Are Your Private Brands Working As Hard As They Should?October 30, 2017
I’ll be the first to tell you that private brands offer a better opportunity for growth and differentiation – and sure enough, that’s what the data show. Private brand darlings are filling the gaps in major categories including beverage, salty snacks, dairy and frozen. Our team took a deep dive into to the categories and departments spurring private brand growth to share the trends and opportunities in each. Here are some of your best bets:
The beverage category, worth $98 billion, is a hot commodity due to emerging trends in the market. One of the beverages leading the way is ready-to-drink coffee which is expected to grow by 83 percent in dollar sales from 2016-2021. Just because the coffee beans are in though, doesn’t mean that water is out. Health concerns have led bottled water to take share from other beverage categories because of innovations in flavored sparkling water and enhanced waters like electrolyte, hybrid and alkaline water. This category is a great example of private brand and niche players driving innovation which is why retailers can find opportunities to grow the category by incorporating even more better-for-you options. Our recommendation is to make water that satisfies without sugar, since that is the main growth driver putting health-focused consumers at ease. Additionally, remember to highlight a products own set of health and wellness enhancements.
Private brand is making strides in the $20.2 billion salty snack category. The decline of traditional meals and the rise in all-day snacking has helped this category boom. Among salty snack favorites are protein-packed meat snacks and popped popcorn, thanks to a newfound demand for snacks to deliver the nutrition found in traditional meals. The private brand products that have bridged the gap between healthy and crave-worthiness include jerky and cheese puffs. Since taste is still the leading salty snack driver, we recommend focusing on authentic flavors that cater to the 66 percent of consumers eating a wider variety of ethnic cuisines. Another thing to keep in mind is that this category does well in most consumer trends including health and wellness, epicurean and organic – so don’t stand on the sidelines as new products come into the fold, play up the trends!
The $65 billion dairy department, positioned as the fresh extension of the perimeter, generates high traffic as consumers continue their quest for healthy products. Milk is trending down, mainly due to price, but also due to the rise of plant based milk, which is driving growth in other categories such as creamers and yogurt. In this department, we’d suggest looking at ways to innovate in the fastest growing private brand categories in dairy which are dairy dips (up 9.3 percent since 2016) and cream (up 5.7 percent since 2016). However, don’t forget to fortify the products in the top selling private brand dairy categories that will continue to be important like milk, eggs, cheese and yogurt. If you can convince your shoppers that your staple products are good, they’ll be more willing to try the new things you bring to the table.
The $50 billion frozen department is getting a makeover with manufacturers coming to the table with a new set of rules. Products that are artificial or lack freshness are being replaced with items that satisfy consumer demands for authentic flavors, convenient packaging, clean ingredients, and embrace the move toward all-day snacking occasions. Frozen entrees remain one of the largest categories (with over $10 billion in sales – 2 percent up from last year!) and where private brand growth is strongest, along with sandwiches and appetizers. In the frozen department, private brand and niche players are outpacing branded manufacturers in innovation, as they continue to develop products that are better tasting with healthier ingredient profiles. To join these players at the forefront, we propose doubling down on healthy frozen options which can be done by integrating more fish, which has been on the rise as consumers eat less meat, or focusing on other protein alternatives.
Private brand growth means more retailers are investing in themselves, and that’s always a good sign. The game is changing fast for everyone, which means private brand manufacturers need to make sure they keep innovating and retailers need to keep providing the experiences and selection that keep shoppers coming back.
How do you see things shaping up for your private brands? Shoot me a note at JimH@daymon.com.