Store Brands-0421 by ensembleiq

THE PULSE OF PRIVATE LABEL

APRIL 2021 www.storebrands.com

HOT CATEGORY: COFFEE AND TEA P.24

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PLMA 2021 Live From Chicago!

Store Brands Mean Business Sales grew double digits last year. Make your play for success by becoming an exhibitor at the trade show that’s as dynamic as the industry itself. Retail and wholesale buyers will be looking for high-quality products just like yours. Welcome back to PLMA. Reserve your booth space now. E-mail exhibit@plma.com or phone (212) 972-3131.

PLMA’s Private Label Trade Show

November 14-16 Presented by the Private Label Manufacturers Association

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VOLUME 44 NO.3

COVER STORY:

Aldi’s Next Phase

The fast-growing retailer looks to accelerate even more through e-commerce, exclusive brands

Cover Story:

State of the Industry

Editor’s Note

Industry News

Questions/ Answers

Viewpoint

Dispatches: Store Brands in the Wild

A by the numbers look at private label overall and the topperforming categories.

16 BB&B’s Private Brand Plan

Joe Hartsig, the home good chain’s chief merchant, discusses Bed Bath & Beyond’s owned brand-fueled growth strategy

24 Hot Category:

Coffee and Tea Hot beverages gain ground as consumers seek single-use options

26 Shelf-Stable Foods Will the gains made during the pandemic stick around longer than COVID-19?

30 Packaging Report Environmental concerns, reusability are top of mind

Store Brands (ISSN-0190-9851; USPS # 0488-370) is published monthly, except January, May, July, December by EnsembleIQ, 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631. Subscriptions: One year, $100; two years, $182. One year, Canada $118; two years, $215 One year, foreign $135; two years, $225. One year, digital $70; two year, $130.Single copies $14 US, Canada & foreign $16. 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 Chicago, IL and additional mailing offices. Printed in USA. POSTMASTER: send all address changes to Store Brands PO Box 3200 Northbrook, IL 60065-3200. Copyright 2020 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. 4

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INTRODUCING THE STORE BRANDS INDUSTRY SUMMIT COME LEARN WITH US AT OUR INAUGURAL, VIRTUAL, ONE-DAY EDUCATIONAL SUMMIT At Store Brands, we have always felt it is extremely important to not only report on the vibrant and growing private label and store brands industries but to be a part of its future. After the last 14 months — with all the great things that went on with private brands and all the challenges that were overcome — we think it is even more important to stay connected with others in our industry in every way possible. On June 9, we are going to take that gigantic step ahead in our desire to help retailers and suppliers connect and learn as much as they can about private label and its many attributes. On that day, Store Brands will hold our first Industry Summit, an all-day virtual experience that is designed to help bring retailers and suppliers in our industry together to gain a better understanding of this magnificent industry. The Store Brands Industry Summit will offer attendees indepth data and information about the overall private label category as well as offer specific seminars regarding key areas of private label. The four seminars slated for that day will touch on: The State of the Industry; Emerging/Hot Categories; Health & Beauty Care and Wellness; and Innovative Consumables. Each seminar will feature key industry officials — retailers, suppliers and consultants — who will discuss during live webinars the issues facing their respective markets and what can and should be done to increase sales and profits or, perhaps, how to save costs or avoid a pothole on the road to success. We think it will be a can’t-miss important event and one that will help the private label/store brand industry gain a better understanding of what is happening during these chaotic, yet exciting, times in mass retail. We invite you to attend Store Brands Industry Summit by visiting our website, storebrands.com, to sign up. We also invite you to participate in this exciting day. If you feel you have something to offer, please contact us and let’s talk. Private label and store brands are on a roll. But to keep things moving in the right direction, the industry must keep growing and learning and, most importantly, take the steps necessary to stay connected during these odd days. The Store Brands Industry Summit is designed to do just that. We hope you can find the time to attend this event on June 9 and we hope it helps you become better merchandisers and marketers in one of the most exciting arenas in mass retail.

Seth Mendelson Publisher/ Editor-in-Chief

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An EnsembleIQ Publication 8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631

Publisher/Editor-in-Chief Seth Mendelson (973) 650-0263, smendelson@ensembleiq.com

EDITORIAL Managing Editor David Salazar (212) 756-5114, dsalazar@ensembleiq.com Executive Editor Dan Ochwat (773) 992-4416, dochwat@ensembleiq.com

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PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production Derek Estey (877) 687-7321 x 1004, destey@ensembleiq.com Creative Director Colette Magliaro cmagliaro@ensembleiq.com Advertising/Production Manager Pat Wisser (973) 607-1322, pwisser@ensembleiq.com

LIST RENTAL MeritDirect Marie Briganti (914) 309-3378, mbriganti@meritdirect.com

SUBSCRIBER SERVICES/ SINGLE-COPY PURCHASES contact@storebrands.com TOLL-FREE: 1-877-687-7321 FAX: 1-888-520-3608

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CORPORATE OFFICERS Chief Executive Officer Jennifer Litterick Chief Financial Officer Jane Volland Chief Innovation Officer & Managing Director of Path to Purchase Institute Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several Senior Vice President, Content Joe Territo

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

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4/12/21 3:37 PM

Dick’s Sporting Goods Debuts VRST

Walmart Taps Brandon Maxwell to Lead Free Assembly, Scoop Walmart is continuing to elevate its own brand apparel, looking to the runway for its latest move. The retailer is collaborating for the first time with a well-known American fashion designer, hiring Brandon Maxwell to be the creative director of its Free Assembly and Scoop brands. Maxwell has made a name designing high-end, red carpet gowns and runway stylings, and will design seasonal collections for men’s, women’s and children’s clothes, as well as accessories under the Free Assembly and Scoop private brands. Walmart debuted Free Assembly last fall, and recently launched a spring lookbook for its spring collection. Scoop is an older fashion boutique that Walmart revived as an own brand in 2019. In addition to developing pieces for the two store brands, Maxwell will be involved in brand marketing initiatives and campaigns for them. The first collection that Maxwell will oversee is the holiday 2021 collection, and annually he will oversee four seasonal collections for the two store brands. In Spring 2022, his full collections will arrive for the brands. Maxwell was raised in Longview, Texas, and has made a career in fashion with his eponymous brand. “Brandon is a powerhouse in the fashion industry. His designs are beautiful, youthful, timeless and expertly tailored,” said Denise Incandela, executive vice president of apparel and private brands at Walmart. “Our shared fashion values of accessibility and commitment to incredible design and quality make him an ideal partner for Walmart. Bringing his distinctive design talent to our elevated brand collections of Free Assembly and Scoop allows Walmart to offer customers stylish, high-quality fashion at an extraordinary value.”

Dick’s Sporting Goods has a new exclusive men’s collection of apparel dubbed VRST, a line of workout gear and clothing ripe for the growing athleisure trend. The line includes commuter pants, jogger pants, shorts, tees, hooded sweatshirts and quarter-zips, ranging in price from $30-$120. VRST will be the second exclusive line at Dick’s to have its own e-commerce and digital platforms, sold through VRST.com and dicks.com, and will be sold in more than 400 brick-and-mortar locations this month. Calia by Carrie Underwood is the other brand with this arrangement. “With the continued intersection of casual wear and athletic apparel, we saw a white space opportunity for a men’s line,” said Nina Barjesteh, senior vice president of product development, Dick’s Sporting Goods. “The VRST line leverages our expertise in athletic apparel, technology and the in-house design capabilities we have been building over several years. VRST not only offers sophisticated performance apparel for running and training, but also comfortable, stylish pieces with premium fabrication that can be worn around town, out with friends or while working or working out at home.” VRST joins other retailers launching athleisure brands such as Target’s highly successful All in Motion line that turned a year old, Kohl’s launched FLX last month and JCPenney launched a line for women.

