Something Special

Store brand knockoffs of Kraft Macaroni & Cheese and Campbell's Chicken Noodle Soup might help shoppers stretch their grocery budgets, but they do little to stir up excitement — or to encourage loyalty to a particular retail banner. That reality is one reason many retailers have been ramping up product development on the premium side of private label foods and beverages.

Sometimes premium-product development simply results in a store brand product that beats the national brand in quality. But more often, it results in something truly special: new spins on old favorites (such as the new Trader Joe's Guacamole Hummus from Monrovia, Calif.-based Trader Joes) or completely original concepts (such as Kroger's new Private Selection Chipotle Cheese Flavored Rice and Bean Chips). And it's that something special that really is attracting today's consumers.

"The premium tier has continued to gain strength, as consumers are getting tired of the same old processed foods on the shelf," explains Steve Silverman, national sales manager for The Perfect Bite Co., Glendale, Calif.

Pinpoint opportunities

On the store brand side, retailers have an opportunity in premium products that offer a value proposition, differentiate themselves from others on the shelf and are "relevant to the eating experience," Silverman believes. Promising categories include, but are not limited to, frozen appetizers, finishing sauces, pasta sauces, frozen meals and ice cream, he says.

Jonathan Pehl, director of marketing and branding for Fischer & Wieser Specialty Foods, Fredericksburg, Texas, also sees finishing sauces as a hot area — and adds dipping sauces to the opportunity list.

"Most consumers want the convenience of grab-and-go products but want to customize them, and these sauces and spices allow for that," he says.

And premium private label baking mixes represent a huge missed opportunity for many retailers, which tend to limit product development here to the value tier, notes Diana Michelsen, senior vice president with NorthWest Specialty Baking Mixes, Portland, Ore. Creative and/or indulgent premium baking mixes not only appeal to consumers, but also can situate a retailer as an innovator within the category.

"Many stores have found great success by developing seasonal premium private label programs to offer consumers what they want when they want it most," she says. "The majority of baking mixes are sold in the last half of the year, so there's an opportunity for stores to bring in the product line during the fall and plan to sell through January."

And with more retailers offering in-store olive bars, George Christodoulou, director of retail sales for Hauppauge, N.Y.-based Castella Imports, sees the chance for expansion.

"In the olive and Mediterranean bar area, there is a great opportunity for store brand product development," he says. "As more retailers expand this area of the store, more products are needed for their lineup, which also needs to be different, unique and attractive to the consumer."

A premium slant also could provide much-needed differentiation in the crowded snack food category. With many people consuming smaller, but more frequent meals today, products that mesh with the trends toward healthful, whole-grain, gluten-free, low-calorie and/or local offerings have particular appeal, according to Kris Olson, director of marketing for Lehi Valley Trading Company, Mesa, Ariz.

"Premium store brands have been able to execute on this demand with greater success and innovation than [other] store brands," he says. "That being said, there is always a need for indulgent offerings. In a struggling economy, consumers continually show a willingness to reward themselves with something indulgent. Indulgent snacks just seem to make people happy, and premium products command a higher ring at the register."

Olson points to Target's Archer Farms line as an example of great execution within the premium store brand snack space. The brand gives everyday products a new spin with "slightly unique and trendy flavor profiles" and, in the process, differentiates the products and drives value to the customer and loyalty to Target's stores.

Speaking of indulgence, candy, too, makes a logical category choice.

"We believe there are still big opportunities in premium candy as long as it has compelling packaging and a good retail price point," says Michael Mosto, national sales manager for Original Gourmet Food Co., Salem, N.H.

But compelling packaging isn't necessarily a must in every premium opportunity area. Scott Mackie, president of Lynnwood, Wash.-based SeaSalt Superstore LLC, adds gourmet spices, nuts and sea salts to the list of promising categories, but notes that many grocery-store shoppers — unlike their specialty store counterparts — would rather see a lower price than fancy packaging.

"Subsequently, many grocery stores are choosing to private label premium products like infused sea salts, package them in inexpensive plastic tubs and place a simple white label on the packaging that contains the bar code, unit price, product name and ingredients," he says. "Whole Foods does a great job of creating inexpensive private label bulk packaging for premium products."

