4 Private Label
Tracking top-line trends in store brands
That concern varies, however, based on product type.
According to Nielsen data, private-label penetration
among specific foods can vary from as little as 1% (lard
and liquid coffee) to more than 60% (milk and frozen
More generally, the most popular private-label categories in grocery stores, according to IRI data, are fresh
bread and rolls, fresh eggs, milk, natural cheese and
The categories where private label is most successful
all tend to have certain things in common. Private label
is doing especially well in the so-called “perimeter” categories: fresh produce, baked goods, deli goods, fresh
meat and other products sold along the perimeter of the
supermarket. In addition, they tend to do well in less-processed products that are thought of more as ingredients
than meal solutions. (Of course, those two groups overlap
A report from the Hartman Group called The Future
of Private Label Food suggests that consumers are more
open to private label among less-processed foods precisely because there’s less manufacturer involvement—
which means less product identity.
“The cultural stakes associated with any individual
ingredient purchase are lower than when buying ready-to-eat or value-added prepared foods,” the Hartman
report says. “This is because consumers see themselves as the makers of the end-food experience, not the
Less-processed categories are also the ones where
national brands usually don’t have as much history.
National brands are better established in highly processed
categories that are closer to being meal solutions, such as
chilled lunch kits, frozen pizza and canned soup.
“Overall, the categories in this segment—dominated by
value-added snacking, prepared meals and meal accompaniment items—have a much stronger brand heritage,”
the Hartman report says. “Brands continue to be the standard bearers for quality and authenticity cues.”
Strong product identity, however, can be a double-edged
sword for national brands, because it robs them of the
flexibility they need to adapt to changing tastes and retail
circumstances, says PLMA’s Sharoff.
“The national brands are incapable of responding to
this because their entire life rests on the concept of mass
marketing,” Sharoff says. “You cannot make a product
that’s ‘better’ than an Oreo cookie. How could you do that
without saying to all of the Oreo cookie eaters, ‘Now it’s
time for you to switch to my new organic Oreo cookie?’
That would make no sense. Coca-Cola tried that, and you
saw what happened to Coca-Cola with its reformulation”
as New Coke.
Private brands, on the other hand, are better able to
meet specialized consumer needs, both with individual
products and with entire lines. Segmentation of product
lines into specialties such as super value or premium is
increasingly being used by retailers to target consumers.
For instance, Topco LLC, a retailer-owned private-brand cooperative, has long maintained three basic product tiers. Valu Time is a line of basic commodities with
everyday low prices; Food Club and Simply Done are
mainstream or “national brand equivalent” lines; and
premium brands include Full Circle Market, Pure Harmony and the newly rolled out Culinary Tours.
“Because mainstream offerings appeal to the broadest
set of shoppers, we have more brands that fit within this
description,” says Kina Guyton, Topco’s senior director of
brand marketing and design. However, the premium category is going strong: Pure Harmony and Culinary Tours
were both added in the past 18 months.
Organic is another area where private brands have