www.storebrands.com

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Bed Bath & Beyond’s Nestwell, Haven Hit Stores The first two of the six new own brands Bed Bath & Beyond is launching this year have debuted. Nestwell, a line of bedding and bath products, launched in March, and Haven, spa-like bath products, rolled out in April. “Nestwell is a solutions-oriented brand that takes the guesswork out of everyday bedding and bath products,” said Joe Hartsig, executive vice president and chief merchandising officer at Bed Bath & Beyond. “It provides smart solutions built to withstand the demands of day-to-day use and fit perfectly into the everyday home. Nestwell will include a broad range of bedding and bath products that bring that cozy feeling to our customers’ routines and make beds easy to make and hard to leave. In the spirit of making it easy for our customers, our ‘Nestwell to Rest Well Guide’ is a useful tool to help consumers find their perfect sleep solutions.” The guide begins with an online quiz to help shoppers identify their nesting archetype and find products that best suit that style of sleeping. It also includes design tips by interior designers at Decorist, as well as advice from renowned sleep expert Dr. Shelby Harris. Nestwell products include sheets, bedding, pillows and more, tailored to fit the various sleep styles and also claim to feature such organic and responsibly sourced materials as OEKO-TEX 100, OEKO-TEX Made in Green, GOTs, organic cotton percale, cotton sateen, hemp, polyester, copper spandex blend, Tencel Lyocell and cotton/linen blend fabrics. Bath products include towels, washcloths, bathmats, shower curtains and more. In total, Bed Bath & Beyond said it will be launching 10 new own brands into next year. Soon to follow the latest launches will be Simply Essential, a cross-category brand. Simply Essential will look to be an opening-price-point value brand that includes more than 1,000 household essentials and functionally designed products. Hartsig told Store Brands that some Simply Essential products can be found in some stores now as it builds up to the full launch. The retailer is underway on a full retail transformation from store redesigns and new store brands that aim to reconnect with shoppers and reach new, younger shoppers through an omnichannel strategy. For more on the retailer’s strategy, see our Q&A with Hartsig on page 16. 8

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Lidl Beer Wins 11 Medals Two golds, four silvers and five bronze medals, Lidl US racked up the honors at the 2021 New York International Beer Competition for its line of exclusive beers. Private brand beer as a whole has been struggling to grow, yet Lidl’s line of lagers, German-style pilsners and more look to be a strong differentiator for the discount chain. It also won for its private brand beer in last year’s USA Beer Ratings and the 2018 New York International Beer Competition, and the chain was named one of the fastest growing retailers, per the National Retail Federation. The New York International Beer Competition took place for the 10th time, and trade buyers judged remotely, tasting more than 800 submissions across more than 14 countries and in more than 30 categories of beer. Lidl won on behalf of its Perlenbacher brand being named German Pilsner Brewery of the Year, and also won 11 medals for its individual beers. The winners are: • Van Danken European Lager — a gold winner in the international-style lager category; • Trailgazer Session Ale — a gold medalist in the Saranac pale ale category; • Perlenbacher Imperial Premium — silver in the German-style pilsner category; • Perlenbacher Hefeweizen — silver among German-style pilsners; • Atomic Tart Raspberry Sour Ale — silver in the American-style sour ale category; • Craft Explorers Blue Ridge Lager — silver among American-style lagers; • Galereux Lager — a bronze finisher in the European-style low alcohol lager category; • La Blonde de Ch’Nord French — bronze in the French-style saison category; • Bronzen Schild Belgian Tripel — bronze in the Belgian-style tripel category; • Perlenbacher premium pilsner — bronze for German-style pilsners; and • Craft Explorers Hop Blast IPA — a bronze winner in the other strong beer category.

www.storebrands.com

4/13/21 9:32 AM

At Seneca, we're still doing things the way we always have - the right way. Think globally, grow locally.

99%

of our produce is grown by AMERICAN FARMERS

Please visit www.SenecaFoods.com to learn more about our company, people and products.

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Target Gets Crafty With Mondo Llama Brand

Beautiful Kitchenware Launches at Walmart Beautiful Kitchenware, Walmart’s exclusive line of modern small appliances and more that previewed on St. Patrick’s Day, has launched in full on walmart.com and will be in stores on April 19. The brand comes from a collaboration between actress and talk show host Drew Barrymore and Made by Gather founder and CEO Shae Hong. This is Barrymore’s second collaboration with Walmart, following her launch of haircare products under the Flower Beauty brand. The Beautiful Kitchenware collection includes more than 150 products, including measuring spoons, a range of cooking tools, appliances (the air fryer sold out in one day after appearing on Barrymore’s show), cutlery and cookware. While the initial launch, timed for St. Patrick’s Day featured a few appliances in a sage green colorway, the full launch includes additional colors, including oyster grey, white icing, blueberry pie and black sesame. The majority of items are sold for under $100. While Barrymore primarily worked with Hong for the appliances, both worked with Lifetime Brands to develop the kitchen tools and cutlery. The sleek products are aspirational in their colors that stand out on the countertop and are built around functionality to complement small appliances. 10

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Shortly after expanding its owned brand foodand-beverage portfolio with Favorite Day, Target rolled out another private brand — this time in the craft aisle. Mondo Llama is the Minneapolisbased retailer’s latest own brand, featuring almost 400 colorful arts-and-crafts items and marking the chain’s first crafting owned brand in more than 10 years. With an assortment that includes crafting supplies, drawing kits, paint sets and canvases, Target said Mondo Llama’s price points are largely under $25. The company said shoppers were looking for crafts that could appeal to all creative abilities and skillsets in the family. “Mondo Llama is about joy and creativity for all. After extensive guest research, we co-created a new brand with our guests that meets their arts and crafting needs at an incredible value,” said Julie Guggemos, Target senior vice president and chief design officer. “More guests are looking for creative ways to have fun, and Mondo Llama encourages families to create, experiment and spend time together. It’s the perfect addition to our portfolio of owned brands.” Target said the bold line also is built to be inclusive, with a 24-shade palette of skin tones in its marketers, crayons and paints, noting that consumer research and feedback helped create the final palette and color names. Additionally, the company commissioned more than 70 pieces of artwork from diverse artists worldwide that are featured on Mondo Llama packaging.

www.storebrands.com

4/13/21 9:33 AM

Subsidiary of Post Picks Up Ronzoni Pasta

Aldi’s PlantBased Line Earns Recognition

Private brand producer 8th Avenue Foods & Provisions is acquiring the Ronzoni dry pasta brand from Riviana Foods, the U.S. subsidiary of Madrid-based Ebro Group. The business has been valued at $95 million. The Ronzoni business generated net sales of $102 million in 2019 and $115.8 million last year. 8th Avenue Foods & Provisions is a subsidiary of Post Holdings. Last fall, private brand leader TreeHouse Foods purchased more than 10 dry pasta brands from Riviana Foods. TreeHouse and Post Holdings are no strangers, either, as in early 2020 the two ended a cereal deal. The decision followed the Federal Trade Commission’s halting of the sale, claiming the $110 million acquisition would have given Post a more than 60% share of the market. For Ebro Group, after the divestment of Ronzoni, the company maintains a fresh pasta business with the brands Garofalo, Bertagni and Olivieri, as well as frozen products through the Ebrofrost brand, rice and other products through Carolina, Mahatma, Minute, Success, Tilda and RiceSelect. 20_0313_AD_H_Store Brands Mag.pdf 1 3/20/20 4:12 PM

Aldi is adding 34 more products to its list of Aldi-exclusive products recognized by the Good Housekeeping Seal. The latest additions are 34 Aldi Earth Grown plant-based products, joining more than 170 other Aldi items to receive the trusted symbol of consumer assurance and quality that the Good Housekeeping Seal represents. Aldi was recognized last January for 80 of its Simply Nature products. In 2019, 50 of its Little Journey baby products earned the seal. Additionally, the entire liveGfree line of gluten-free foods and Never Any! meats have been backed by the Good Housekeeping Seal since 2018. This year’s Earth Grown items include popular items such as Vegan Macaroni & Cheese, Meatless Meatballs, Coconutmilk Strawberry Yogurt, Meatless Chicken Tenders, and Veggie Burgers as well as new additions such as its nondairy ice creams. “Aldi customers have loved Earth Grown products from the moment we introduced them,” said Joan Kavanaugh, vice president of national buying at the Batavia, Ill.-based retailer. “Shopper feedback drove us to create this exceptional line of delicious vegetarian and vegan foods, all at great prices. We’re proud of the brand’s success and honored that Earth Grown foods are now backed by ‘America’s Most Trusted Emblem.’” Aldi debuted Earth Grown products as part of its Aldi Finds program in 2018 and based on the immediate popularity of the products, the retailer fast-tracked the process to add more Earth Grown products to its everyday assortment. In fact, the retailer said it was the fastest introduction of an Aldiexclusive brand to market. The product line has expanded since its launch and will continue to grow in the coming year. www.storebrands.com

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QUESTIONS/ANSWERS

COUNTRY PURE FOODS STAYS ON TOP OF BEVERAGE TRENDS

everage manufacturer Country Pure Foods has operations that run the gamut — from retail and foodservice to comanufacturing for leading brands and private label. Ray Lee, CEO of the Akron, Ohio-based company, sat down with Store Brands to discuss his company’s offerings, and how its focus on innovation differentiates it from the competition.

