Popularity of private label grows

by Monica Watrous
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Couple choosing meat in deli section of grocery store
Deli is one of the fastest growing categories in private label.

ROSEMONT, Ill. — Supermarket shoppers are seeking more fresh and convenient options, and private label manufacturers are poised to deliver. Among the fastest growing categories at the Private Label Manufacturers Association’s annual trade show are deli, dairy and fresh bakery, offering a greater opportunity for grocery retailers to stand out in the sections with a stronger store brand selection. 

Brian Sharoff, P.L.M.A.
Brian Sharoff, president of the PLMA

“Consumers are making it clear they want convenience and speed in meal preparation, and this is creating highly profitable opportunities for retailers to respond with their own brands,” said Brian Sharoff, president of the PLMA.

More than half of consumers are buying more private label products today than they did five years ago, according to a recent study commissioned by the PLMA and conducted by Surveylab, which analyzed the behaviors of 800 primary grocery shoppers in the United States. Furthermore, 44 percent currently shop store brands frequently or always. In the deli, dairy and bakery departments, the figure skews higher, to 47 percent.

Few major national brands have dominance in these sections, the PLMA said, and the majority of survey respondents indicated store brands were better or equal to national brands in the deli (71 percent), dairy section (86 percent) and bakery (80 percent).

Survey participants indicated preferences for purchasing perishables. Convenience is the top driver in deli, with 40 percent of respondents more likely to choose time-saving items. Also popular among shoppers in the deli are restaurant-quality products and heart-healthy or reduced sodium items.

Freshness and health are key attributes in the bakery section, with nearly a third of consumers favoring items baked on-site and the same number of shoppers seeking products containing “less fructose, sugar, corn syrup and bad fats.” For a fourth of respondents, more nutrition information, greater portion variety and more emphasis on healthy ingredients are also important. In the dairy department, consumers desire more variety, particularly in cheeses.

Product innovation highlighted at the PLMA 2015 Private Label Trade Show, held Nov. 15-17 in Rosemont, presented opportunities for store brand expansion in the deli, dairy and bakery departments.

“We are seeing more companies in these categories who are interested in exhibiting than ever before,” Sharoff said. “One thing we have learned from past shows is that when companies want to exhibit, it usually means growth in the categories at retail.”

Woman choosing bread in bakery section of grocery store
Freshness and health are key attributes in the bakery section, with nearly a third of consumers favoring items baked on-site.

Among hundreds of food exhibitors at the show, many offered solutions for grocery stores seeking to improve the presentation and quality of fresh offerings. Specialty Bakers LLC, Marysville, Pa., ships partially baked and thaw-and-serve pies and pastries, enabling retailers to create a dessert display without the need for an on-site chef or master baker.

For the deli case, Handmade Real Foods, Vernon, Calif., provides the supplies required to finish a restaurant-quality prepared dish, with offerings spanning American, Italian, Mexican and Asian cuisines.

Private label players are tapping into dairy trends with innovations in the growing segments of ethnic yogurts, artisanal cheeses and dairy alternatives. A São Paulo, Brazil-based company called Ducoco Food and Beverages S.A. offers coconut milk made by grinding meat from coconuts. The product is vegan-friendly and shelf-stable.

“The PLMA survey found that there is a desire for greater convenience and a bigger focus on health and wellness,” said Bob Vosburgh, news director for the PLMA. “For store brands, this could mean more ready-to-eat foods in the deli case or foods that they can customize to their own tastes at home. In dairy, expansion into milk substitutes made from nuts or seeds and cage-free or organic egg products. In bakery, there’s growing demand for a wider variety of portion sizes and products with less bad fats or sugars or (products that) are gluten-free.”

Perishables departments contribute to 30 percent of total store sales, according to Nielsen data, and basket sizes are up to two times larger when they include fresh food items, Vosburgh said. Furthermore, the deli, dairy and bakery sections represent a key point of differentiation for supermarkets in an increasingly competitive retail marketplace.

“Consumers may trust on-line giants like Amazon to supply them with mass market products like paper goods, diapers and household cleaners, but they’re not quite ready to let other channels pick their deli salads or just-baked garlic bread,” Vosburgh said. “And that’s where the in-store experience and a strong store brand presence in the fresh departments can make all the difference.”

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