Premium Private Label Stars In All Channels of Trade, Large and Small Retailers
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| Safeway Select is one of those broad-based private labels; it covers everything from specialty taco sauces and flavored olive oils to tea and ice cream. |
From the five-store independent operator of Larry's Markets in Bellevue, WA, to the global behemoth of Wal-Mart based in Bentonville, AR, retailers are pushing their premium private label offerings into new specialty categories and new co-branding ventures.
Premium private label used to be a pretty simple matter-in theory, at least. You picked a name that ended in "Choice" or "Select" or "Premium," found unique or better than national brand quality products to put under that name, and-Voilà, the better mousetrap.
But it didn't turn out to be that easy, at least not all the time. The two largest wholesalers in the United States, Supervalu, Eden Prairie, MN, and Fleming Companies. Lewisville, TX, for example, couldn't make a go of Preferred Selection and Marquee Premium.
Some retailers insisted that they didn't really need a premium brand, because their first line private label was already premium. That's the philosophy at H-E-B Grocery, San Antonio, TX, which considers its H-E-B brand to be premium and its far smaller Hill Country Fare line its national brand equivalent.
However, there are several broad-based premium lines with hundreds of items: Sam's American Choice at Wal-Mart, Bentonville, AR; Safeway Select at Safeway Stores, Pleasanton, CA; Private Selection at Kroger, Cincinnati, OH; President's Choice at Loblaw Companies, Toronto, ON; and Master Choice at A&P, Montvale, NJ.
New Premium Contenders
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| Wegmans offers premium private label under two sub-brands: Food You Feel Good About for light and healthy products and Italian Classics for largely imported Italian fare. |
Recently joining the premium private label club is Shaw's Supermarkets, West Bridgewater, MA, which launched its premium Shaw's Signature Brand in June 2001 and which now includes 300 food items in the grocery, bakery, dairy, frozen and meat departments (see cover story in PL July-August 2002 issue.)
Shaw's Signature items represent at least a 5% cost savings to consumers over the national brand-where one exists-even though premium ingredients are used. By comparison, Shaw's Own Brand products generally offer a 10 to 20% savings over the national brands.
Also, getting ready to climb onto the premium private label bandwagon is Raley's Supermarkets, West Sacramento, CA, which plans to launch a new tier of premium products to be sold under the Nob Hill Trading Company brand, according to Marketing Management Inc., Fort Worth, TX.
MMI is assisting Raley's with product development, label design, and in-store marketing for the new line which will include premium cookies, condiments, sauces and syrups that should begin reaching store shelves sometime early next year. At least one category, coffee, is already in the stores. (More details to follow in next issue of Private Label.)
How Big is Big Enough?
Some premium lines with characteristic names, like Premium Select at Price Chopper, Schenectady, NY, are relatively limited in scope. Too few SKUs can be a handicap, however; that was one reason Western Family Foods, Tigard, OR, decided recently to drop its Distinct Selection line, while folding some items back into the Western Family brand.
Still, some premium lines have flourished even without retailers feeling obligated to extend them to every category in the store. Examples include Weis Choice at Weis Markets, Sunbury, PA, Grand Selections at HyVee, West Des Moines, IA; Prestige at Winn-Dixie, Jacksonville, FL, and Pathmark Preferred at Pathmark, Woodbridge, NJ..
While premium private label can mean a whole lot, it can also mean a whole little. At Ahold USA, Chantilly, VA, the Sensational brand, which used to cover dozens of categories, is now limited to soft drinks, sparkling waters and premium pet foods. Albertson's, Boise, ID, has never taken it's A+ brand beyond soft drinks and sparkling waters.
Finding Ways to Stand Out
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| Kirkland Signature products from Costco Wholesale include co-branded cereal, candy and coffee. |
Every retailer wants to make an impression on consumers, however, and even the smallest are getting into the act. Larry's Markets, Bellevue, WA, which has only five outlets in the Seattle area and carries Western Family as its primary private label, has nevertheless created distinctive products under the Larry's Market brand such as premium mayonnaise, fresh guacamole, chipotle & chicken pizza and Smoky Cattle Country BBQ Sauce.
In the Midwest, Heinen's Fine Foods, Cleveland, OH, is another independent operator testing the premium private label waters with its new Two Brothers brand which presently includes roasted coffee-roasted in-store-olive oil, barbecue sauce, teriyaki sauce, and an all-natural seasoning blend.