STORE BRANDS: CAN YOU TELL US A BIT ABOUT COUNTRY PURE FOODS AND WHAT IT DOES? RAY LEE: Country Pure Foods, or CPF, with five manufacturing plants, is the premier manufacturer of beverages, including 100% fruit and vegetable juices, juice drinks and now plant-based beverages including organic and conventional almond milk and oat milk. CPF has a diversified portfolio of products in three distinct segments: • Retail — CPF is one the largest private label providers of 100% juices, juice drinks and plantbased beverages to many of the largest retailers across the entire country; • Foodservice — At over 1 billion portions per year, CPF is one of the largest portion juice providers in frozen, chilled and shelf stable, in the foodservice industry, servicing K-12, healthcare and the hospitality industries; and • Co-manufacturing — CPF is one of the most trusted manufacturers of beverages for the past 25 years for the largest International consumer juice brands, specializing in chilled extended-shelf-life products. 12

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“Our customers can be assured that a culture of food safety and quality is ingrained in the company.” SB: What about your private label strategy makes you the choice for retailers? RL: Country Pure Foods is proud to launch innovative new products to meet the customer needs and has become one of the premier suppliers of refrigerated plant-based beverages and juice in the retail and foodservice industries. We are fully aligned with all the latest trends and our R&D team is always thinking ahead within the plant-based category to ensure we meet consumer needs. Based on the growth of plant-based beverages (almond up 14% and oat up more than 200% percent in 2020), retailers need a supplier they can trust to deliver the ontrend, high-quality products their consumers expect. In addition, our customers can be assured that a culture of food safety and quality is ingrained within the company, beginning with the vigorous testing of ingredients and certification of suppliers to the rigid standards and

expectations that Country Pure Foods instills throughout its organization. SB: How do retailers build sales from the category and, specifically, private label in the category? RL: Most retail chains want to quickly follow new national brand launches, and as a result, Country Pure Foods’ R&D team, in conjunction with operations, must constantly test new ingredients, new flavors, and new production methodologies so that when there is a successful new product that reaches national scale, we can be there to service the retail chain’s demands. Within private label, we are experts in creating unique items within the category. Some of the more innovative items we have created include not from concentrate, or NFC, grapefruit juice, NFC pineapple juice and organic NFC orange juice. These products are not broadly available from the national brands, so they help retailers differentiate themselves in the juice category. Within the plant-based beverage space, with so much activity in this category, retailers committing expanded shelf space for their brand is key. The growth of the category is creating new entrants all the time, consisting of many variants and line extensions. The retailers committing to a private brand block within the plant space will help their most loyal customers and cut through the clutter on the shelf with high-quality products at a value. SB: Any new items coming down the line in the near future? RL: Innovation in foodservice can drive trends in retail. Our V blend juices, and frozen Sidekicks sold in foodservice are made with 100% fruit juice, vegetable juice and a blend of both. While these products are unique to school foodservice now, they meet the “better for you” and plant-forward demands of consumers. With our foodservice success, these are ideal products for consumers who would be interested in buying these “better for you” products within traditional retail, club and e-commerce. SB

www.storebrands.com

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VIEWPOINT

VALUE BEYOND PRICE Earning the trust of private brand shoppers of color Phyllis Johnson, senior director of own brands, Catalina USA

hen I was growing up, my single mom with eight kids didn’t often buy private brands. I noticed at an early age that our grocery cart always had Tide and Clorox in it. I couldn’t understand why when there were less expensive options on the shelf. I realized years later it’s because she trusted these products would work. She couldn’t afford to try a lesserpriced brand for fear that it would not perform at the same level she’d come to expect and experience with name brands. Clean clothes for all of the kids and herself was not something she was willing to risk. Today, industry studies show African American, Asian and Hispanic shoppers remain name-brand loyal. But the pandemic and its aftermath have created a new opportunity for private brands to earn their trust. At the height of the lockdown in March 2020, retailer private brand sales rose 70-80%, which is 40% higher than brand sales compared to the prior year. Some of this was in no small part due to forced trial. But even when their favorite brand names returned to the shelves and supply issues stabilized,

nearly half repeated their purchases. (Ultimately, the private brand industry grew 4.1% last year compared to 1.4% for national brands.) As 2021 unfolds, private brand retailers shouldn’t let the pandemic’s retail dynamic dictate their approach. A combination of value and quality will continue to influence shoppers of color, but the best opportunity for growth will come from better understanding the diversity that lives within this customer base. Retailers sometimes see an incomplete picture of this diversity because of the limitation or access to enhanced or amplified shopper intelligence that goes beyond demographics and income levels. Could this be the reason why many of them open the same playbook to target all private brand shoppers with the same private brand message, offer or incentive? DIG DEEPER INTO LIFESTYLE NEEDS To craft a message that will resonate and motivate diverse shoppers to purchase private brands over time, you must know more about them. To drive loyalty and lifetime value, you need to better understand their lifestyles and which product attributes and ingredients they are seeking and why.

With a more complete understanding of shoppers of all ethnicities, you can target them with specific health messages and information around the benefits and value of private brand product categories. You also can encourage them to seek medical advice to properly diagnose any health issues and concerns. I challenge retailers to use their private brand platform to become an advocate of health concerns that affect various communities of color differently. For inspiration, consider how Dove has used its brand status and influence to co-found the Crown Coalition, which works to make hair discrimination illegal. This is an important way for a brand to support a cause that affects a portion of their consumer base. If national brands can do it, private brand retailers can, too. PERSONALIZE MESSAGING The pandemic has exposed the health disparities in shopper-ofcolor communities and has forced their health and wellness even more to the forefront. Our data indicates they are looking intently for ways to stay healthy. Leverage your private brand attributes and ingredients to communicate the benefits and value to all shoppers. Create a unique engagement and experience that shoppers can only get via your private brand banner and stores. Ultimately, begin using a new value equation as you seek to earn their trust. No longer are private brands solely about value and quality. Now value equals price, quality and personalization. When you dig deeper to better understand the diversity of your private brand shopper of color, they will reward you with loyalty. Be bold and create a deeper connection with these shoppers by seeing and acknowledging their diversity and offering them value products, engagements and experiences that address their unique needs. SB

www.storebrands.com

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STORES BRAND Q&A

LA DORIA’S FOCUS ON EXCELLENCE Diodato Ferraioli, La Doria’s export and business development manager, discusses the company’s products and how it stands out in terms of private label with Store Brands magazine.

Store Brands: Tell us about your products. Diodato Ferraioli: Our production variety ranges from tomato-based products such as passata, chopped and peeled plum tomatoes to canned legumes up to pasta sauces and pestos. All our products are characterized by high quality raw materials and best in class production process, carefully monitored from field to shelf. SB: What makes them unique? DF: All our products stand out from the competition in terms of quality and excellence, reflecting our passionate work and our desire to promote the best of Italian traditions. All our raw materials are processed in our 6 Italian facilities, ensuring our “Made in Italy” guarantee. Since 1937, we have been using the same authentic Italian recipes for our wide range of pasta sauces and pestos. We are committed to exporting our values and the typical Italian flavours to a broad group of consumers across the World.

