Honey and Syrup report: A sweet opportunity
During its lifetime, the average bee produces just one-quarter of a tablespoon of honey. Honey — along with maple syrup — is harvested manually in a labor-intensive process. And syrup is only produced in one corner of North America, with each tree yielding about 20 gallons of sap per season. Roughly 40 gallons are needed to produce one gallon of finished product, which sells for around $60 per gallon.
These scenarios make maple syrup and honey two of the most expensive center store products. Their prices become even heftier if they are natural, organic or part of a special formulation.
But consumers’ growing interest in natural and organic foods, coupled with mainstream retailers’ launch of private label natural/organic lines, has paved the way for traditional chains to increase proprietary offerings in such premium segments as honey and maple syrup. Prices normally are about 20% to 30% less than for branded goods. As a result, natural and organic merchandise is attracting both specialty store customers and health-conscious consumers who cannot afford the higher prices of chains like Whole Foods.
According to officials at retail consulting firm Daymon, roughly 20% of private label sales growth now is coming from premium, trendy and organic items. And the total organic food market continues growing. The Organic Trade Organization reported that 2018 organic food sales hit $47.9 billion, an increase of 5.9% — more than double the growth rate of the general food market.
“New business is being driven by center store organics,” said Arnold Coombs, executive director of sales and marketing at Acworth, N.H.-based Bascom Maple Farms, which produces private label organic maple syrup. “While most big retailers have a private label organic line, they’re looking at what else they can do. Thirty years ago, there were two SKUs of maple syrup on the shelf. Now, there’s different brands, sizes and flavors in both branded and private label.”
Target, for example, is offering organic maple syrup under its Simply Balanced brand at $7.69 per 12 oz. And H-E-B Or- ganics features a 12-oz. private label maple syrup for $8.98. On the branded side, Whole Foods sells a 12.7-oz. bottle of Doc’s Organic Maple Syrup for $15.99, while Kroger features Shady Maple Farms Organic Maple syrup at $14.75 for the same package size.
The price differential in honey is similar. A 16-oz. jar of Target’s Simply Balanced Raw Organic Honey is just $7.49. But Target’s price for a 16 oz.-bottle of Nature’s Nate Pure Raw Unfiltered honey is $10.29.
Growth of premium products is good news for the slow- turning categories, in which performance of both branded and traditional private label has been flat. According to Nielsen and the Private Label Manufacturers Association data, retail sales of all breakfast syrups increased just 0.4% to $703 million during the 52 weeks ended Dec. 28. Sales of private label breakfast syrups grew 2.4% to $249 million, representing 35% of total category sales. Total honey sales declined 1.5% to $619 million. Private label honey, which represented 47% of category sales, fell 1.7% to $291 million.
Slow category expansion
Traditionally, private label syrup and honey has revolved around processed products. While many retailers launched proprietary organic offerings over the past decade or so, growth of private label organics and other high-end segments of honey and syrup began just five years ago. “Processed honey still represents a significant portion of the category, said Tony Landeretti, CEO of Rice’s Lucky Clover Honey in Greeley, Colo. “But consumers are buying more raw and organic honey. Raw is the smallest part of the category, but it’s growing the fastest in both private label and branded. Some retailers are on the front end of the curve in that shift.”
Consumers’ expectations of private label have changed, opening the door for more premium offerings — not just opening price points. “While private label’s number one mission is to save consumers money, consumers expect more than basic items,” said Stephane Vachon, principal sales director of Citadelle, a Canadian supplier of honey and maple syrup. “Organic was a fringe item in private label; now it’s moved into the mainstream.”
Organics have strong appeal among young adults, with about 20% of Millennials and Gen Zers saying they buy organic food “all the time” versus 8% of Gen Xers and 7% of Boomers, indicated a study by organic food supplier Earthbound Farms.
Young adults value food transparency. “Over the past 10 years or so, the importance of a short, clean ingredients list has accelerated,” Landretti said. “Younger consumers are very interested in cause marketing. We support our local American bee keepers, which is a point of differentiation in food transparency.”
Consumers’ desire to reduce processed sugar consumption is also driving the shift into more premium private label honeys and syrups. “With the war on processed sugar, maple and honey are great alternatives,” said Vachon. “More consumers are recognizing that they’re healthier. Maple tastes good in everything you want to sweeten.”
