Private label grocery products are bigger and better than ever. Two recent indicators help prove it. Florida-based Publix has gotten a lot of attention recently for its expansive line of store brands. The products themselves, (from ice cream to aluminum foil), are great, but it's the package graphics that has really caught the attention of people who notice these things. Because of its unique packaging, Publix was recently named "in house design group of the year" by a design trade magazine.
Meanwhile, at the FMI show last month, private label products were part of the mix for the first time, as grocery chain buyers walked the floor to see the latest offerings from companies like Kraft Foods, Frito-Lay, and Tyson. A morning session at the show focused on private label category management, and a subsequent article in The Chicago Tribune looked at how private label has evolved since the low-cost store brands and white and yellow generic products of the 70s were the norm:
- Generics made up 1% to 2% of grocery store products 30 years ago, but now account for as much as 17%.
- Total sales have grown to more than $105 billion and could reach $130 billion by 2010.
- U.S. sales of store brands have experienced more than twice the growth rate (5%) of national brands (2%) during the past five years.
That's the bigger, now for the betterAnyone in the food business knows that today's private label offerings are not your father's store brands. Yes, private label can still offer low-cost value for the consumer who needs to pinch pennies, but private label also hangs out in other neighborhoods. The Tribune article noted that discount chain Aldi Foods fills 90% of its shelf space with private label products, while ultra-hip sister-company Trader Joe's offers 70% private label.
The yogurt and craft beer at Trader Joe's, (along with products in the ‘O' organic line at Safeway, for example) are not cheap knock-offs but unique products whose quality matches or exceed that of national competitors. Gone is the stigma attached to buying store brands.
The Publix story is a great example. Publix does not want its products to blend with those from General Mills and Proctor and Gamble, it wants them to stand out.
"Publix products have their own look: clean, clever and-with lots of white space and simple but crisp typography-vaguely upscale," The New York Times Magazine said in a recent article.
The magazine quoted a Publix creative director who says this has happened in other categories with companies like the Gap and Pottery Barn building their own brand trust and loyalty. Today's consumer will decide for herself if a product offers quality, and in the food industry, there are ingredient and nutrition labels to help.