"Five items out of 38,000 SKUs is certainly not much," admits Tom Heinen. "But conceptually, do we want to develop this line further? Yes, conceptually we are going to continue to look for items that meet the criteria for this brand." He is co-president of the company sharing the title and job with his brother Jeffrey-hence the name Two Brothers.
According to Heinen, candidates for this premium line must meet three criteria: 1. be exclusive to the market, 2. offer high quality, and 3. represent unique products.
Specialty private labels, which can be considered more or less premium, are becoming more common. Wegmans, Rochester, NY, was the pioneer here, with healthy foods under the Food You Feel Good About brand and mostly imported Italian fare under the Italian Classics umbrella - the latter is the obvious inspiration for La Cucina d'Italia, a sub-brand of World Classics from Topco Associates, Skokie, IL.
Spotting Premium Trends
One of the hottest recent trends is organic and/or natural foods brands and sub-brands. Topco has its Full Circle, Safeway offers its Safeway Select Organic and Loblaw has its President's Choice Organic (or, in French-speaking areas, La Choix du Président Biologique). Hannaford Bros., Scarborough, ME, may be easing into this with soy milk under the Nature's Place sub-brand. Whatever else can be said of organic lines, they command premium prices.
Another hot trend is premium private labels in non-foods, especially cosmetics and HBC. Duane Reade, Long Island City, NY, a local drug chain that never had any premium private label before, now has a cosmetic line called Apt.5. Fred Meyer, Portland, OR, recently debuted a similar line called Curfew Colors. Albertson's, through its drug store division in Scottsdale, AZ, has come up with a bath and body line called Identity. CVS, Woonsocket, RI, has just expanded its Essence of Beauty line into hair care.
Prestige brands in other non-foods can be found a Target Stores, Minneapolis, MN, such as Michael Graves designer housewares and Mossimo fashions, or Martha Stewart domestics and housewares at Kmart, Troy, MI. Target's Mossimo now includes bath and body care items as well as trendy apparel.
Touching All the Bases
Harris-Teeter, Matthews, NC, is covering the bases in food with four premium/specialty labels. Most recently, the Naturals line of organic products was introduced to join Premier Selecfion and H.T. Traders in dry groceries and Hunter Farms in dairy products.
Although they each do their own thing, there is also notable overlap among the three dry grocery brands. In 64-ounce juices, for example, there are white grape juice, berry blend and apple juice under the Naturals brand; Premier Selection also includes apple juice, plus 100% cranberry juice and cranberry apple, raspberry and grape blends.
In cookies, the H.T. Traders brand offers Milk Chocolate Macadamia, Peanut Butter with Milk Chocolate, Milk Chocolate Toffee, White Chocolate Macadamia, Chocolate Chip and Butter Pecan with Cinnamon, Oats & Raisins. Displayed near them are Premier Selection Truly Chocolate Chip, Triple Chocolate Chip, Bursting Raisins, Butter Pecan, Lemon Center, Raspberry Center and Lemon Luxuries. Both lines were two for $5 recently.
Rice and related items in 32 to 36-ounce square plastic jars include both H.T. Traders and Naturals items. The former include wild rice blend, jasmine rice and couscous, all at $3.99. In the latter brand are basmati and basmati brown rices at $4.49, but recently featured at $3.99 for VIC (Very Important Customer) card holders.
Where they don't overlap, the division between Premier Selection and H.T. Traders is the standard versus the exotic-granola bars and fruit and grain bars on one hand; on the other, artichoke hearts, red and green chili dipping sauces, Alfredo pesto and so on. Although the line began with imports, especially Italian pasta and pasta sauces, it includes domestic fare as well. Naturals covers anything organic, from raisins and raisin brand (also represented in Premier Selection) to white and blue tortilla chips. Hunter Farms covers things like cottage cheese and sour cream as well as milk and ice cream.