SB: How private label can play a role in offering consumers great quality at an affordable price? DF: Among all retailers aiming to offer increasingly quality products, we are witnessing a growing interest in the ranges of Premium and Super Premium “Authentically Italian” – also in the private label segment. To achieve this goal it is essential to select the right partners, able to guarantee the certified quality of their products and of the entire production process. By matching these expectations, the supplier become a real partner with whom establish long-lasting relationships of trust and collaboration and work together to make high quality products at an affordable price. This is La Doria’s business model and through this synergy we are able to create long-term relationships that help achieving high levels of economic efficiency while offering an increasingly complete service, oriented not only to production but also to product innovation. SB: What is La Doria’s history of producing quality products? DF: Our history is a tale of inspiration, courage, initiative, entrepreneurship and hard work, started from Diodato Ferraioli and Anna La Mura, his wife, who had the ambition to build something impactful thanks to their passion for fine food and commitment to bring it all over the world. As a representative of the Ferraioli family’s third generation I am extremely proud to continue this family history and this source of continuous inspiration is enabling us to innovate our products and invest in our future while remaining firmly anchored to our roots. Even today, after more than sixty years, our headquarter is located in Angri, the place where La Doria was founded and where every day we produce quality products that are distributed all around the world. SB LA DORIA S.p.A. Via Nazionale, 320 - 84012 Angri (SA) – Campania Italy+39.081.5166111 www.gruppoladoria.it commerciale.estero @gruppoladoria.it

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QUESTIONS/ANSWERS

REBUILDING THROUGH OWNED BRANDS

BED BATH & BEYOND’S MARKETING HEAD DISCUSSES THE CHAIN’S TRANSFORMATION, STRATEGICALLY TIED TO SIX NEW OWNED BRANDS LAUNCHING THIS YEAR

eginning in March, Bed Bath & Beyond announced it would be debuting six new owned brands over the next six months. Nestwell was the ﬁrst, followed by Haven this month. Simply Essential launches next month. Going into next year, 10 new store brands will be unveiled. Joe Hartsig, chief marketing officer, talked to Store Brands about the company’s ongoing transformation.

STORE BRANDS: WHY DID YOU LAUNCH NESTWELL FIRST? JOE HARTSIG: I think there are a couple parts to that answer. Mark [Tritton, CEO,] came in a year and a half ago. I came in about a year ago. The company is now undergoing a big turnaround transformation — and one of the things that attracted us to the company is that there’s a high association with consumers to our core categories: bed, bath, kitchen, storage, organization. And bed and bath is in our name. That’s how the company started. When we looked at the categories from more of an analytical and data-driven aspect, we created four big category groupings, and the most important one for us is what we call destination categories. That’s where we have the bed, bath, kitchen, storage and organization. I think over the years, the company lost relevance and they lost some market share, and to rebuild this authority back with these customers who still, despite all that, have a very big love for our brand, we sought out to kind of focus our efforts around the areas that mattered most and Nestwell represents the first step into that. 16

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SB: The brand launched with innovative digital and in-store marketing, a reflection of your omnichannel strategy. Is this what we can expect from the other brands? JH: Oh, absolutely. As we were just reflecting on a year ago, we became a digital-only business for three months until we reopened our stores in June or so. We brought on some new team members who had a lot of expertise in digital to overhaul our website, overhaul our mobile platform, and to make them functionally faster, more responsive and more stable, making sure the user experience is much smoother in terms of product, page flows and navigation. We did a lot of work around product, discovery and content to make sure that we’re providing the right level of information. Part of this is using digital to connect to customers that may not have shopped with us before, too. Let’s be honest, we have a core customer that might have been slightly older, but we want to reach more customer types that we’ve defined in our customer segmentation, who are really connected to digital.

SB: How does the new digital focus compare to what was done previously? JH: The company had digital, but it wasn’t connected very well to the physical. We’re not all the way done, but clearly this is a great manifestation when we bring our first of many owned brands to market, how we use our new platforms much more seamlessly due to the interconnectivity of this. So we’ve done a lot on mobile in terms of creating that platform to make it easier, more accessible and shoppable, because part of our mission is to make it easy for our customers to feel at home. We know that through some research that it has been hard to shop Bed Bath because it’s too cluttered in the stores, it’s hard to find things. So, a lot of our work and our efforts around remodeling our stores or improving our digital platform is in service of making it easier to shop and make it easier to feel at home. SB: Is the phased launch for the store brands tied to store resets? JH: That’s exactly right. We’re going to have six consecutive launches that we think all in their own right are complementary. They’re very exciting in terms

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of the brand that we’ve researched, curated and sweated. We made sure we were carefully considering products to be part of that brand — taking more of a brand-management approach. That’s why we’re spending a lot on marketing to create awareness. The Haven brand is actually a brand that is very small right now, but we love the name. We did some research and there’s a lot of relevancy for that product line for our bath product. So we rejuvenated it and cleaned it up. It’s spa-inspired towels, furniture, robes, slippers and other things that would accessorize your bathroom. Simply Essential, which is more value based, but good quality, is a broad product line that includes bath and bed products. SB: Is Simply Essential considered the flagship? JH: I wouldn’t call it flagship. It’ll probably be our broadest line because it’s going to touch many different categories of essentials across different rooms. The theory was: Okay, we’re moving to a reset calendar as opposed to drip-feeding products and whatever the merchant thought they wanted in the store. We’re going to be more pur-

poseful on how we use store operations and create a room-reset process. So those new brands will flow into those new rooms when they’re ready, when the room set is going to be done. SB: How much do the owned brands mean to the transformation? JH: Means a lot. There’s value to customers in terms of price point, value and quality. But clearly if you look at our assortment in the past, we haven’t really had more of an opening-price-point assortment. Owned brands, taking cost out, being much more direct, can help us get to a price point with a margin structure that’s much more competitive. Then there’s the shareholder value creation, because certainly the margin profile on these is in some cases dramatically better than buying a product that has a license on it, for example, really taking the costs out so we can pass it along to our customers, but also provide shareholder value. So as we’re overhauling stores or we’re revolutionizing our supply chain or our technology platform, how do we pay and fund our future? This is a critical strategic component to that roadmap.

SB: The owned brands feel like a connective tissue to reach new shoppers and usher in a new store. JH: You’re spot on. One of the things that we needed to do when we joined back in the spring of last year was to really step back and create a segmentation. We identified five key segments of the home goods market. We’re really good with what we call the “nester,” kind of an older female shopper wh’s known us for years. But on the other end of the spectrum, there’s these millennials, these creators and innovators, minimizers that probably haven’t shopped with us, and we haven’t had the ways to connect with them with product and omnichannel capabilities. It’s also about finding an emotional connection. Nestwell is very much an emotional brand and sustainable. The goods and the quality of the products are sustainable. We think it’s going to resonate very well with a younger shopper and the price points are affordable enough so you can actually go out and afford these with straightforward pricing. SB

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COVER STORY

ALDI’S NEXT PHASE THE FAST-GROWING RETAILER LOOKS TO ACCELERATE EVEN MORE THROUGH E-COMMERCE, EXCLUSIVE BRANDS BY DAN OCHWAT 1818

Store Store Brands Brands● ●April April2021 2021● ●www.storebrands.com www.storebrands.com

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lot can happen in two years. At Aldi U.S., in that timespan, the retailer has added more than 200 stores, with another 100 on the way this year, and has set a goal to hit 2,500 stores by the end of next year. Then, we can talk about its remarkable online activities. Consider the fact that two years ago, the Batavia, Ill.based retailer did not have curbside pickup and had just begun a delivery service with Instacart. It now has curbside pickup running at around half of its locations and delivery is available at nearly all of its stores. It was also the first retailer to accept EBT SNAP as a payment option through Instacart. Obviously, the COVID-19 pandemic accelerated Aldi’s e-commerce expansion — as it did across retail — but this digital embrace also is a key factor in what can be considered the next evolution of Aldi. “To add some context, in response to changing customer needs during the pandemic, we added roughly 1,000 curbside grocery pickup locations in a little more than a year,” said Brent Laubaugh, co-president of Aldi U.S., in an exclusive interview with Store Brands. “We’ve learned that now, more than ever, people want options for how they shop and we’re proud to be able to offer those choices. The demand for e-commerce continues to be strong, so it’s a critical part of our business that we’ll continue to invest in.” He added, “The last several years have been very transformative for Aldi. We’ve invested more than $5 billion in a multi-year, nationwide growth initiative and have opened more than 500 stores in the last five years.” Grocery industry analyst Phil Lempert, better known as The Supermarket Guru, went one step further when asked about Aldi. He said executives told him that e-commerce and curbside pickup is enabling Aldi to attract shoppers that have never been to an Aldi. “They’re smart. They’re constantly evolving and trying to get new products there and new shoppers into the store,” he said.

