Hot Category: Spices and Seasonings

Seasonings Sales Heat Up

It appears that COVID-19 is adding some excitement to the spices and seasonings category as consumers stay home more and seek out just about anything to make a meal more interesting and tasty.

The result is a nearly 40% increase in category sales with private label items getting a big share of that growth as price points and product diff erentiation play larger roles. “Consumers have been home cooking and experimenting with fl avors more than ever, and this has been supported by social media, cooking programs on TV and the innovative online ordering of ‘ready to make’ dinner solutions,” said Gerhard Martin, executive director of Cape Foods, a South African private label supplier. “We believe that the home cooking experience will be part of the new normal and will ensure that the sales of spice and seasonings will remain at these higher levels.”

Martin added that the growth in plant-based food off erings is adding to the demand for innovative seasonings and salts, and this will drive further growth. Plus, he said, consumers are becoming more health conscious, and the high mineral content of pure sea salt and Himalayan salt is becoming more and more important to them.

So how does the industry keep the momentum going in the right direction? Martin said that now, more than ever, consumers are looking for value — and retailers have been doing a stunning job in securing quality alternatives at great prices. “Private brands now cover the basics such as salts and pepper, and an increasing innovative range of seasonings,” he said. “There is no compromise on quality, but pricing is better because the consumer is not paying a premium for the traditional brand leader’s product.” consumers bought a private label seasoning or spice product, just behind 72 million for Lawry’s and 160.5 million consumers for McCormick & Co.

— STATISTA

The global spices and seasonings market is expected to grow from about $16 billion in 2018 to $23 billion in 2026. — NATIONAL SEASONING MANUFACTURERS ASSOCIATION

Total herbs, spices, seasonings and extracts category sales increased by

during the 36-week pandemic period ended Nov. 7 compared to the same time last year.

— NIELSEN

Consumption of spices, seasonings, marinades and rubs was up more than

for the month of July. — NPD GROUP

Global seasoning and spices registered as a $13.8 billion category in 2019.

THE BRANDSWITCHING OPPORTUNITY

Jean Ryan, senior director, brand strategy and design, Daymon

The COVID-19 pandemic has underscored something that more and more shoppers learn every day: the benefit of private brands. At the height of the pandemic, units flew off shelves as consumers stocked up for the unknown future ahead. This contributed to out-of-stocks across all categories, forcing consumers to substitute their typical preferences with available options. In addition, with the pandemic affecting nearly one-third of U.S. families financially, income constraints presented further challenges for shoppers. These conditions presented the perfect opportunity for private brand trial — traditionally one of the largest roadblocks towards growth and loyalty for private brands. With shoppers turning to retailers to provide cost-effective and alternative solutions, private brand growth outpaced national brands with 19%, compared with 17% national brand growth during this time. In fact, 70% of shoppers reported purchasing a different brand than they had preCOVID, with nearly 30% reporting positive experiences from brand switching and plan to permanently commit. Our research shows that once private brand trial is initiated, consumers will continue to shop at specific retailers for their private brand offerings.

However, consumer affinity towards private brands is not a new trend. Even before the pandemic, only 6% of shoppers were exclusively purchasing national brands. Our research shows private brands were already well positioned for growth, as 86% of shoppers viewed private brand quality as equal to or better than the national brand. The pandemic accelerated this growth with increased trial, providing room for retailers to gain loyal shoppers. Retailers have the opportunity to capitalize on this increase in trial by encouraging consumers to continue shopping within the portfolio. In addition to educating consumers on the value proposition and assortments within private brand, there are key consumer needs driven by the pandemic that present crucial areas for retailers to showcase private brands as solutions. Three of these key areas are continuing to innovate against consumer needs, providing meal inspiration and education, and establishing a borderless online to in-store experience. First, retailers should continue to innovate within their private brands to encourage additional trial within the program. Even with the increased focus on value, our research shows that consumers are still looking for differentiated solutions that match their lifestyle, such as within health and wellness. For example, 80% of consumers are currently focusing on what they consume as part of taking care of themselves, with 77% looking to lead a healthier life than pre-pandemic. Retailers should prioritize continued new product development against these and other consumer needs, and focus on educating shoppers via merchandising, marketing, and promotions about these new items. This will allow shoppers to branch out to new products in your portfolio while accentuating the solutions that private brands offer beyond savings. Another way to proactively reach consumers is by providing meal inspiration that leads with private brand offerings. Initial dining out restrictions from the pandemic has altered eating behavior, with consumers eating at home more frequently and nearly 6 in 10 expecting to continue this trend into the future, especially as restaurant restrictions persist. The increase of home cooking has consumers seeking meal inspiration to keep mealtimes exciting, as well as looking for education on how to expand their repertoire. Retailers should also enhance meal solutions available to purchase by addressing various skill sets; combinations of ready-to-eat, ready-to-heat, and meal ingredients can help consumers integrate new items and ideas even if they are first-time cooks. As the pandemic continues, retailers must consider how to expand this inspiration and engagement to stay continuously relevant, such as through online cooking classes, expert partnerships, and incorporation of seasonal needs. Finally, concerns over health safety and maintaining social distancing measures has consumers shopping in less stores in favor of e-commerce purchasing. In fact, our consumer research among private brand buyers shows that 7 in 10 will continue the increase of online purchasing. Given this shift to online, retailers should ensure their private brands are represented and elevated via this platform the same way they would be positioned as solutions in-store. SB

