PrivateLabel:TakingtheNextStepinPackaging

BrandSquareNovember19,2015

JimLucas

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NBE/QualityMissionAccomplished

•  Theoldimage--consumersbuyprivate-labelbrandsforcostreasons,butviewthemasinferior.–  42%ofMillennials(ages18-36)agreestore

brandfoodproductsaremoreinnova*vethanname-brandproducts.

–  AndMillennialslikelytobuystorebrandfoodsingeneral(97%versus94%ofallU.S.shoppers).

–  Nearly2/3rds(63%)ofstorebrandbuyers—including70%ofMillennials—agreethattheseproductsarehigher-qualitythantheyusedtobe.

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Using Shape and Color to Communicate Functional Benefit

(NBE)

ValueBeyondPrice•  WhatisinfluencingPLpackagedesigntoday?

–  PLhasexperiencedastagnated.Retailerslookingfornewareasofopportunity!

– Nowthattherecessionhaseaseditsgriponhouseholdfinances,consumersarelookingformorefromPLbrands.

–  Consumerneeds&expecta^onsaboutpackagingevolvingrapidly

–  Beyondprice,consumersaregivingOwnBrandfood&beverageproductsgoodmarksforinnova^on.

•  PrivateLabelpackaging,mustcommunicatebeyondprice.

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Retailershavebeen(Pro)AcGve

29%ofUSintroduc^onsinfood&beveragearePrivateLabel

Source:MintelGNPD4

Challenges/OpportuniGes

•  PrivateLabelpackagingmusttocommunicatebeyondsimpleprice

•  PrivateLabelStrategies,PorcoliosandRangeshavebecomemorecomplex.

•  Makingchoiceeasier.•  Moreover,retailerss^llhaveamarkeddisadvantagevis-à-visbrandedCPGintermsofmarketspend…soareturningtotheirpackagingtoworkevenharder(andsocial)!

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•  GreaterneedtocommunicatewithpackagingtocommunicateNBEstatusofPLbrands,–  Value– New,morecomplicatedarchitectures(beyondG-B-B)– Healthyliving/Nutri^on– Makingchoiceeasier–  Premium–  Crai&Ar^san–  Seasonal

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More than 3/4ths of grocery shoppers choose food based on the fact that it tastes good, and 65% look for high-quality ingredients. Conveying these aspects of a product on pack is being considered in order to appeal to the largest proportion of food buyers.

On-pack Messaging Should Match Consumer Decision-making

Base:internetusersaged18+whoareresponsibleforatleastsomeofthegroceryshoppingforthemselves/theirhouseholdSource:LightspeedGMI/Mintel

LEADING FACTORS INFLUENCING FOOD BY GENERATION GROUP, MAY 2015 “Which of the following factors are most important to you when choosing which food products you buy?”

Pack Similarities Brand comparison: Private labels openly compare themselves to brands by copying the packaging especially in categories like cereal, sauces and dressings, pasta, laundry detergents, personal care and pet food

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Source: www.consumerreports.org

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Value Ranges Get Revamped Retailers striving for balance in basic ranges – restraint, but not cheap/bad packaging. Usually white packaging.

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Target Up Walgreens Nice!

Walmart Great Value CVS Just the Basics

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Multiple Positionings

Ketchup July 2011

France

Sauce October 2013

France

Same private label, different positionings: Five table sauces condiments targeting different consumer needs by Carrefour, that go beyond good-better-best.

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Mustard July 2013

Brazil

Ketchup April 2012

Spain

PremiumDiscount

Bearnaise September 2013

France

Standard Healthy Ethical

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ItsnewinternaGonalfoodsbrand,Hemisfares,aimstoincreaseKroger’sappealtothemore

adventurous‘foodie’shopper.

Krogerhasreinventeditsentrylevelbrand,reGringits‘Value’labelandreplacingitwiththreenewbrands;thenewbranding

ismorefunandinteracGve.