THE RISE OF ALDI

Laubaugh credited the loyalty of its shoppers for the retailer’s rapid growth. “It’s their commitment and enthusiasm that continues to propel us forward,” he said, pointing out the “grass-roots enthusiasm” found on social media. It’s true, a search on Instagram brings up more than 50 influencers dedicated to the retailer with handles like All I Need is Aldi, Aldi for President, Aldi Nerd, Aldi All the Time and many more. The accounts share regional perspectives, such as The Aldi Nerd, based in Florida, who just posted about Aldi’s rain boots and Pineapple Mimosa product. All I Need is Aldi focused on recipes, cooking and product reviews from her area stores. Laubaugh said the influencers take to social media to highlight Aldi Finds, the weekly drops from the retailer, and personally noted the Facebook fan group Aldi Red Bag Chicken, which has nearly 20,000 followers solely dedicated to sharing recipes and photos of how home cooks innovate with the retailer’s Kirkwood Breaded Chicken Fillets. Aldi has even placed shelf tags near the product in stores proclaiming: “Red Bag Chicken. So Good It Has Its Own Fan Group.” “The sales for those already popular fillets increased exponentially after we shared our own fast-food chicken sandwich dupe made from Aldi ingredients amid the chicken sandwich craze,” Laubaugh noted. “Their passion and buzz have helped make us one of the fastest-growing retailers in the country.” How Aldi built such a rabid fan base started years ago as consumer perceptions changed and shopper demographics changed, Lempert said. Traditionally,

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COVER STORY

20 years ago, an Aldi shopper was considered someone only interested in saving money. “They weren’t upscale consumers,” he said. “The stigma that was attached to using coupons, or going to Aldi, or going to a dollar store was gone with Generation X, with millennials, where people didn’t feel that way anymore.” Diane Wehrle, marketing and insights director at Springboard, a global intelligence company, said Aldi filled a gap. “Aldi’s proposition of low-cost grocery retailing combined with stores that are smaller than traditional large grocery formats have delivered convenience to shoppers that was previously unavailable,” she said, adding that shoppers who are “time-poor” find the small format beneficial and that millennials seemingly have less desire for leading brands, paving a way for Aldi’s own brands. Aldi earned its new shoppers by curating to what they need, Lempert said. For example, the retailer will stock four olive oils, as opposed to dozens at some conventional grocers, he added. There will be an everyday olive oil, an 20

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“The last several years have been very transformative for Aldi. We’ve invested more than

$5 billion in a multi-year, nationwide growth initiative and have opened more than

500 stores in the last five years.” — BRENT LAUBAUGH, CO-PRESIDENT, ALDI U.S.

extra virgin olive oil, an organic olive oil and one imported from a small town in Italy. This is the model that newer shoppers prefer, Lempert said, noting that it is in-step with the

similar rise of Trader Joe’s. While Lempert said the two retailers don’t communicate with one another, “the two of them have changed the way conventional retailers look at store brands. They woke them up

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COVER STORY

and said, ‘Hey, if we do a good job on our store brands, shoppers will buy them.’”

ALDI’S EXCLUSIVE BRANDS

More than 90% of Aldi’s assortment is made up of its exclusive brands, of which there are dozens. Some of the standouts, according to Laubaugh include: • Specially Selected: A range of gourmet and specialty items such as German coffee, premium pastas and seasonal sweet treats like the Specially Selected Belgian Cocoa Dusted Truffles; • Earth Grown: Launched in 2018, the exclusive vegetarian and vegan line was an instant success and has quickly grown to become one of Aldi’s most popular brands. Earth Grown was the quickest to market in just under eight months; • Simply Nature: Customers are increasingly aware of what they are putting into their bodies and Simply Nature products are organic, non-GMO and free of added artificial ingredients and preservatives; and • Little Journey: Baby and toddler essentials. Looking at the year ahead, Laubaugh said the company is aiming to take advantage in the renewed interest in cooking, baking and grilling at home. “We’re about a year into being at home full-time and people still love to bake,” he said. Items coming soon include giant marshmallows for s’mores season and the return of a popular funnel cake kit. The retailer has seen success specifically through its specialty organic sugar cane, almond flour and premium chocolate chips, too. “While the pandemic necessitated cooking at home, consumers have rediscovered the joy of it, and we’ve seen that reflected in how and what they’re buying,” he said. “Some customers are also taking home more premium items to recreate the restaurant 22

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experience at home.” Aldi is looking to add to that this summer with the launch of a grill master collection kit that includes burgers, steaks, pork chops and chicken. The retailer also has on deck a new Zarita Lime Margarita drink, more for the grill like L’oven Fresh Keto Friendly Buns, pizzas, snack foods and Park Street Deli Spicy Black Bean Hummus to name a few. The company’s Mama Cozzi’s Take & Bake Pizza won its 2020 Aldi-exclusive products Fan Favorites survey. Laubaugh said the productdevelopment process is handled closely with its suppliers. Aldi works with thousands of suppliers and he said they’re looking for more with an aim on building strong, collaborative partnerships. The retailer and supplier relationship involves developing products quickly based on consumer trends, enabling them to adjust any current products to bring in new ones based on market movement and customer feedback. “Our supplier network is a crucial component of the company and directly impacts our ability to serve customers,” he said. “They are our partners in developing innovative products, cutting costs from the supply chain and maintaining the highest quality standards. When identifying

new potential partners, we’re looking for organizations that can do this and keep pushing us to be better.” Aldi has a dedicated page on its website on steps to become a supplier.

SOURCING SUSTAINABLY

As Aldi looks to bring new shoppers into the fold through its digital capabilities, another area of focus is through sustainability and food transparency. The retailer recently published its sustainability charter that reiterated a pledge to make all store brand packaging — including plastics — to be recyclable, reusable or compostable by 2025, as well as reduce packaging materials by 15% during that same span. Additionally, all Styrofoam will be removed from produce packaging, and

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the retailer will be redesigning packaging to reduce excess plastic from products such as teas, fruits and bread, labeling products to promote recycling at home, using cardboard sleeves for more than 90% of apparel items. “The global impact of plastics can’t be ignored,” said Jason Hart, CEO of Aldi U.S. “We can’t get rid of plastic everywhere overnight, but we continue to work to eliminate plastics anywhere we can. Where we do need plastic, we are committed to choosing materials that contribute to a circular plastic economy.” Sustainable sourcing initiatives include more than 40 coffee products that are currently certified, and Simply Nature and Barissimo coffees will be sustainably sourced by the end of next year. Aldi is the second-largest private brand purchaser of Fair

Trade USA coffee. The retailer’s own brand chocolate bars and candies are certified as sustainably sourced by Fairtrade, Fair Trade USA or Rainforest Alliance. Aldi also joined the Ocean Disclosure Project that makes its wild-caught seafood transparent. Lastly, by 2025, Aldi said it plans to reduce greenhouse gas emissions by 26%, transitioning to solar and wind energy sourcing and building a renewable infrastructure to rely less on grey power grids. Earlier this year, Aldi installed its first company wind turbine at a warehouse in Dwight, Ill. The retailer has solar panels at 111 stores and 12 distribution centers nationwide and will add solar warehouses in Alabama and Kansas as well as 60 stores by the end of 2022. The sustainability initiatives are another example of how far Aldi has

come and where it’s going in its next phase. During its growth pattern last year, it entered its 37th U.S. state in Arizona and this year it will enter its 38th in Louisiana. This year Aldi broke ground on a new regional headquarters and distribution center in Loxley, Ala., that is set to open next year, said Laubaugh. The facility will enable them to grow farther into the Gulf Coast and expand in Alabama, Southern Georgia, Mississippi, the Florida panhandle and Louisiana. “We see each new store as a chance to serve new communities and I’m looking forward to expanding our presence across the country to do just that,” Laubaugh said. “We know access to affordable groceries is vital and are always looking for more ways to save our shoppers money.”