Be thoughtful in development

If they want to be successful within the premium private brands arena, retailers have to do a bit more homework than they do on the national brand equivalent (NBE) side. As Pehl emphasizes, they really need to understand their own customers and pinpoint which products would appeal to them.

"You need to spend time with your customers, in the aisles of the stores, and listen and watch," he stresses. "Listening and talking to customers, even finding out where they like to eat dinner, can clue you in to their mindset and help bring focus to creating a successful store brand."

Olson agrees, saying he believes one of the most common mistakes brands that fail make is losing sight of what customers want.

"For every trend that was set, there [are] a great deal of failures," he says. "The key is to be able to capitalize on the trends."

Retailers also need to stay true to the definition of premium, Silverman says.

"I think when retailers blur the lines of NBE and premium, it begins to confuse the customer," he says.

Silverman also recommends that retailers communicate the product's "story" to consumers to connect with them emotionally, as well as "stretch the box" to develop items that are truly unique but still bring the value experience to the shopper.

"Sometimes we tend to 'overthink' product development," he adds, "which leads to a paralyzed process and ultimately forces a product to come to market that is not the right fit. Don't be afraid to go with your gut and be different — or as Apple says, 'Think Different.'"

Branding is critical, too — and with premium products, the retail banner name typically won't fly, Mosto suggests.

"We believe retailers need to develop brands within their department[s]," he says. "Just using the company name isn't enough."

The brand/product name really should be trademarkable, Pehl says, and understandable to consumers.

And although the packaging for premium products in some categories could go the simpler route Mackie outlined, more sophisticated options might be called for in other categories. For all premium product packaging, Silverman advises retailers not to be afraid to be different, and points to some "dos" that really count.

"Do have a great photo that shows the product 'in action' — something canned will not resonate with your consumers," he says. "Do make it an emotional experience for the customers [and] do educate the consumers on the brand."

But don't go with unique specialty glass options for sauces and similar premium offerings, Pehl advises.

"Specialty glass is pretty, but isn't always conducive to fitting on store shelves or in home cabinets," he says. "It also can be difficult to get product out of some jars."

Cheryl Growvogel, marketing director for Castella Imports, notes that "there is beauty in simplicity" when it comes to the package label. She points to clean fonts and artwork as desirables, and says that the amount of text on the label should inform the consumer without overwhelming him or her.

If a retailer does opt for bulk packaging, communication is even more critical.

"Sometimes retailers [also] private label low-quality product in bulk packaging," Mackie says, "and it's important for the consumer to know the products are of premium quality if they are offering premium quality."

Market its uniqueness

When it comes to marketing premium store brand products, "compare to" statements regarding quality or price usually are not an option for retailers. After all, a premium store brand product typically has no national brand counterpart sitting next to it on the shelf.

Beyond great packaging, high product quality and sampling are critical to marketing these products, Olson says. A product enjoyed, after all, is a product that's likely to be purchased.

Growvogel agrees that sampling is important here.

"These days, so many experiences are digital, but when it comes to attracting consumers to a new product, especially food, the best experience is still the tangible one," she says. "And, of course, visually representing the product through POS displays is still an effective tactic."

"Romance" shoppers, too, on relatable selling points, Christodoulou suggests. Instead of suggesting a Kalamata olive, for instance, retailers could suggest a premium store brand olive medley having "multiple olives for complementing flavor." Or they could private label something along the lines of Castella Import's Mediterranean Tapas Platter, informing shoppers that it provides them with "a mixed platter for your enjoyment."

One simple way retailers could attract shoppers to new premium store brand products, Pehl says, is by rallying their own employees and "making them the store brand ambassadors." For example, a retailer could get these team members to sample key premium store brand products and get them emotionally involved in the marketing process.

Finally, don't discount the importance of promotions in boosting trial.

"Demos have had moderate success, but are very dependent on the store and the person demoing the product," Silverman says. "Retailers might have a great product on the shelf, but it is a 'secret.' Celebrate your success and spread the word — promote it often, and they will come!"