Adding More Bases
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| Making scents out of premium private label. Top row: CVS's Essence of Beauty, Fred Meyer's Curfew Colors, Rite Aid's Pure and Rite Aid's Elsewhere. Bottom row: Yet another Rite Aid brand, Spa Swami, Wal-Mart's Simply Basic, Albertson's Petite Potions, Albertson's Identity, Target's Sonia Kashuk Scent, and Shopko's Bath, Body, Etc. |
Established premium lines aren't resting on their laurels by any means. One current area of expansion is in fresh foods, Safeway, which introduced Safeway Select cold cuts under the Primo Taglio sub-brand at service delis a few years ago is now selling them in shingle packs as well-while also making them part of a Signature line of service deli sandwiches like Hail Caesar and the Chicago South Sider on fresh-baked Safeway Select Artisan breads.
Safeway Select Artisan dessert items were rolled out earlier this year, and other specialty items of note that have popped up include green and red taco sauces, orange and lemon-flavored olive oils, blueberry and chocolate cheesecakes and refrigerated salad dressings like Blue Cheese and Jalapeño Ranch. And that's not counting organic cereals and vegetables, or a host of frozen entrees under the Gourmet Club sub-brand (see frozen food story this issue).
Kroger keeps adding stuff to its Private Selection line, although the total count is probably still only half that for Safeway Select. As with Safeway, a lot of the activity is in frozen entrees, but other items include shingle-pack cheeses (Muenster, provolone, pepper jack, colby jack), sun-dried tomatoes, stuffed olives, whole roasted peppers, butterscotch and chocolate hot fudge sauces, sparkling cider and grape juice, and specialty mustards like Smoky Garlic and Jalapeño Gold.
Bread and butter corn-mixed white and red kernels-is a rather odd innovation under the Food You Feel Good About sub-brand at Wegmans. It's also one of the chain's Integrated Pest Management (IPM) products, which are sort of halfway between standard and organic. At the other end of the country, Quality Food Centers, Bellevue, WA, is still adding stuff to its Cucina! Cucina! line, even though it's part of Kroger now and carries Private Selection. Latest additions include Gorgonzola and Raspberry Balsamic Vinaigrettes, Balsamic Bread Dipper and fat-free House Italian Dressing.
Publix Supermarkets, Lakeland, FL offers its new the Publix Premium brand on ice-that is in the freezer case on ice cream and in the refrigerator case on meat.
Five different lines of ice cream-standard, children's, light, low-fat and homemade-come under the Publix Premium banner in the freezer section, and the chain even offers private label thermal insulated bags to carry them home.
Even the standard ice creams are far from standard, embracing branded tie-ins such as Butterfinger and off-the-wall items like Jack Rabbit Fudge as well as traditional ones like French vanilla and mint chocolate chip. Targeted at children are Peanut Butter & Jelly, Cotton Candy and others, while light ice creams include tiramisu and Coffee Almond Fudge and low-fat embraces Black Cherry, Heath Bar and more. Homemade flavors range from Chocolate Chip to Key Lime, Apple Pie à La Mode and Banana Pudding.
Homemade ice creams all come on round half gallons at $3,99, positioned against Edy's at $4.99. The others come on ovoid half gallons, all at $3.79 against $4.80 for Breyer's, except for low-fat, which are $2.03. A prominent marketing feature is new "Limited Edition" flavors such Chocolate Black Raspberry Passion in standard ice cream and Orange Pineapple in light.
Publix Premium Certified Beef is the other anchor of the chain's premium brand, which is supported at point of sale by special fixtures and item separators. USDA Choice items range from shoulder roasts to strip steaks to back ribs, with typical prices ranging from $1.99 a pound for bottom round roast to $5.99 for rib eye steak.
At a Gainesville, FL, outlet that used to be a Winn-Dixie ("The Beef People"), Publix made a show of introducing "our new brand of beef," and singled out one of the items in the line of "Standing Rib Roast, the crowning example of Publix Premium Certified Beef, consistently tender with an exceptional balance of leanness and flavor."
Club Store Premium Lines
By pedigree, the wholesale clubs are national brand heavy-weights concentrating on generating high volume from a limited number of branded SKUs. However, starting in 1997 club stores led by Costco Wholesale Corp., Issaquah, WA., with the launch of Kirkland Signature, began a major drive to supplement its national brand offering with a better margin premium private label range. Kirkland Signature brand products now include 400 items and represent 10% of overall product mix. This premium private label range is noteworthy for two reasons:
First, it reaches across several food and nonfood categories such as dry grocery, health and beauty care, automotive, luggage, clothing and major appliances.