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HOTCATEGORY

Coffee and Tea

With suppliers rushing out all types of new flavors and types — and consumers demanding a wide choice of products — the coffee and tea category is booming at mass retail. And, that means great news for those companies in the private label and store brand segment. According to Packaged Facts, retail coffee sales hit nearly $16 billion in 2020, with NielsenIQ noting that private label packaged coffee sales for the year ended March 27, 2021, reached $1.7 billion, a 6% increase in two years. NielsenIQ said that private label packaged tea sales for the same period exceed $110 million, up 5.7% from a year ago. So where does that leave retailers in this hot category? Many industry officials said that merchants are being forced to expand their selection of products in these categories as more consumers look for varying types of flavors and types — and across a wide range of price points. “Like most food and drink categories, retail sales of coffee and tea have benefited greatly during the COVID-19 pandemic at the expense of out-of-home sales and as the general trend toward ‘premiumization’ continues,” said Bosmat Levi, head of the international division of Tel Aviv, Israel-based Wissotzky Group, a 170-year-old company in the tea category. “Looking at hot tea specifically, the category continues to evolve with a strong trend toward products with specific wellness claims. “Traditional blends such as English Breakfast and Earl Grey are still very relevant but the growth and interest in the category is coming from blends of teas and herbs with holistic benefits as well as great taste. Consumers seek out flavor and benefit and are open to new experiences which injects dynamism into the category and makes it an exciting place for brands and private label alike.” There is other good news for private label products in this category. According to IRI, private label “singlecup coffee” was the leading coffee brand in March 2020, amassing more than $1 billion in sales, ahead of the Starbucks and Keurig Green Mountain brands. And, private label “ground coffee” was third for the 52 weeks ended March 2020, generating more than $434 million, a 10% market share.

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Private label packaged coffee sales for the 52 weeks ended March 27, 2021, nearly reached

$1.7 BILLION

up more than 6% from two years ago. — NielsenIQ Private label packaged tea sales for the same period exceed

$110 MILLION, up 5.7% from a year ago.

— NielsenIQ

Retail coffee sales managed to hit nearly in 2020.

$16 BILLION

— PACK AGED FACTS

Private label “single-cup coffee” was the leading coffee brand in March 2020, amassing more than

$1 billion in sales, ahead

of the Starbucks and Keurig Green Mountain brands. — IRI Private label ground coffee was third for the 52 weeks ended March 22, 2020, generating more than

$434 MILLION a 10% market share. — IRI

Revenue in the tea category expects to pass $12 BILLION in 2021, growing annually by 5.7% until 2025.

— STATISTA

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SHELF-STABLE FOODS REPORT

FROM SOUP TO NUTS MANY SHELF-STABLE FOOD CATEGORIES REBOUNDED IN A BIG WAY IN 2020 — BUT WILL THE GAINS OUTLAST THE PANDEMIC? By Michael Applebaum

n the middle of the store, it was the year of the experimental grocery shopper. Throughout 2020, shoppers took fewer trips to minimize their exposure to COVID-19 and made larger stock-up purchases as dining-out options shrank during the pandemic and cooking at home became the norm. Limited quantities of produce and fresh meat in many parts of the country forced cash-strapped consumers to adjust their routines and look for items that were more widely available, stretched their budgets further and lasted longer. As a result, a large swath of shelf-stable products at the center store — many in traditional packaged goods categories that have been falling out of favor for years — suddenly got a second look. “People like to buy fresh ingredients, but when those things are taken away — whether it’s because they lost their job, it’s not on-shelf or they only want to shop every other week — they will of course try new things,” said Andrew Russick, vice president of sales and marketing at Pacific Coast Producers, one of the largest suppliers of private label canned tomatoes and other fruits. Those “new” things included an array of familiar kitchen staples: everything from cereal and oatmeal to

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nuts, beans, canned vegetables, rice, dry pasta and soup. Russick says that retailers’ pent-up demand for canned tomatoes following an initial run on shelves in March sent the company’s sales up anywhere from 8-12% in late summer and early fall, depending on the product and region. “Shoppers discovered that moving from fresh to shelf stable didn’t hurt them at all,” he said. “They got something that’s portion controlled, all prepped and ready to cook. And the quality was just as good or better than what they were getting from a national brand.” Similar trends played out in canned peaches and other fruit categories, said Russick. “There is a slight bias around shelfstable because people think, ‘Well you wrap a can around it and it’s not as fresh’,” he said. “We’ve always known that canning is the freshest thing out there. It’s picked in the field and five hours later it’s in the can. It brought people into purchasing things they wouldn’t normally consider.”

VARYING STRENGTH OF PRIVATE LABEL

By now, it is widely accepted that 2020 was a banner year for store brands. Indeed, the pandemic accelerated the shift toward smaller manufacturers and private brands, as

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SHELF-STABLE FOODS REPORT national food manufacturers struggled to keep products on shelves. Big food companies lost 1.3 share points, or $12 billion in sales, to small CPGs and private brands, according to an IRI report published in January 2021. Yet the relative strength of private label was not spread equally across all categories. In some center-store categories with the biggest volume increases, the share of private label actually decreased compared to national brands. Soup, dry pasta and rice, for example, all saw overall jumps of more than 20% for the 52 weeks ending Feb. 27, according to Nielsen data (see chart). The share of private label in each of these categories dropped anywhere from 2-3% during the period. In soup, it appears that a rising tide lifted all boats. Pantry loading in the early spring provided a boost to national brands like Campbell’s and Progresso, as consumers stuck with the brands they grew up with, said Dan Carley, vice president of sales and marketing for store brands at Baxters North America. “After that initial surge, brands stayed up 15%20%, took a dip in September and came back up again,” he said. “Brands drove quite a bit of the strength in the category but private label also did well. Brands were up about 30%-35% at the end of the year and private label was up about 15%-20%.” This year has been more challenging for the soup category. In its latest earnings announcement last month, Campbell’s warned of waning sales as consumers began to dine out more and get back to the office. Carley at Baxters expects the category to be down anywhere from 5%-10% by year’s end, but said the company hopes to make inroads against branded soups with new flavors and formats like pouches and single-serve toppers, with several new SKUs available starting in July. The picture is brighter in the $2 billion rice category, which had more upside momentum heading into the pandemic. Total sales were up 3.9% 28

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Cost of Sales in 4 Key Center Categories Category

SOUP

National Private label VEGETABLES

National Private label RICE

National Private label PASTA

National Private label

Latest 52 weeks, 2/27/21

% Change vs. Year Ago

3,405,282,230 326,691,961

+24% -6.9%

3,030,669,026 1,538,784,782

+27.9% +21%

1,287,194,469 445,658,735

+29.9% +11.4%

1,725,895,026 660,905,859

+28.7% +17.1%

a 20%-30% growth rate this year. “More consumers are going back to restaurants, so when they are cooking at home, they will be looking for something different [than plain rice],” he said. “We’re doing new globally inspired flavors, including a Chimichurri, a Moroccan curry and a separate lineup with lentils, so you’ve got a plant-based protein with some added flavors.”

