TheShopperWonk

10 Tips for Defending Your Brand from Private Label

Health Claims – "Now with More Calcium", "Good Source of Antioxidants", "Natural", "Made with Real Sugar". First look for claims you can make without reformulations. Then consider adding nutrients at add perceived value.

Unique Packaging – Consider Dean Milk Chugs in a category dominated by private label. Older shoppers may appreciate packaging that easier to open, easier to re-seal, and easier to read without glasses.

Line Extensions – Look at the soda category with only 6.1% private label share. Every year we see many new soda flavors, but very few really "new" brands.

Promote a Cause – Don’t just offer a percent your profits. Build awareness. Educate the consumer about a cause you can really embrace. Let them know how they can get involved.

Odd Ounces – It’s easy for store brands to copy products sold with the same package size year after year. Shifting a 12 oz. package to 15 oz. makes it difficult to compare prices to store brands. Going metric makes the price comparison even harder.

Offer Your Own Value Brand – Look at the hair care category with only 2.2% private label share. National value brands make it difficult for store brands to get a foothold.

Local Ties – Each year have your sales force apply labels to packages in the store, reminding shoppers when a product is grown locally, processed locally, or warehoused locally. In today’s environment, shoppers are likely to support the local economy.

Differentiate Yourself – Compete with private label like you compete with any other brand. Set your brand apart with a clear case for why it’s worth more than the store brand.

"Green" Sizes – We used to call the "value sizes" or "club packs". Large pack sizes use less packaging by nature. Combine the value message with the green message. Give shoppers a way to help the planet while saving money.

Keep Innovating – Be a moving target. Make your brand difficult to copy. Give shoppers a reason to spend a little more on your brand. Whether it’s packaging, labeling, health claims, or new flavors, use your brand equity and category expertise to push the category forward.

-Tom Pirovano, TheShopperWonk

-email: tom.pirovano@nielsen.com

Economy Taking a Bite Out Of Health & Wellness Sales

Tom Pirovano, a fellow Nielsen associate with a thirst for creating thought leadership content for the CPG industry, shared the following slide with me showing how sales growth of organic products have taken a nose dive as our economy has worsened.  For the 4-week period ending 3/21/2009, dollar sales of upc-coded products with an organic label claim grew by just 1%, quite a dramatic shift from the 24% growth rate in March of last year and the 30% + growth rates experienced in many periods in 2005 and 2006.

So with that information in hand I wanted to share insights on whether or not the economy has had a similar negative impact on products with other healthy label claims.But before doing that, let me set the stage on how food products are doing as of late.

This next slide shows trends in food department dollar and unit sales for a recent 52-week period along with the last 13-week and 4-week period in that time span. With inflationary pressures easing somewhat in recent weeks and months, all of these departments experienced positive annual dollar sales growth, but we do see softness in the most recent 4-week period (versus growth rates for the latest quarter).

We see lower growth rates on a unit basis and some departments posted more positive trends in the most recent period. Across all time periods and departments, there was an average growth rate of 5.3% in dollar sales and 1.1% in unit sales (remember these figures).

These next three slides compare dollar and unit growth for 25 health & wellness claims.  These claims come from Nielsen LabelTrends where we code specific health claims on product packages and then link that with Nielsen retail measurement content to track retail sales.  I decided to create three separate slides where health claims were ranked based on product sales of health claims that exhibited the fastest year-over-year growth in dollar sales.  The 1^st tier growth claims group had annual growth rates of between 15% and 26% in dollar sales with omega claims representing the fastest growing segment.  The 2^nd tier exhibited annual dollar sales growth of between 8% and 12%, while annual growth for the 3^rd tier was between a negative 4% and a positive 8%. 

As you examine these slides you will see that the growth of products with healthy claims is definitely slowing.  But which healthy label claims are still posting growth and are growth patterns similar or different to total food trends?  Here are a few comments about each tier: 1. For the 1^st tier, omega claims was the only segment (across all 25) with both positive and improving dollar and unit sales growth.  Every other 1^st tier segment posted declining dollar sales growth in the latest 4-week period from what was posted in the latest quarter and growth levels dropped precipitously.  However, growth rates for a just a few these segments fell below the average food department growth rates mentioned above.  Those segments with less than stellar performance were products with flax or hemp seed, plant sterol, less sugar claims and probiotic claims (unit basis).

 

2. There were less severe declines overall for the 2nd tier grouping, but again we see weaker  performance in the latest period, suggesting that consumers are making some tough calls on where and how they spend their food dollars.  Although organics experienced a sharp drop in dollar and unit sales, levels were above the average growth across all measured food departments and time periods.  The segments which performed the worst were low glycemic (unit basis), hormone antibiotic free (dollar basis) and antioxidants.

 

3. Within the 3rd tier, claims performed generally worse than the other tiers and versus the average food department growth rates.  The only claim in

this group to perform better than the market average on both a dollar and a unit basis was reduced calorie claims, but latest period trends were soft.  Segments with the biggest declines included cholesterol, soy and gmo free. 

 

So what can you make of these trends?  Without question this economy is getting many consumers to think about almost every shopping or purchase event and tough calls are being made.  Better-for-you products were in great popularity when consumers weren’t in panic mode regarding their current and future state, but times have definitely changed and some consumers are opting to buy products that don’t serve up all of the healthy claims that were of interest to them a year or more ago.  Manufacturers and retailers with focus on better-for-you foods need to work harder to drive sales success and value messaging along with value pricing, in addition to healthy claims, are now important aspects of actions required to keep existing consumers and/or win new consumers.  With continued disturbing news regarding obesity rates in this country and a large population of aging consumers, health & wellness is still a needed and opportunistic platform for both manufactures and retailers to innovate and differentiate. 

 

Channel Watch Update: Some Unexpected Positive News

As reported the Department of Commerce, retail sales (ex-automobiles) in the U.S rebounded in the first two months of the year to register sales levels that at least weren’t in the red.  January sales grew unexpectedly by 1.0% and February sales were up 0.7%.  Certainly not the kind of growth needed to get us out of our current economic funk, but a lot better than sales levels posted in the last four months of 2008.

As we drill down into the other retail formats generating trip growth, as measured by the Nielsen Homescan Consumer Panel, we see a good start for 2009 on this metric too.  Most retail channels saw better trip performance in the first two (4-week) periods of 2009.  That is, if you were a retail channel with trip growth in the last 4-weeks of 2008, then you registered stronger trip growth in 2009.  If you were a retail channel with declining trip growth at year-end, then at least trip declines were not as steep.  The exceptions were drug stores (validating recent reports regarding a weak flu season and a strong performance in selling flu vaccinations in the 4th quarter of 2008), department stores and toy stores.  However, as seen for most of last year,

U.S. consumers are still shying away from discretionary retail channels.

While this represents a small ray of sunshine peeking through the dark recessionary clouds, with Easter falling later this year, we will likely see more negative patterns in the month of March.  Hopefully though, this represents signs that we are near the bottom of this economic downturn and a return to economic growth is not far off. 

 

- Todd Hale, Co-Founder TheShopperWonk

 

-email: todd.hale@nielsen.com