For many Private Brand has traditionally been defined by grocers and the world of packaged goods, so much so that retailers rarely agree on what to count in their Private Brand sales and penetration reporting. Most often fresh produce and meats as well as variable weight products are often excluded from their Private Brand numbers. This article from the trade magazine The Packer examines the growth of Private Brand in the produce department.
Consumers aren’t eating less during the recession, but they are generally spending less at retail for the same amount.
So the rise of private labels in the produce department shouldn’t surprise us.
The United Fresh Foundation’s Fresh Facts third quarter 2010 report finds that private-label produce accounted for 10% of sales in the year ending Sept. 25, up slightly from a year ago but up significantly from a 6.8% share in 2005.
Retailers have several benefits of private label: It’s generally cheaper for them and consumers; investors and analysts see it as a sign of financial strength; and it enhances the retail chain’s name and brand.
While suppliers see the weakening of their brand when retail chains move to private label, the suppliers still have the business, and it means they can invest their money in things other than marketing their brand.
As much as companies in the produce industry have tried to create brand awareness — without the advertising budgets of the Pepsis, Mars and Kellogg’s of the world — very few fruit and vegetable brands resonate with consumers.
The report showed about 90% of private-label produce was in vegetables, with packaged salads making up 20% of store brand vegetable sales. Bagged potatoes and carrots also make up a sizeable percentage.
There’s a clear opportunity for fruit that goes in bags, like apples, oranges or pears, to sell in bulk under private label.
Source: The Packer