DOWN TIME: NUTS, SNACKING AND BAKING

for the 52 weeks ending Feb. 29, 2020, per Nielsen, with slightly higher gains in national brands than private label. “Ready-to-serve rice is a super easy side dish, and the pandemic only drove this trend further,” said Carley. Private label sales increased by triple digits for several weeks last spring, though from a much lower base than national brands, he said. He expects the category to maintain

Tales of quarantine cooking and baking blanketed the Internet in 2020, as consumers had more time for leisure activities and could put more thought into their meals and snacking habits. Two categories that benefited from these trends, not surprisingly, were nuts and baking mixes. Nut sales had been growing steadily prior to last year, thanks in part to the product’s reputation as a healthier snack option, said Krista Daly, director of marketing at Marathon Ventures, a producer of private label nut products including snacking and baking nuts. “During the pandemic, we found

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each customer had its own story with anywhere between 20%-50% growth, depending on the channel and category, with a trend toward bulk purchases and larger packaging size options,” she said. “There was some disruption in smaller package [and] grab-and-go impulse items. Otherwise, the growth trends were amplified.” Bryn Garcia, vice president of retail sales and business development at private label almond producer Select Harvest USA, said that the almond segment continues to benefit from the nut’s perception as a low-carb, highprotein snacking source and as an alternative baking option for customers seeking healthier choices. “We had an extremely strong year for almonds last year,” Garcia said. “We saw the majority of our lift early on at the beginning of the pandemic onset when retailers were struggling to keep enough products on-shelf. Their customers were stocking up in massive quantities in order to prepare for lockdowns for undetermined lengths of time, and retailers were putting in backto-back purchase orders with us and many other suppliers to keep up with demand.” While almond sales were fairly evenly distributed between private label and national brands, she said, “Private label took a bit of a hit once the lockdowns began to lift in many states and retailers were overbought on their own branded items.” Private label disruption is a growing

story in the baking mixes category, which traditionally has been dominated by national brands Pillsbury, Duncan Hines and Betty Crocker. However, skyrocketing demand during the pandemic has begun to slowly open the door for store brands. “Major retailers are finally realizing how important their owned brands are, and particularly in the premium and clean label area,” said Fern Phillips, CEO of Little Big Farm Foods, which produces more than 60 baking mix SKUs for brickand-mortar and online specialty retailers, as well as a line of branded mixes with the company’s name. “So far this year, private brand growth in the premium segment is really picking up. There is more opportunity to do development for retailers and specialty brands.” Despite operating in an indulgence category (Little Big Farm Foods’ apple cider donut mix is among its top sellers), private label baking mixes can differentiate from national brands by meeting the needs of shoppers’ various dietary restrictions, said Phillips. “I think gluten-free will always be around, but programs like keto are really catching on,” she said. “You can use almond flower or some other kind of unbleached and un-enriched flour [for a healthier mix]. It’s a processing difference. The national brands are trying to keep up by looking more organic and natural, and they are keeping prices down by decreasing net weight.”

POST-PANDEMIC TRENDS

Many of the above trends began to take shape well before 2020 and, according to the suppliers, should continue to strengthen once the pandemic wanes. “We anticipate continued strong demand, less the pantry filling spikes, with the slow and steady return of food service,” Garcia said. “While in-home cooking

and baking has certainly increased, those activities will be affected by the reopening of restaurants. However, we believe growth will remain above pre-pandemic levels. Snacking, on the other hand, will continue on a high growth trajectory regardless as people have moved beyond the traditional three-meal plan to snacking all day.” Daly agrees. “The continued importance of better-for-you snacking options and overall health benefits of the food we put into our bodies will drive growth in the healthy, natural, minimally processed space,” she said. “I’m thrilled to see people paying greater attention to the way food and it’s nutrients effect our body and how we feel, and I hope that is a trend that lives on.” Independent private label experts believe that the push toward clean label products will also accelerate this year. Jim Wisner, president of Wisner Marketing Group, said that interest in sustainability actually increased during the pandemic, perhaps counter-intuitively. “You’d think that with people just trying to get their hands on products and reverting back to brands they knew as a kid, something that could be considered trendy like clean label would take a back seat. In fact, the opposite happened,” he said. “One explanation is that there was so much concern about health in general, it got people more engaged in topics like the environment.” Of course, none of this bodes particularly well for manufacturers of processed foods. Still, the longterm outlook for the center store may depend on whether many of these iconic brands can keep up with consumer demand for new flavors and lighter versions of their original products. “We expect conditions [in the center store] to eventually drift back to what they were before,” Wisner said. “The pandemic disrupted some of the sales trends but it didn’t change the overall pattern.” SB

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PACKAGING REPORT

SETTING THE STANDARD RETAILERS ARE USING THEIR STORE BRAND PACKAGING TO LEAD THE WAY IN SUSTAINABILITY By Dan Ochwat

etailer store brands are striving to become leaders in sustainable packaging, and it is driving the packaging industry. By 2025, both Ahold and Aldi will make 100% of its private brand packaging recyclable, compostable or reusable. Kroger pledged to do the same by 2030. Walmart, Albertsons and others have set comparable packaging goals. “While packaging that is convenient, easy to open, and keeps the product safe from tampering and damage will continue to be important, environmental concerns are affecting consumer choices, and packaging that is recyclable or reusable is growing in importance,” said Bob Tupta, marketing product manager at Mold-Rite Plastics. To tackle sustainability, packaging suppliers and private label manufacturers are stepping up in various ways — from creating reusable containers like the Loop platform from TerraCycle to leveraging post-consumer content and renewable bio-based resins in packaging, as well as deploying more flexible pouches or bags as opposed to rigid packages. “Even in the throes of this pandemic, sustainability continues to drive packaging,” said Sal Pellingra, vice president, global application and innovation, ProAmpac in Cincinnati, who added that the Ellen MacArthur Foundation and its underlying vision of a circular economy is helping companies to strategize and develop eco-friendly packaging. Mold-Rite is a signee of the Ellen MacArthur Foundation and its Global Commitment pact, joining some of the world’s biggest consumer goods companies, government agencies and more out to reduce plastic pollution globally. However, Leo Brozell, director of product innovation at Chicago-based Mold-Rite, said there are significant challenges ahead, and that adapting will require an understanding of what it means to be fully sustainable throughout the entire life cycle of a package. “With regard to alternate materials to achieve the goal, often there are supply issues, functional issues, and regulatory issues,” he said. “There is plenty of confusion, lack of standardization and claims around these materials

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that need to be validated for use. Meeting these goals is also going to require a fundamental reworking of how we currently deal with the end of life of packaging — recycling, composting, reuse, etc. Mandating that percentages of recycled content be used is noble for the sustainability effort, but there aren’t yet sufficient avenues to collect and recycle the plastic and supply it in a way that is required by FDA and current packaging specifications.” Pellingra at ProAmpac agreed that it’s difficult to know how realistic it is for retailers to reach its laudable packaging goals. “Most important will be having infrastructure available for handling a wide range of materials, the ability to pay for both infrastructure and the costs for managing it,” he said. “Glass, for instance, isn’t being recycled in many municipalities because of the high cost to collect, transport and recycle it. This same issue is being experienced with other material solutions.” He also noted that in Europe, packaging that uses postconsumer recycled material/recycled resin, or PCR, hasn’t been approved for many food applications. “Meeting those big goals isn’t a single solution; it’s a holistic approach by suppliers, brands, retailers, and local and national governments,” he said. “For its part, the industry is making inroads towards these goals every day. Getting there will require continued development and cooperation from everyone in the supply chain — raw material sources, converters, processors, retailers, materials recovery facilities, the right legislation and most importantly, improved education of and communication with consumers.”

SUSTAINABLE SOLUTIONS

The key to developing a more sustainable package comes down to developing a smaller package (using less material that makes the item cheaper to ship) and using materials that support the circular economy. The Loop platform from TerraCycle has been a leading example of the reuse application and is growing in the private brand space. The platform last fall hit a milestone by making its platform available in every zip code across the 48 contiguous states and this year it launched reusable

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President’s Choice packaging for Canadian retailer Loblaw. The service likens itself to the days of the milkman. Shoppers in Canada, for example, select a President’s Choice jar of salsa online (in-store service will be available soon). The jar is a reusable package designed by Loop and Loblaw that gets returned by the shopper (shipped back in a package provided by Loop) to be refilled and mailed back to the shopper. Kroger and Walgreens are using Loop for its own brands in the United States, and Loop has partnered with select Carrefour stores in France. Additionally, the platform will be launching in Japan with Aeon and in Australia with Woolworth’s later this year. “I think it’s great that retailers are setting big goals and this will put pressure on brands being carried at their stores to adapt with the current consumer trend of delivering goods in sustainable packaging,” said Charlotte Maiden, publicist for the platform. “I think this will be even more successful if retailers start these steps with their own private label brands.” Outside of Loop, Trenton, N.J.-based TerraCycle hit a milestone last summer by launching the first-ever recycling program dedicated to a store brand product, teaming with Kroger for the SimpleTruth Recycling Program — which centers on flexible packaging that is not accepted in the curbside bin, including produce bags, bread bags and plastic overwrap found on items like tissue boxes and bottled water. After a shopper signs up on the TerraCycle website, once they purchase one of the more than 300 eligible Simple Truth products, they are able to ship empty packages to TerraCycle to be recycled using a free, prepaid shipping label.