InvesGnginPrivateLabel

Source:IGDResearch,Kroger

TheSimpleTruthbrandconGnuestoearndouble-digitunitandsalesgrowth,withmorethan20millionhouseholdshavingboughtoneormoreofthe2,700availableitems.Itofferslowprices,forhighquality

products.

HealthyLiving

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Source:IGDResearch,Retailers

NewHealthyLivingImpetus

•  HealthylivingandwellnessaregrowingprioriGesformanyshoppers.

•  Asretailersseektobe]ertailorstorestotradeareasanddifferen^ateformats,focusonhealthcandrivecompe^^veadvantage.

•  Significantopportunityingrowthacrossorganic,free-from,vegetarian,children-specificandbroaderwholesomefoodranges.

Ashealthrisesfurtheruptheagendainmanymarkets,moreretailersareusingprivatelabeltoshowcasetheirhealth&wellnesscredenGals.

Supervaluisrefreshingits‘WildHarvest’rangewithanewbrandposiGoning,logoandpackaging.Thiswillbesupportedwithanew“EatFree.GoWild”integratedmarkeGngcampaign.

SimpleTruthreached$1.2Bsales;20Mhouseholdsbought1ormoreofthe2,888itemsinthepastyear.

Source:SixTrendsinPrivateLabel,IGD2015.

HealthyLiving

•  Allagreeshouldeathealthier,watchwhattheyeat.– Morethanhalfofshopperssaynutri^onalpanelsareinforma^ve

– 1/3rdofconsumerssaynutri^onalpanelsinfluencepurchase

– Only25%ofgroceryshopperssaynutri^onalpanelsareeasytounderstand.

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FoodPackagingImpactbyAgeGroup

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LookingLessatOverarchingClaims

Source:Mintel

35%

38%

38%

48%

50%

62%

80%

0% 10%20%30%40%50%60%70%80%90%

Local(fromalocalcompany/farm)

Allnatural

Nosugar/high-fructosecornsyrup,

Fullservingoffruitorvegetables

Lowsugar/carbs,salt/sodium,etc.

Good/Excellentsourceof(vitamins,

Anynutri^on

FoodclaimssoughtbyUSconsumers,April2013

ChangesinPackageClaims,2010-2015

SHAPE AND COLOR BRANDING

Vivi Verde July 2012

Italy, Coop

Carrefour Bio September 2013

Italy, Carrefour

Healthy living ranges strive to look natural: Prevalence of green and brown, matte finishes.

Source: Mintel/GNPD, Private Label Packaging, 2014

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naturaplan October 2013

Switzerland, Coop

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HealthyLiving:AugmenGngPackaging

•  Consumerswanttobeabletomake“healthier”choices.Onpackcommunica^onsaidedbysocialmediaand/orwebsites—crediblesources.–  ForexampleKroger’sSimple

Truth&SimpleTruthOrganicare“Freefrom101”ingredientsthatcustomerstoldKrogertheydon’twantintheirfood.

–  Similarly,WholeFoodsMarketshasalistof78ingredientsthatareunacceptableforfoodproducts.

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hqp://www.wholefoodsmarket.com/about-our-products/quality-standards/food-ingredient

hqps://www.facebook.com/simpletruth/

hqp://www.simpletruth.com/

MeeGngConsumerNeeds

•  Visualandtac^lethenew“op^cs”.Easiertochoose.

•  Func^onality—re-sealability—freshness,portability,mul^pleoccasions,wastecontrol.

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ConsumerPercepGonsMoreImportantthanOn-packMessages…

Ingredients:TurkeyBreast,Water,Honey,Contains2%orLessofSeaSalt,EvaporatedCaneSyrup,RiceStarch,Vinegar,CarrageenanfromSeaweed,LemonJuiceConcentrate,CeleryJuicePowder

Ingredients:Water,Honey,SeaSalt,EvaporatedCaneSyrup,CeleryJuicePowder.

