has worked exceptionally well for our customers.” A third-generation family business, GoodFibers develops wipe products, including many sustainable varieties, across all major categories and varying price tiers. “Plant-based wipe materials are becoming more affordable and are highly effective versus petrochemical-based alternatives in a majority of wipe applications, including baby wipes, makeup wipes and more,” says Menache. GoodFibers is experiencing significant growth in the use of its naturally derived formulas across all categories and price tiers, Menache adds. “Retailers are looking for more ways to differentiate without increasing costs, and in some cases natural formulas or formulas with a high percentage of

Moist Towelettes

Private Brands

All Brands

Dollar Sales (in millions)

$349.9

$732.7

Change vs. Year Ago

10.9%

6.3%

Dollar Share

47.8%

100%

Unit Sales (in millions)

106.7

216.7

Change vs. Year Ago

9.9%

6.5%

Avg. Price Per Unit

$3.28

$3.38

water can do just that. While natural substrate options are more expensive than synthetic alternatives, that’s not always the case when it comes to formulations.” “The No. 1 trend in the marketplace is to go natural with ingredients and substrates,” Lum adds. “In the past, there wasn’t such a clear idea of what natural was, but we now have much more educated consumers and more educated retailers as well. There is a lot of demand for ingredients and extracts that are plant-based [such as] aloe and coconut, “ both of which are hot right now.” Consumers know what they want and have educated themselves about the types of ingredients and performance they are looking for in their wipes products, Vitale says. “To really capture their audience and build private label loyalty in these segments, our store brand partners need to bring something extra to the table. What I mean by this is: What’s the added ingredient that turns a facial cleansing wipe into one that also addresses break-out prone skin or gives an added benefit of an agedefense ingredient?” Retailers and consumers are also demanding more sustainable materials, calling for wet wipes with biodegradable, compostable and/or plantbase substrates, Lum says. Diamond Wipes uses biodegradable rayon and biodegradable bamboo in its products. Sustainability will play a significant role in all wipe categories for years to come, Vitale declares, with the emergence of biodegradable wipe materials, recyclable and/or biodegradable films for the wrapper materials, and closures made from recyclable and biodegradable materials. Younger people aren’t afraid to try new technologies, and realize they work just as well as the old ones, Fries says. SB

www.storebrands.com / August 2019 / Store Brands

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CATEGORY CLOSEUP

60%

Size of the market share of baby food for supermarkets. Source: Statista

$6.9

7.3%

The dollar share that private brands own in the baby formula segment.

1867

The year Henri Nestlé, a pharmacist in Europe, invented the world’s first infant food. Source: Gerber

Source: IRI

82%

BILLION

Size of the baby food market in the United States. Source: Statista

Baby Food

Percentage of U.S. parents using manufactured baby food, drinks or milks in the United States. Source: Mintel

11.1% Rate of growth for the organic baby food market through 2024. Source: Mordor Intelligence

WHAT THEY’RE SAYING “The convenience benefits of baby food products undoubtedly appeal, with pouches and snacks viewed as the most convenient of the baby and toddler food products.” — Amy Price, senior food and drink analyst at Mintel

Store Brands / August 2019 / www.storebrands.com

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Rice Rusks

Smoothie Melts

Puffs

Mini Rice Cakes

Organic Puff Corn

Toddler Fruit & Vege Bites

1.76 oz (50g)

0.21oz (5.9g)

1.48 oz (42g)

1.4 oz (40g)

4.23 oz (120g)

Pouches

Entrees

Crunchers

Mini Wafers

Single Vegetable Combo (Fruits & Vegetables) Protein 4.5 oz (128mL)

6.5 oz (185g)

1.48 oz (42g)

1.4 oz (40g)

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Toddler Formula Stage 3 24 oz (680g)

Organic Toddler Cookies 5.3 oz (150g)

Organic Baby PurĂŠe 3.5 oz (100g) 4 oz & 4.2 oz (113g & 119g) 7 oz (200g)

8/2/19 11:20 AM

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7/23/19 12:54 PM