Packaging Report: No more knockoffs

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Packaging Report: No more knockoffs

By Michael Applebaum - 02/19/2020

Has private label finally shed its reputation for copycat packaging? That question is still a matter of debate. But one thing is certain: Thanks to the steady growth of the private label business, retailers are increasingly looking to separate their brands from those of national manufacturers by developing a distinctive overall brand identity that starts with the package design.

“Store-owned brands no longer consider packaging as simply a product delivery system. Instead, they are focused on truly designing packaging to compete with national brands,” said Scott Brill, senior vice president of market development at New York-based Prs In Vivo.

Retailers are eager to replicate the success of such multi-million-dollar brands as Kroger’s Simple Truth and Costco’s Kirkland Signature, along with eye-catching new entrants like Target’s Good & Gather line of food and beverages, introduced last September. Total U.S. store brand sales increased 4% to $136.3 billion in 2019, which was in line with the growth in 2018, per Nielsen.

Store-owned brands no longer consider packaging as simply a product delivery system. Instead, they are focused on truly designing packaging to compete with national brands.
Scott Brill , senior vice president of market development, Prs In Vivo

Part of the appetite for greater risk-taking in packaging innovation comes from lower costs. Advances in manufacturing technology are allowing smaller runs of packaging to be produced more affordably, and Brill said this may motivate more store brands to experiment with features like foils, holograms, unique structures, different finishes and color palettes. “These tactics are still not being fully utilized, but when implemented, they have allowed retailers to support brand extensions and promote premium versus value lines,” he noted. 

MILLENNIALS: A MISSED OPPORTUNITY?

Millennials are driving much of the innovation in private label packaging. According to an October 2019 report by IRI, more than half (54%) of millennial shoppers say that store brands are extremely influential or very influential in determining which stores they decide to visit. Yet nearly 1-in-5 shoppers (18%) overall said that packaging makes private brands appear to be of lower quality than national brands, per IRI.

Experts agree with IRI’s conclusion that inferior packaging creates a purchase barrier for light shoppers and millennials, who often look to the packaging of consumer products as a way to communicate brand attributes that are consistent with their values. “While all generations have environmental concerns, millennials see the strongest connection between being eco-friendly, being healthy and having a better quality of life,” said Tim Whelan, director of marketing and product development at Evergreen Packaging in Memphis.

According to Evergreen’s research, nearly 60% of millennials said that they try to buy products in packaging made with plant-based materials. A further 64% of millennials say that eco-friendly products are worth paying a premium, compared with 37% of baby boomers. This creates both a challenge and an opportunity for all store brands.

“Retailers will be challenged to find sustainable and economically viable packaging choices in their stores that offer real value to consumers,” Whelan said.

SPECIFIC CATEGORY CHALLENGES

Giving consumers what they want with regard to sustainable packaging is sometimes easier said than done. For example, most CPG companies are actively looking to reduce the percentage of plastic in their packaging. Yet the two leading packaged coffee brands — Folgers and Maxwell House — still rely on the thermoplastic polymer high-density polyethylene in their canister packages, which cannot be recycled. In soft pack coffees, there are challenges with using compostable materials related to product quality.

Clay Dockery, vice president of corporate brands, Massimo Zanetti

“Companies are looking at using recyclable paper, but oxygen is the enemy of coffee and it will begin to stale if exposed to air,” said Clay Dockery, vice president of corporate brands at Massimo Zanetti, one of the largest private label coffee producers in North America. “Current substrates are laminated multiple layers that prevent the package from being recycled but maintain the shelf life of the product. We’re looking at some of these other materials, in compostables, that can provide the right level of barrier protection.”

The coffee pod, meanwhile, is a slightly different case. Because of the compact size, manufacturers are able to use a compostable “mother bag” in pod packs to maintain the freshness of product. Dockery said that “compostable is a little bit of a lean forward in our category because there are not a lot of commercial composting facilities,” but that it likely will grow as shoppers look for more solutions.

Innovation in sustainable packaging doesn’t necessarily need to entirely upend the familiar. Incremental changes — using a more biodegradable form of plastic or reusable sandwich bags made from beeswax — can go a long way toward pleasing shoppers, according to Jennifer Gaeto, senior creative and strategy director at package design firm Equator, whose private label clients include Schnucks, Aldi and Giant Eagle.

There also are regional trends that could spread into the U.S., Gaeto noted, citing ovenproof paper trays and brown paper labels used on refrigerated meat packages at Aldi UK. Katie Simmons, director of marketing for the North American packaging division at Evergreen, says that on-package storytelling via paper labels is often a missed opportunity and can be particularly important for store brands.

“In the fresh beverage categories, one of the primary bene fits of paper-based packaging is the expansiveness of the four available panels for messaging about that particular product,” she said. “Even the simple opportunity to cross-sell or offer a coupon on another store brand item is missed.”

STANDING OUT ON THE SHELF

Product packaging remains a critical first touchpoint at the shelf. In order for store brands to stand out through package design, retailers need to further understand what consumers want from packaging and deliver on those needs, Prs In Vivo’s Brill said, noting that there is opportunity for innovation to help private brands stand out.

“From a strategic perspective, store brands should push the envelope — similar to that of start-up brands — as they are typically not wed to an existing design architecture in the same way as established national brands where too much deviation often creates confusion.”

There are ways to elicit a desired response from shoppers using traditional branding cues, added Steve Cox, creative director at New York-based package design firm Daymon. Premium coffee companies are moving away from the traditional black-label approach and no longer only rely on dark or rich colors to connote premium quality. “They’re starting to inject more personality and playfulness into a tier of products that has been a bit more serious,” Cox said. “How far to go against the grain in any given category is a subjective decision that each store brand has to make.”

As for ridding private label of its decades-old “me-too” image, Brill said it is going to take some time to fully ad- dress this issue in the minds of consumers.

“It is certainly heading in the right direction, especially as consumers struggle to immediately acknowledge what is and is not a store brand offering,” he said. He pointed to ShopRite’s Bowl & Basket as an example of a store brand whose packaging and story identify it as more than a copycat offering.

“Only when this is commonplace will the reputation be fully addressed,” he said.