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Target:ArcherFarms

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SavorEverydayNaturalSrirachaS^r-FryChickenStripshavebeenreformulatedandarenowmadewithnewingredients.Thefullycookedstripsareminimallyprocessedandcontainnoar^ficialingredients.

AppleCinnamonCrispGranolacanbeusedasacoldcereal,anon-the-orasatoppingformuffinsandquickbreads.Itcontains29gwholegrainperservingandisagoodsourceoffiber.Thiskosherproductretailsinareclosable12-oz.pack.

Premium•  Retailersareevolvingandreposi^oningvalueand

premiumranges;premiumwillmoveintonewareasandcreatenewcompe^^onforbrandedsuppliers.

•  Discountretailersarepushingfurtherintopremiumprivatelabel,whileothersaretarge^nganewtypeofprivatelabeldevelopment,includingexclusiveranges.

•  BlackandGlossfinish

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Premium

•  TheKrogerCo.launchedrecentlyanewlineofpremiumprivatelabelbrandproducts,importeddirectlyfromthemostfood-richregionsoftheworld.“HemisFares™isaguidedtourofthebest-of-the-besttastestheplanethastooffer–foundexclusivelyattheKrogerfamilyofstores.”

–  Packagingforeachproductisunique,asittellsthestoryofthefoodfind.EachHemisFaresitemhasa"findnumber"onthepackagingtodirectcustomerstoothersimilarproductsintheHemisFaresbrandthattheymayenjoy.

KrogerHemisFares

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Cran&ArGsan:Premium-izaGonBeyondProcessed

•  Anotherwayretailersare“preimium-izing”isviacraiandar^san.– Provenancetoproduc^onmethodscanserveasclues

– Ar^sanmorebelievablethanpremium– Counter“overprocessed”percep^on– Craiassociatedwithingredientquality– Packaging:wood,fabric,craipackagematerialsarebecomingmoremainstream.

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Cran/ArGsan:3ElementsTellingtheStory

MaterialPackaging,oraclosureorotherfeature,madefromamaterialassociatedwithcraismanshipsuchaswood,leatherorfabriccanenhancear^sanproductclaims.VisibilityConsumershaveagrowingdesiretoseeproductsbeforetheybuy.Thisispar^cularlythecaseincraiedorsmallbatchbrandswhereconsumersexpecttoseetheproductvariabilityinherentinsuchproducts.

InformaGonBringingthehumantouchtothepackagingthroughnumbering,handwriqenlabelsorbringingthedetailsofthecraitothefore.Digitalpackagingwillenablesuchpackvaria^ononamassscale.

Source:MintelGNPD

Source:Mintel/GNPDCrai&Ar^sanPackaging,2015

EroskiSeleQ^aWhiteKidneyBeans

Seasonal•  Seasonalproductsaccountfor5%ofsupermarketsales

(Mintel,SeasonalPackaging,2014).•  22TraderJoe'sPumpkinSpiceFoods,2015•  Opportunityfor“newtradi^ons”andincremental.

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FinalThoughts

•  Manyopportuni^esinPLforbothdevelopingandrevampingpackaging– Beqer,moresophis^catedcommunica^onroleforpacktohelpconsumers

•  Value•  HealthyLiving•  Mee^ngConsumerNeeds•  Premium•  Crai&Ar^san•  Seasonal

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FinalThoughts•  Abilitytocommunicate:

– Facilitateconsumerchoice– SensoryProof– Claims/Benefits– Func^onality

•  Packagingisbeqeraqunedtoshopperneedsandbeqerdesignedaround“momentsoftruth”

•  Cleanlabelexample:– Detailsonline(ZMOT)– Easytounderstandatshelf(FMOT)

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FinalThoughts

•  Packagingisbeqeraqunedtoshopperneedsandbeqerdesignedaround“momentsoftruth”

•  Healthyliving:– Detailsonline(ZMOT)– Easytounderstandatshelf(FMOT)

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Thankyou!

QuesGons

JimLucasTheEvanstonConsul^ngGroup

847-691-8155RetailEcologist@gmail.com

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