Consumers have increasingly turned to private-label grocery alternatives during the last two years, with dollar sales up in double digits for some items, according to the Private Label Manufacturers Association. Specialty food makers often have to compete with store brands on the shelf, but at the same time many see demand for private label as an opportunity.
The panel (picture left to right):
Joe Jolly, CEO, Plenus Group, Lowell, Massachusetts
Caroline Cotto, co-founder and chief operating officer, Renewal Mill, Oakland, California
David M. Neuman, president, Dave’s Gourmet, San Rafael, California
Q: How is the increasing popularity of private label impacting your brand and strategy?
David M. Neuman, Dave’s Gourmet
At Dave’s Gourmet, our sole focus is on producing the best quality branded products we can to meet the needs of both the retailers and consumers. Private label has always been a challenge for branded businesses as far as I have experienced in the last 30 years. Private label tends to key off on successful products that a retailer has tested in their stores. Then a similar item appears under the retailer’s control label, and often the successful brand item is discontinued. This obviously is a disappointment.
Brands can sometimes choose to make these replacement items to recover some of the losses. Other times they can’t. In our case, we rely on the legacy of our brand and the loyalty of the Dave’s Gourmet consumers to continue to support the products we develop and sell.
Private label expansion has forced brands like ours to create workarounds so we can maintain the level of revenue needed to support the business. This includes ecommerce, website and Amazon sales direct to consumers, as well as alternate channels. As eager as retailers are to promote their own label, we are to sell our brand. We coexist in a complicated world where we rely on but also compete with each other. There is room in the consumer’s basket for all of us.
Caroline Cotto, Renewal Mill
The popularity of private label is helpful in the upcycled space because we see some very large brands getting on board with producing certified upcycled products. Some of these private label brands are using our branded Renewal Mill ingredients, which is great because we're able to get some mass market education around upcycled food with much larger distribution than we would have on our own.
We're really looking at it as an educational tool because 99 percent of people think that food waste is a problem. They want to know what they can do to help, but only a small percentage actually know what upcycled food is. It’s a great vehicle to meet people where they are and to get that education out into the market.
I think you're seeing retailers push for more private label in general, but we're in an interesting position because we are an ingredients company and a finished brand. From the ingredients side, it's been a good way to partner and find different, unique opportunities to showcase the ingredients. That said, obviously it is something to be cautious about if they're copying the exact product that you have on shelf. We do it strategically, and I think it's important to work with private label in a way that it’s achieving shared goals.
Joe Jolly, Plenus Group
If your specialty food product has enough differentiators it is easier to sell along with private label brands. Private label positioning is different for retailers; their brand might serve the different demographics of their consumers, it might be a value brand, or an all-natural better for you brand.
Our Herban Fresh soup brand, which has a social mission to support Urban Agriculture and food justice by giving back 2 percent of our sales, has positioned us well because we are able to support causes in the retailers’ market areas.
Related: Aldi, Target, Amazon Grow Private Label Sales; Love + Chew Protein Cookies Feature Renewal Mill's Upcycled Oat Milk Flour.