See How They Grow
Posting dollar and unit sales gains of 5 percent or more, our 2011 food and non-food Movers and Shakers are red-hot.
Although store brand growth overall during the past year did not rise to the levels we saw during the recent "Great Recession," a number of product categories did realize exceptional gains. These overachievers — 49 food and 24 non-food categories — posted dollar and unit sales increases of 5 percent or more, and reached $5 million or more in sales, during the 52 weeks ending June 11 (U.S. food, drug and mass merchandiser stores, including Walmart, based on data from New York-based Nielsen).*
*Nielsen classifies the categories presented within the tables as subcategories of larger total store brand categories.
Moreover, many of these categories realized sales increases in the double-digit range, notes Todd Hale, senior vice president, consumer & shopper insights for Nielsen. That reality differs from what Nielsen sees on the branded side, where single-digit growth is more the rule.
'The brands control about 83 percent of the dollar share across food, drug [and] mass consumer packaged goods sales.' — Todd Hale, senior vice president, consumer & shopper insights, Nielsen
"However, keep in mind that brands control about 83 percent of the dollar share across food, drug [and] mass consumer packaged goods sales," Hale says. "So store brand growth is typically off of a smaller base."
A few surprises
Coming in high on this year's list are a few categories traditionally thought of as difficult for store brands to penetrate. For example, domestic and imported beer posted 36.2 percent and 96.3 percent dollar and unit sales gains, respectively, while imported table wine saw 15.7 percent and 25.1 percent increases.
Jim Wisner, president of the Libertyville, Ill.-based Wisner Marketing Group, calls beer and wine's performance on the store brand side "intriguing" because for many years experts believed success was not possible here. He notes that Europe has enjoyed success here for many years, however, and that Issaquah, Wash.-based Costco "broke the code" to a great extent in the United States.
'There's a little bit of 'chic to be cheap' going on,'. — Jim Wisner, president, Wisner Marketing Group
"I think what this has done is underscored the concept that eventually maybe any category can be successful in private label if you do it right," Wisner says. "The c-stores have jumped on the bandwagon; the drugstore chains have jumped on the bandwagon."
Also helping to boost the wine category, he notes, is increased wine consumption overall — and the existence of a more educated consumer when it comes to assessing quality and value.
"There's a little bit of 'chic to be cheap' going on," Wisner adds.
Also somewhat surprising to Wisner was the strong performance of many traditional baking ingredients such as powdered sugar (+16.8 percent in dollar sales and + 11.7 percent in unit sales), brown sugar (+13.8 percent and +8.3 percent), cello-wrapped nuts (+12.9 percent and +5.8 percent), "remaining" all-purpose flour (+10.6 percent and +11.8 percent) and ready-to-serve frosting (+6.7 percent and +5.6 percent). The logical conclusion seems to be that consumers are baking more at home.
Hale does note that these particular categories — like several other categories on the list such as fresh meat and seafood, fresh produce, candy, cereal and snacks — are feeling a great deal of pressure from rising commodity prices. That reality could have consumers reaching for less-costly store brand alternatives; even though pricing has increased for both the national brands and store brands, most store brands still represent the less-costly option.
On the non-foods side, the rise of certain over-the-counter (OTC) products such as "remaining" pain remedies (+47.8 percent and +37.5 percent in dollar and unit sales), sinus remedies (+37.2 percent and +28.3 percent), "remaining" cough and cold (+21.5 percent and +20.4 percent) and cold remedies (+12.6 percent and +11.5 percent) should come as no surprise, in light of heavy recall activity on the national brand side. What might be somewhat surprising, however, are the steep gains these products made.
Wisner notes that the recalls found FDA suggesting to consumers that they try "generic" products, reassuring them that store brand items were, indeed, the same in terms of formulation.
"There's a good story building on that," he says. "All the data we are seeing from multiple sources [suggest] that not a lot of those people are going to go back to the national brand."
In line with trends
But many the overachievers on this year's Movers and Shakers list come as no surprise at all. These categories are in line with overall trends playing out in the food and non-food space.
For example, a number of categories on the list represent rising consumer interest in prepared foods, particularly within the deli arena. Enjoying very strong sales here were deli salad dressings (+54.8 percent and +61.8 percent in dollar and unit sales), refrigerated spreads (+37.7 percent and +37.4 percent), deli sandwiches (+31.4 percent and +31.4 percent) and specialty/imported cheese (+22.7 percent and +17.1 percent).
A number of categories on the list represent rising consumer interest in prepared foods, particularly within the deli arena.
"Some of the deli items, to some extent, could reflect store brand items that didn't get branded before, that didn't get captured under a UPC," Wisner adds. "But you're also seeing more attention given to fresh, ready-to-go types of products."
And products tied to home entertaining also remain in growth mode, Wisner says, which also could explain the strong gains made by some of those deli items, as well as items such as snack crackers (+11.0 percent and +11.9 percent in dollar and unit sales), jarred nuts (+10.5 percent and +10.0 percent), tortilla chips (+6.8 percent and +5.5 percent) and more.
Other noteworthy climbers are part of hot categories such as tea, healthier oils and ethnic foods, Wisner notes. Making the list here were instant tea (+15.6 percent and +9.5 percent in dollar and unit sales), liquid tea (+14.3 percent and +7.9 percent), frozen Mexican entrées (+12.6 percent and +7.6 percent), oriental sauces (+8.9 percent and +5.3 percent) and olive oil (+5.7 percent and +6.9 percent).
Store brand olive oil continues to take more share out of the total category.
As for olive oil, Wisner says retailers are beginning to get a bit more aggressive with it within their private label programs.
"It continues to chop away and take more share out of the total category," he says.
Outside the OTC arena, a number of non-food categories also are in line with trends. But most also reflect areas in which store brands are underdeveloped, Hale notes, such as within oral care, cosmetics, personal grooming and skin care.
Making the list in these areas were oral care appliances (+127.4 percent and +183.3 percent in dollar and unit sales), wave setting products (+51.2 percent and +22.4 percent), "remaining" cosmetics (+45.7 percent and +43.5 percent), suntan preparations (+28.2 percent and +24.6 percent), personal grooming sponges (+23.7 percent and +33.4 percent), "remaining" hair care — women's (+22.3 percent and +19.8 percent), face cream and lotions (+15.3 percent and +10.5 percent), bath oil and additives (+9.0 percent and +10.2 percent), acne remedies (+8.2 percent and +6.5 percent) and shaving cream (+6.3 percent and +14.6 percent).
Keep the momentum
If these categories — and others — are to continue in strong growth mode, retailers will need to pay close attention to what Hale calls "enduring trends" — trends that will fuel growth opportunities for years to come. One such trend is that toward a large base of aging consumers who require different products and product quantities than those they purchased in the past.
And although great-looking packaging is important, functionality is even more important.
"A fast-growing base of African American, Asian and Hispanic consumers … possess[es] diverse shopping, buying and media behaviors," he adds. "If you don't have real focus against these consumers today, then time is growing short for you to have a meaningful impact with your store brands and drive growth."
For his part, Wisner points to innovation — both in products and packaging — as critical for continued store brand growth. And although great-looking packaging is important, functionality is even more critical.
"It has to be as functional as or more functional than the brand's," he stresses. "So if the brand doesn't have a pull lid, put one on. If it doesn't have a measured dispensing cap, put one on. Don't try to save the 2 cents. You might take 40 percent of the customers out of the market."