3 KEYS TO KEEPING PRIVATE LABEL SUPPLIERS COMPETITIVE

Kevin Cyr, director of retail sales, Catania Oils

In August, Daymon released its Private Brand Intelligence Report, which found that 9 out of 10 consumers trust private brands as much as they do national brands.

Those statistics are not surprising based on the trends we have been monitoring in our own business — Catania Oils — a leading processor and packager of plant-based oils in the United States and provides private label olive and vegetable oils to retailers across the country.

Consumer behavior has been significantly altered by the pandemic, and it’s hard to predict whether that behavior is temporary or permanent. With online shopping increasing, and customers focused on more price-conscious options, private label brands are emerging the winner in this race for customer brand loyalty. However, building and maintaining that loyalty creates tremendous pressure on private labelers to deliver an equal or higher quality product than their national counterparts.

There are other hurdles facing private brands too, like competing for shelf space with national brands — whose penetration rates are higher than their private brand competitors — and bearing full responsibility for all marketing and advertising costs to bolster brand awareness as a trade-off for receiving dead net pricing from suppliers.

How can suppliers help private label brands succeed in this new environment? Here are three important factors: Diversification: Because our business model incorporates three distinct divisions — bulk, retail and food service, we have the ability to fulfill orders that other suppliers, for example, those who focused solely on retail businesses, can’t. This diversification can be a key differentiator for store brand suppliers. During the pandemic, for example, the slowdown we experienced in our food service business was offset by the increased demand among our retailers. As customers began quarantining and cooking every meal at home, they began hoarding products — resulting in empty supermarket shelves. National brands that set their budgets for the year at the end of 2019, could not possibly have anticipated what was to come in 2020, and as a result, could not keep up with the growing demand for specific products and struggled to fill the growing number of orders.

Flexibility: One of the benefits of diversification is the ability to be flexible with customers whose orders may have changed dramatically from pandemic shopping. While deliveries were slow to move on the food service side of our business, and payment restructuring discussions were happening, it afforded us the opportunity to extend greater flexibility to the retail side of the business, which required additional shipments or to break up the order by the truckload with several different oil products. Like other suppliers, we had more product on hand but could be flexible and handle custom orders based on the new level of consumption.

One-stop Shop: Make it easy for retailers. One way Catania can offer dead net pricing to customers is through an investment in a printing company that works directly with us to help our customers design labels for their products or modify their packaging as needed. We have also invested in vertical integration of packaging and blow molding to create a quality bottle that’s more attractive than those offered by standard oil packaging. Packaging innovation can be a major factor in staying ahead of national brands. For retailers that are concerned about lowering the carbon footprint, we also developed a “Bag in Box” technology which is made of 100% recyclable cardboard and contains an airtight bag to keep the oil fresher longer. But more than innovation, the key is being able to fulfill the entire process in one place. It ensures a smoother process for the retailer versus some national competitors.

Private brands have come a long way from the stigma once associated with ’80s generic brands (remember the stark white box with black lettering). We concur with Daymon that private brands are growing — and suppliers that offer flexibility, diversification and a one-stop-shop will see their business, like ours, double by 40% to 50% compared with 20% to 30% in prior years. SB