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Private Label value-added produce outpacing brand growth

November 29, 2012
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Double-digit growth from perishables departments is helping fuel store brand momentum, with fresh produce ranking in the top 10 mega categories to experience store brand dollar volume growth.  For the year ending August 4, 2012, store brand sales for all outlets and all departments reached $107.5 billion - an increase of 5.1% versus one year ago.  By comparison, brand sales reached $518.6 billion and also grew, but at a more modest 3.1%.  According to Nielsen ScanTrak (http://nz.nielsen.com), store brand growth came from absolute dollar volume growth in 90 mega-categories (generating $5.7 billion in gains), while dollar sales fell in 24 branded categories (generating $492.2 million in losses).

In value-added produce the momentum is very apparent.  In the last six months, total private label value-added produce grew 10% in unit sales, reaching 30% share of the category. By contrast, branded value-added produce sales declined 3%.  Value-added salads and fruit private label unit sales grew 16 and 18%, respectively, and now make up about one quarter of the sales in their segments. 

Clearly the economy has played a role in the growth of store brands, which are now 14.4% greater than calendar 2009. Strategic positioning to feature private label as equal or better in quality to brands also has been a contributing factor.  According to the Private Label Manufacturer’s Association (PLMA), nearly one in four products sold in supermarkets is now a store brand, and 65% of consumers agree that store brand quality now ranks “as good as”, while 38% say that some private label brands have higher quality, than national brands.

 “Ready Pac was one of the first fresh-cut produce companies to embrace a dual brand strategy with our own brands and producing for private label,” says Tristan Simpson, director of marketing and corporate communications at Ready Pac.  “Ready Pac brands are the perfect fit for some retailers, and we also offer private label programs for select customers whose corporate strategy seeks top quality store brand products.”

In the mid 1990’s Ready Pac marketers observed European trends in fresh-cut produce, saw continual movement toward private label in Europe and predicted that store brands would soon surge in America, which they did.  The company developed a process of co-development with private label partners whose strategies called for quality that met or exceeded leading brands. Ready Pac customers and brand development staff continue to work together to develop products that are technically and economically feasible, that bring unique offerings to the category and provide top quality to reflect positively back to the retailers.

“We think that private label growth and consumer acceptance is going to keep expanding because of the coming generations’ attitudes,” says Simpson. “Gen Xers outspend the U.S. average on store brands, and Millennials report the most positive attitudes toward private label. We’re ready.”  

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