Second, several products in the Kirkland Signature range are co-branded with prominent national brand names such as Starbucks on the Kirkland Signature house blend coffee, Jelly Belly, Hershey, and Nestle on candy, Quaker on cereal, and Whirlpool on major appliances.
Following Costco's lead, Sam's Club, Bentonville, AR, in 1998 launched its premium private label line called Member's Mark which now includes more than 150 items covering a broad range of products; and BJ's Wholesale, Natick, MA, joined the premium private label club in 1999 with the launch of Berkley & Jensen which includes about 200 items in food, health and beauty care, and household products.
Smart & Final, City of Commerce, CA, pioneered the cash-and-carry wholesale grocery business in Los Angeles in 1923. However, its roots in the grocery business go back to 1871 and by the turn of the century, this grocer had already introduced its first private label item-canned tomatoes-under its Iris brand which began "a tradition of artistically designed labels to emphasize the cans' high quality contents," says Smart & Final on its corporate website.
This cash-and-carry operator offers its customers two premium labels:
1. Smart & Final Iris-"Guaranteed to be as good as, or better than, the national brand products. The competitive prices on these quality-driven items make Smart & Final Brand an exceptional value."
2. Smart & Final Premium-These products "offer the highest quality available. When recipes demand the very best, the choice is Smart & Final Premium."
Smart & Final also offers its customers seven specialty private label lines which it refers to as Signature Brands. They include: La Romanella Italian food, Montecito authentic Hispanic products, Snack'rs snack food products, Tradewinds spices and blended seasonings, First Street Deli deli-style products, Rushing Springs selection of bottled water, and Ambiance coffee and hot beverage program.
Premium PL Beauty Care
Shopper's Drug Mart, North York, ON, has been in the forefront of North American drug store operators that are aggressively developing premium private label beauty care lines. Introduced in the early 1990s, its Rialto Natural label line has grown to include more than 300 items.
The newest addition to the Rialto line is the Caribbean Collection which is designed to capture the "Fun in the Sun." According to the company, "We have taken your favourite drinks of the Caribbean and put them in a Body Wash, Body Lotion & a Super Hydrating Body Sorbet." The line comes in four tropical fragrances: piña colada, margarita, tequila sunrise, and strawberry daiquiri.
The Rialto line encompasses: bath and body, aromatherapy, deodorant soaps, bath accessories, home fragrances and personal fragrances. The Caribbean Collection also comes in "Two for the Road" gift sets that contain a body wash, body lotion, and mesh sponge in a convenient clear carry bag.
The past year has seen a bevy of growth for a new private label arena: cosmetics. Due to cosmetics' nature, nothing short of the highest caliber of products would even be able to survive, and only then if they were marketed exceptionally well.
Duane Reade unveiled its Apt. 5 cosmetics, with lipstick, nail poiish, eteliners and the rest, just a few months ago. This is especially notable because Duane Reade is a relatively small drug chain, with just over 200 stores in the New York metro area.
Target is one of the pioneers of private label cosmetics, although its Sonia Kashuk brand is just over two years old. Target has expanded Sonia into perfumes, with a three-fragrance launch of Sonia Kashuk Scent eau de toilettes. A promotional tool for potential customers is a free envelope with samples of the three fragrances, like scented ads in magazines.
Brand expansion is being used by JCPenney, Plano, TX, to extend its Mixit brand of women's clothing into cosmetics. Mixit's cosmetics covers the basics from lipstick to nail polish, and have had name recognition from most of its female shoppers from the first day they hit the shelves.
Fred Meyer's Curfew Colors line is aiming at the younger cosmetic buyer. Wal-Mart has a similar teenybopper line with its No Boundaries cosmetics ("girl tested, boy approved" is its slogan), and Albertson's also joins the fold with its glitter-heavy Petite Potions through its drug store division-the same division that puts out an adult version, Identity, which covers some cosmetics as well as premium bath and body products.
Premium bath and body lines are almost becoming standard items at larger stores, both drug and otherwise. Rite Aid, Camp Hill, PA, has four all by itself: Pure, Elsewhere, its newest line Spa Swami, and its children's line Soaked in Tickles (which expand a few months ago to include Soaked in Giggles with a hippo mascot, and Soaked in Cuddles with a teddy bear mascot).
