Adopt A National Brand Perspective

The key to developing premium store brand products is to approach product development as a consumer-packaged-goods giant would.

The premium tier can be the trickiest tier to develop within a store brand program. Although a copycat approach might work when creating value-tier or national-brand-equivalent products, retailers need to put forth a little more thought and effort when developing premium products that provide true differentiation from the competition.

The key to developing premium private label products is to approach product development as a consumer-packaged-goods giant would, says Fern Bennett Phillips, CEO of Portsmouth, N.H.-based Little Big Farm Foods.

"Innovation drives the premium tier," she explains. "Success here can filter down into lower-tier private label brands, reinforcing the retailer's quality and taste proposition."

These innovative products are those that cannot be found anywhere else, Phillips explains. To create such products, retailers need to partner with manufacturers willing to develop proprietary formulations.

Point of entry

According to Phillips, all-natural foods have become the point of entry for many premium product lines. Consumers are particularly interested in better-for-you premium foods.

Barry Rosenbaum, owner of Hicksville, N.Y.-based Nassau Candy, says the better-for-you boom is playing out strong in the premium candy and confection segment.

"One of the hottest areas of food in general is health and wellness, and that pertains to the gourmet segment of confectionary, as well," he says, pointing to candy and confection ingredients such as nuts, fruit and dark chocolate as being particularly popular.

For premium distilled spirts, ingredient purity is critical, says Earl Hewlette, CEO of North Charleston, S.C.-based Terressentia Corp.

"All types need to be as free of congeners — minor alcohols and free radicals — as possible," he explains. "And you must have a very positive quality-to-price ratio."

On the nonfood side, all-natural and organic products also "continue to remain on consumer radars," notes Dana DeVorzon, CEO of Los Angeles-based Ton Savon.

" [They] now are rapidly expanding far beyond food and beverage to include a wide range of products such as health and beauty care (HBC), clothing and cleaning supplies," she explains.

Loco for local sourcing

Along with natural and organic products, consumers also seek locally sourced goods. Phillips says local-sourcing is especially attractive in fresh premium categories. It's also important with any types of organic products.

And local sourcing doesn't just benefit the customer. It also can help small- to mid-sized regional retailers who lack economies of scale in their purchasing endeavors.

For example, Charleston, S.C.-based Piggly Wiggly Carolina Co. had to rely on smaller local suppliers to develop its Newton Farms brand of premium foods, Robert Masche, senior vice president, supply chain, Piggly Wiggly told Progressive Grocer's Store Brands during a recent retailer-supplier roundtable discussion (which can be viewed at http://bit.ly/rPK3mo).

"That's why we decided to go with the high-end private label for our Newton Farms brand — local and regional companies, small companies that specialize in small batches and make sure the quality is there," he said.

But local sourcing does not always work so well in nonfood categories, DeVorzon notes.

"Food, especially perishables, is often inherently presumed by consumers to be better if locally sourced," she says. "However, sourcing [nonfood] private label products ... from distant or exotic locations — such as French soap or Egyptian cotton — adds a premium that consumers instantly [associate] with high quality and expertise."

A premium package

Speaking of quality, DeVorzon notes that packaging quality must reflect the premium nature of a product.

Otherwise, a retailer's product might not connect with consumers.

"An organic HBC product, for example, would be expected to use eco-friendly packaging — or could lose the trust of the customer," she explains.

However, when it comes to food, eco-friendly packaging has not been a big draw for consumers. But Rosenbaum says his company is seeing strong retailer demand for packaging that allows consumers to see the product before purchasing it.

As for a package's artwork, simple wins the sale, notes Nila Mechali, marketing director with Mama Vida Inc., Baltimore.

"Less is more in many respects — clean and basic ingredient statements, wholesome and healthful nutrition panels," she explains. "Simple and clean packaging seem to reflect a premium product."

A quick-response (QR) code on packaging also helps generate consumer interest.

"Adding QR codes to the package allows any consumer with a smartphone to quickly access more information than can fit on any package," says Brett Cramer, proprietor of The Spice Lab, Fort Lauderdale, Fla. "

And when it comes to store brand marketing, highlighting a product in a recipe within circulars or store magazines is one of the best ways to get a consumer interested in a product, Mechali says.

"Reinforcing [the recipe] with in-store demos also inspires the at-home cook to enthusiastically purchase premium-tiered products," she explains.