Stalwarts Of Private Label Success
February 11, 2013 at 11:22 AM
By CHRIS FREEMAN -- PLBuyer
In the world of private label grocery, there are a couple of truths that don’t change. Find the dairy and refrigerated products and you’ll find many of the largest private label penetrations in the supermarket.
Three of the biggest areas are tackled here – Fresh eggs, butter, and yogurt.
According to Nielsen data compiled for the 2012 PLMA Yearbook, fresh eggs ranked seventh as the largest private label category by dollar volume in 2011, with private label sales of $2.3 billion and a 58.6 percent dollar share. Fresh eggs are eighth in categories by unit volume with a 62.2 percent share, while yogurt ranks 12th in unit volume at $782.7 million in sales and a 16.7 percent share of the market.
And butter? Well, butter is simply the sixth-fastest growing gainer in dollar volume, with a 17.9 percent rise in dollar volume in the past year. Butter now registers
$1.2 billion in private label sales and holds a 32.8 percent share of the dollar volume.
Or so it did.
In the latest data from Chicago-based SymphonyIRI Group, data that now includes sales at Walmart as well as other multi-outlet retail businesses in the U.S., private label butter holds a 55.6 percent dollar share and a 59.3 percent unit share in the category, with sales topping $1.067 billion.
A 2011 report from Chicago-based Mintel Group Ltd. on the topic showed private label sales already on the rise, with fast growth expected, largely because of consumers trading down in recessionary times.
It suggested that private label butter marketers make inroads by better publicizing the product.
“Marketers of private label butter could conduct and film blindfolded taste tests in high trafficked locales, challenging participants to identify products made with branded and private label butter,” the report said. “Videos can be posted on social media sites such as YouTube and Facebook to help spread the message that private label butter tastes no different from branded offerings.”
Mintel’s report suggested sales of butter overall could reach $4.3 billion in 2012, rising more than 3 percent annually to reach just shy of $5 billion in sales by 2016.
Eggs, meanwhile, are another category dominated by private label sales. SymphonyIRI data shows fresh eggs and egg substitutes with a nearly 54 percent private label share of sales, while Mintel pegs the overall category total at a 64.1 percent private label share, with private label fresh eggs holding a 66.8 percent private label share.
“Egg brands play only a small role in the market,” the 2011 Mintel report said. “In egg substitutes, a different picture emerged.”
Egg Beaters, the dominant brand in the category, saw sales and share decline in 2010, while AllWhites branded and private label egg substitutes rose, its private label share reaching 27.1 percent.
The latest SymphonyIRI data shows private label egg substitutes holding an overall 1.9 percent share of the entire fresh eggs category, but its dollar sales have risen 13.4 percent in the past year, while unit sales are up 10.8 percent.
One of the main reasons for private label’s domination of the fresh eggs category? Mintel’s report says it is a price war in the category.
“A majority of egg buyers who do not buy most specialty egg types give cost as their reason,” the report says. “Nearly half give cost as the reason for nonpurchase of low-cholesterol eggs.”
Wherever eggs are being bought, cost is factoring in, and private label sales are gaining because of their value.
To that end, Mintel expects the sales of fresh eggs overall to rise at a rate of more than 10 percent annually over the next three years, climbing from a $7.1 billion
forecast in 2012 to nearly $9.5 billion in 2015.
Yogurt sales overall reached nearly $6.4 billion in 2011, according to a Mintel report this summer, and SymphonyIRI data pegs the category at $6.5 billion in the year that ended Nov. 4. While dollar share for private label totals about 10 percent, according to SymphonyIRI, unit share is healthier at 15.9 percent. And both of those numbers are on the rise – dollar sales have climbed 12.4 percent in the past year, while unit sales are up 4 percent.
Overall sales of yogurt and yogurt drinks were up 7.5 percent in 2011 from the year before. “The impressive growth was driven in large part by sales of Greek yogurts, as well as products aimed at children,” the Mintel report said.
And there appears to be little slowing down for the category. Mintel estimates sales to approach $7 billion by the end of the year, a 9 percent increase from 2011. Its forecast calls for growth between 5.4 percent and 7.3 percent annually through 2017, totaling $9.4 billion by that time.
At its present penetration rate, that would put private label sales in the category at or above $1 billion in the next five years.