“Even in the throes of this pandemic, sustainability continues to drive packaging.” — SAL PELLINGRA, VICE PRESIDENT OF GLOBAL APPLICATION AND INNOVATION, PROAMPAC

“Local governments are often faced with the everincreasing challenges and expenses of managing hard-torecycle materials. When [retailers] step up to take the lead on recycling efforts, they alleviate the pressure from local governments, bolster the recycling system as a whole, and support the recovery of their products’ packaging on a national scale,” TerraCycle representatives said. Other examples of companies rolling out sustainable packaging solutions include Smile Beverage Werks, which has introduced commercially sustainable compostable coffee pods that can be used for retailer private brands. The Darien, Conn.-based company’s pods are made from renewable plant-based materials, making them commercially compostable, and the product carries a fullyear shelf life. Eco Lips, a large independent organic lip balm www.storebrands.com

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PACKAGING REPORT

manufacturer, has developed what it says is the first environmentally sustainable lip balm tube that is made entirely from plants and is 100% free of plastics. The Cedar Rapids, Iowa-based company said the tube feels and functions like a plastic tube vessel. Eco Lips produces Fair Trade Certified lip care products using 100% renewable energy, producing products under its brand name as well as for private label and contract manufacturing. At Mold-Rite, a leader in plastic caps and closures for packaging, the company is employing PCR materials and designing lighter weight closures to reduce the weight and amount of material used. “While there is no magic material that is an adequate substitute for plastic, we continue to evaluate and investigate other sustainable resins, additives, and package concepts that may offer true eco-friendliness, such as starch and sugar-based bio-resins, biodegradable additives, and compostable resins,” Brozell said. “It is important to keep in mind that many non-plastic packaging options that are intended to be more sustainable, such as glass, aluminum, and paperboard, have some serious shortcomings in terms of impact on the environment, and might not be the most eco-friendly options when compared to plastic.” ProAmpac, a leader in flexible packaging solutions, launched in February a frozen food sustainable pouch that uses a patent-pending film. The product, named ProActive Recyclable R-2000FT, falls under the company’s ProActive Sustainability family of products, which makes it prequalified for store drop-off recycling through polyethylene recycling streams. 32

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E-COMMERCE FRIENDLY

Perhaps growing alongside the sustainability trend in packaging is the need for packaging that is durable enough, small enough and efficient for the rise of online shopping. “While the pandemic did bring a surge of online shopping, we can expect that e-commerce will stay at similar levels of demand post-pandemic,” said Todd Meussling, FreshLock senior manager, market development, Reynolds Presto Products, Appleton, Wis., and he said store brand packages need to be prepared to ship nontraditional items such as frozen meats, fresh produce and pharmaceuticals. “Packaging must be specifically designed with distribution in mind, offering durable, puncture-resistant protection,” Meussling said, adding that flexible packaging offers the ability to flex and move during shipments as opposed to rigid tube and cardboard boxes. With the importance of speed in e-commerce, Superior Pack Group is a single-source contract packaging company in Harriman, N.Y., that emphasizes speed to market, helping to design packages to meet the needs of e-commerce, and managing the planning and logistics to get it on shelves quickly. “Customers are time constrained, so their shopping experience needs to be fast, easy, convenient, seamless, and safe, in stores or online,” Tupta of Mold-Rite said. He added that nearly a third of packages ordered online are returned due to damage or being a wrong item. Tupta said packaging needs to be taken seriously for e-commerce because it is how the retailer is viewed by the customer. Packaging that is hard to open or unattractive can

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WHAT CVS WANTS Brenda Lord, vice president of private brands and quality assurance, CVS Health

Brenda Lord, vice president of private brands and quality assurance at CVS Health told Store Brands that the retailer is looking to packaging as a way to innovate its store brands. Two examples of where they’re looking: continuous spray bottles for products that otherwise would have messy applications, and packages with pre-measured dosages of OTC remedies to make it easier for customers to take the right amount. Lord said the retailer sees great possibility in reusable packaging, too, and has been working with manufacturer partners to present reusable packaging options and “to push the envelope for all of our store brand product lines to explore additional steps we can take towards achieving even more sustainable packaging goals.” “As a company dedicated to improving people’s lives through innovative and high-quality health offerings, we are continuously working to reduce our environmental and climate-related impact across all areas of business,” she said. “Across our store brands portfolio, we are working to minimize while giving customers information to make smart product decisions and committed to providing customers with accessible and affordable options.”

hurt the retailer, and most important, the packaging needs to be durable. “While a typical product on a store shelf may be handled half a dozen times, a product in the e-commerce channel can be handled up to 30 times before a customer receives it,” he said. “In addition, retailers and manufacturers have to worry about conveyer belts, stacking/compression, roadway vibration, leaking product, and extreme temperatures and humidity.” Lastly, as packaging looks to be more eco-friendly, it can also be used as a vessel to inform shoppers of the food inside. Jacob Foss, co-founder of Agricycle Global, Milwaukee, offers a way for retailers to put a traceability QR code on a store brand package to learn more about a product. For example, the company works with Jali Fruit, where a consumer can scan a dried fruit bag and it tells the story of the women-led cooperative members behind the product, battling poverty in parts of Africa. Albertsons similarly uses its packaging to call out that its Waterfront Bistro brand of seafood is responsibly sourced, and all of the private brand products from Ahold Delhaize USA have clear on-pack Bioengineered Food disclosure messaging. CVS Pharmacy introduced its revamped Live Better by CVS Health line last year, committing 80% of the line to be in recyclable packaging, and the packages themselves tell a story about how certain ingredients were sourced. The company also joined the Sustainable Packaging Coalition’s How2Recycle program so all of its store brand packaging will have instructions on how to properly recycle them. The CVS Health Vitamins and Total Home have the labels and will begin shipping to stores by the end of the year. By 2025, all of the store brands in its portfolio will carry the How2Recycle information. SB www.storebrands.com

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DISPATCHES Vol. 11

Dick’s Dedicates Prime Space to Store Brands Dick’s Sporting Goods expanded its line of own brands recently with the launch of VRST, a men’s athleisure apparel brand, and the retailer is clearly looking to lead with its own brands in-store more than it ever has before. A stop inside a large Dick’s Sporting Goods store in Rockford, Ill., this month revealed main-floor concept shops each dedicated to its store brands — a location in the store normally reserved for such major brands as Nike or Under Armour. In this store, VRST, DSG for both men and women, and the exclusive line Calia by Carrie Underwood each received large, dedicated sections in the center main floor area, screaming out to all shoppers who entered.

Dick’s Sporting Goods has amped up its DSG brand to reach women, men and children.

VRST gets introduced to shoppers. The brand stands for versatility meets style, an athleisure mantra. 34

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April 2021

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School Days for Private Label The private label industry comes together for the first

JUNE 9, 2021 | A VIRTUAL EXPERIENCE On June 9, Store Brands will hold an exclusive all-day virtual event, giving retailers in the private label and store brands industry in-depth data and information, all designed to help them be better merchandisers and marketers. The day will kick off with a keynote address and a webinar on the state of the private label industry. That will be followed by digital seminars on the Emerging/Hot Growth categories; the Health & Beauty Care and Wellness category; and Innovative Consumables. Each virtual seminar will feature key retail executives as well as top level manufacturers, all giving their views on the subject matter and what needs to be done to maximize sales and profits from these areas.

S E M I NAR 1 : State of the Industry Top industry executives and business leaders talk about the state of private label at mass retail, what has happened over the last year and what they expect to take place in the future. S E M I NAR 2 : Emerging/Hot Categories What’s hot now. More importantly, what do retailers need to do to keep the momentum moving in the right direction, postpandemic. S E M I NAR 3: Health & Beauty Care and Wellness Private label is gaining share in the fast-growing HBC and Wellness areas. What do retailers and suppliers need to do to gain more consumer awareness. S E M I NAR 4: Innovative Consumables Consumables sales grow when suppliers come out with new products and marketing programs. We investigate what is happening here across a broad range of consumable categories.

For more information on how to sponsor a category and be on an appropriate panel contact Natalie Filtser | National Sales Manager | 917-690-3245 | nfiltser@ensembleiq.com

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Articles inside

Hot beverages gain ground as consumers seek single-use options