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Savvy shoppers maintain ‘private’ eye

By Jennifer Zegler
July 18, 2012

Private label continues to be a top seller in bottled water, bagged tea, ground coffee, juice and dairy alternatives, according to sales data from Chicago-based market research firm SymphonyIRI Group cited in this month’s State of the Industry 2012 report.

Across consumer packaged goods categories, private brands now account for about 18 percent of dollar sales, Nielsen Senior Vice President Todd Hale told attendees at Beverage Industry sister publication PLBuyer’s “Private Label: The Next Generation” conference in Chicago last month. Nielsen estimates a

12 percent growth rate for private label goods in the industry in the last two years, which is more than double that of branded items, Hale said.

Even the notoriously brand-oriented categories have seen the effects from consumers’ embrace of private labels. A survey by Perception Research Services (PRS), Fort Lee, N.J., found that carbonated and non-carbonated soft drinks were among the largest gainers in private label penetration.

The survey also found that 51 percent of consumers feel smart and/or savvy when they buy private label products. Private label has shaken the tradition of being solely a budget-conscious option because many products now offer both cost savings and product quality across many categories, said Jonathan Asher, executive vice president of PRS, in a statement.

However, not every source sees private label persisting. The NPD Group, Port Washington, N.Y., found that although more households are buying private label, consumers’ satisfaction with private label food and beverage products declined from 32 percent in 2009 to 24 percent in 2012, according to its report, “The Evolution of Private Label.”

At PLBuyer’s conference, Safeway Senior Vice President of Consumer Brands Joe Ennen encouraged retailers to strive to create products that do more and perform as well, or better, than national brand competitors.

“You can’t be better if you’re not different,” Safeway’s Ennen said at the PLBuyer event. “How can you be better if you’re the same? … It’s not like [consumers] walk up to the shelf and go, ‘Shocking! The store brand’s lower in price!’ They expect that. They get it. Our shoppers get it. They know they can save money; that’s not new news. What are you bringing them that’s new and interesting?”

James Tonkin, principal at HealthyBrandBuilders, Scottsdale, Ariz., noted a “tremendous opportunity for private label in sports nutrition,” during Beverage Industry’s June webinar on “Immunity: The Next Big Thing in Sports Nutrition.” Marketers have the opportunity to release products in the traditionally brand-centric category with formulations that target athletes based on gender, age, demographic and psychographic segments, Tonkin said.

In April, GNC stores in Arizona and Nevada began carrying its own GNC Live Well line of 14 nutritional, ready-to-drink sports beverages developed in partnership with Shadow Beverages. The beverages are divided into XP for dedicated athletes and Active for casual athletes.

KEYWORDS: consumer insights private label

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Jennifer Zegler is a contributor for Beverage Industry magazine.

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