In a survey by food search engine Spoon Guru, 55% of respondents said they are eating less processed sugar. Twenty-nine percent use honey as an alternative; 19% use maple syrup. In addition to maple syrup, some companies, among them LB Maple Treat, offer other alternative sweeteners like maple sugar and maple flakes. “Consumers appreciate choices in sugar and sugar alternatives,” said Jinny Lik, marketing director at LB Maple Treat. “With increased product assortments, the sweetener section is growing as well as the number of choices, including organic/natural maple syrup.”
Bascom Maple Farms also offers maple sugar, which Coombs said is “growing.”
Some organic and natural private label honeys and syrups are moving beyond the jelly and breakfast aisles and into dessert, baking, cocktail mixes and other sections. Sioux Honey Association Co-op, for example, markets honey flavored with natural fruits that can be used as a topping on various foods. “It’s a small segment, but it’s growing quickly,” said Alex Blumenthal, executive vice president at Sioux City, Iowa-based Sioux Honey. The company also makes a honey formulated for baking.
Runamok Maple, based in Fairfax, Vt., specializes in flavor-infused organic maple syrups, including cinnamon, vanilla, smoked and bourbon barrel aged. Some work well with savory dishes or cocktails while others lend themselves to desserts, ice cream or coffee, said Curt Alpeter, Runamok president. To date, Runamok has developed 25 private label flavors, including custom formulations. It has also created combo packs, including fancily packaged fourth quarter gift boxes for seasonal promotions.
“In food, there’s an insatiable demand for what’s new and different,” he added. “Maple was a ‘conventional’ product and that’s changing. Starbucks has maple lattes, while trendy bars have maple-based cocktails. Consumers see that maple isn’t just for pancakes.”
Broader packaging choices are another focus. Bascom Maple Farms offers organic syrup in conventional 8- and 12-oz. bottles and in sizes up to 32 oz. Bascom also features a syrup spray can, which prevents children from wasting the product. With the introduction of PET bottles, Coombs said retailers can stack cases higher, fit more on a truck and reduce breakage.
Today’s consumers are willing to shell out more money for natural and organic private labels. Maximizing the potential of these products, however, requires more visibility and education. But these industries traditionally have focused more on beekeeping and sap tapping than marketing. “People who came up through the processed foods companies think more about marketing and how you can have 20 SKUs and flavors and ways to differentiate,” said Blumenthal. “But honey was seen as an agricultural product rather than one that could adapt to what consumers want and need, although sales per square foot of honey far outpace those of jelly.”
Categories have not always received prominent placement. But today, Blumenthal said he sees a “steady uptick” in the number of retailers putting display shippers on the floor. Growing use and acceptance of PET bottles facilitates this, added Coombs. PET bottles can even be merchandised on freezer doors near categories like ice cream or waffles, he added.
Endcap use is growing, too. In the New York market, Fairway’s honey endcap involved a 4-by-6-ft. Metro shelving unit filled with myriad varieties of branded and private label honey. Another Metro endcap showcased private label organic maple syrup.
To educate shoppers, some private label companies are placing recipe tear sheets in stores and on websites. Recipes include everything from desserts and cocktails to balsamic salad dressing and maple glazed salmon.
Since millennials and Gen Zers are prime targets, Bascom works with online influencers to “get the word out” regarding maple syrup’s many applications. “It’s not necessarily about brand and product itself but about what you can do with it beyond breakfast,” said Coombs. “We also see dieticians discussing maple as an alternative sweetener.”
Kroger, Publix and some other retailers work with both private label and branded suppliers to stage food demos involving honey barbecue recipes or ice cream serving suggestions, said Blumenthal. And Runamok funds in-store sampling events involving its highly specialized products. Retailers also use its products in food demos and promote suggested uses via social media and bottle hangtags.
“It’s hard to educate consumers with anything new like this,” said Alpeter. “But people instantly understand it.”
Overall, though, product education is minimal, particularly in private label, which often lacks promotional funding. “More could be done on social media to generically promote product benefits,” Citadelle’s Vachon said. “We do it to the level that we can. But it’s costly if you want to generate a massive impact.”