Casting a Private Label Net
February 17, 2012 at 3:27 PM
By John N. Frank and PLBuyer Secret Shoppers
Consumers opting to eat at home more often because of bad economic times are increasingly circling the frozen seafood aisle, looking for treats that remind them of fish dishes they once ate at restaurants.
But some retailers apparently have yet to get the message that private label frozen seafood can be good bait for attracting shopper dollars. PLBuyer secret shoppers who in November visited four food retailers across the county found little selection of private label seafood. Indeed, in most of the product categories they were asked to shop — frozen shrimp, breaded fish fillets, bulk bags of fillets and breaded shrimp — they found no private label alternatives to branded seafood offerings.
As might be expected, they also saw little in-store advertising for private label frozen seafood and few side-by-side displays. Even in one retailer, Dierbergs in Ballwin, Mo., which had a fairly large private label seafood selection, private label items were placed together rather than next to national brand products, shopper Irene W. reports.
Consumers are willing to buy private label seafood, according to research done recently for PLBuyer by Consumer Science, Dallas/Fort Worth-based research firm.
About half of the 400 respondent’s Consumer Science spoke with in November say they buy store brand seafood and, of those, 69 percent say that it matters to them that the seafood they buy is from sustainable sources (see story, page tk, for a full report on this survey).
Higher wage earners, those making more than $50,000 annually, are more likely to purchase private label seafood. In that income group, 61 percent say they buy private label seafood. For households making less than $50,000 annually, only 25 percent buy private label seafood. Overall, however, fewer lower income respondents buy seafood at all, branded or private label. Roughly 31 percent of lower income households surveyed for PLBuyer buy no seafood compared with only 19 percent of the higher income group.
Walking the Aisle
PLBuyer secret shopper Mike G. in Kansas City saw private label seafood at the Price Chopper he visited, noticing the Best Choice private label frozen shrimp carried by Associated Wholesale Grocers members, he says. And they were displayed next to branded products in glass-doored upright freezer cases.
Best Choice shrimp were priced higher than branded Aqua Star frozen shrimp, he found (see table, page tk). While bag sizes differed, making on-shelf comparisons difficult for consumers, doing the math shows that the private label was priced at 2.5 cents per gram compared to 2.2 cents for the branded offering.
At Dierbergs, “There were two sections of the store for seafood,” Irene W. reports. “One in the freezer case near the seafood deli and one in an area with brands like Gorton’s and Mrs. Paul’s, more the boxed fish and shrimp items.”
Dierbergs also had freezer cases from which shoppers could scoop out frozen shrimp and battered popcorn shrimp, she reports.
Looking at bulk bags of fish fillets, she found that Aqua Star cod fillets were selling for $12.99 a two-pound bag, or roughly $6.50 a pound, while Dierbergs triggerfish fillets were priced at $9.99 per pound.
With so many regional seafood brands available on store shelves some shoppers seemed confused about which were or were not private labels. Shoppers recognize national frozen brands such as Gorton’s and Van de Kamp’s, but become a bit fuzzy on lesser-known regionals. One shopper in suburban Chicago, whose results are not included in our story or accompanying table, for example, listed Fisher Boy as a private label at the Jewel store he visited. Fisher Boy is a brand produced by High Liner Foods (USA) Inc., and is available not only at Jewel but at Chicago area competitor Dominick’s, among other retailers.
What the Experts Say
Seafood processors report generally strong sales in 2011, thanks in large part to the eat-at-home trend.
“Our sales are up double digit [and] private label in our category is doing quite well,” says Lou Shaheen, vice president of sales and marketing at Trans-Ocean Products, Bellingham, Wash. Trans-Ocean markets surimi, a Pollock-based product that is often called fake crab meat and sold in long, formed sticks suitable for dipping and eating as appetizers. Cheaper than real crab, surimi is attractive to shoppers today because of its lower price point, Shaheen says. “And the quality is there too” as retailers push suppliers to improve the quality of their products while retailers also put more marketing muscle behind surimi products, he says.
Trans-Ocean does branded and private label surimi. On the branded side, it has found couponing, through its Web site and such social media as Facebook, effective in increasing sales. It’s also targeted Weight Watchers members for special promotions, stressing the health benefits of its products, he says.
Private label frozen seafood appetizer sales also held strong in 2011, says Jeff Legge, vice president of sales and marketing at Canadian processor Ocean Pier Inc. The eat-at-home trend means that when it comes to appetizers, consumers across North American are asking for “creativity and [have] more desire for adventure,” Legge says. Adventurous tastes and varieties, but not at too high a price, he adds. “Price continues to be a driving factor. In this market, you can’t come up with something with 10 pieces [in a package] and expect to sell them for $25,” he warns.
Retailers aren’t accepting price increases when they see consumers holding tightly to every dollar. But the price of seafood that goes into appetizers and other private label seafood offerings continues to rise, squeezing processors, Legge says. Ocean Pier last year saw increases as high as 30 percent for scallops, for example. Other species it buys, including shrimp and crab, saw prices of raw materials rise 10 to 20 percent.
Trans-Ocean has been in the farm-raised shrimp game the past three years, selling to foodservice and offering a branded line, and even there “it’s all about price point,” says Shaheen, “it’s been a battle.”
If processors can get a handle on costs, the outlook should continue bright for their frozen seafood sales. Indeed, a study at the end of 2010 by Mintel international Group, Chicago, predicted 6.7 percent compound annual growth for U.S. frozen seafood sales between 2011 and 2015. That would send the market up 37 percent over that period to reach annual sales of roughly $7.4 billion by 2015.
U.S. supermarket, drugstore and mass merchandiser sales data, excluding Walmart, supplied to PLBuyer by SymphonyIRI Group, Chicago, for the 52 weeks ended May 15, 2011, showed mostly gains for seafood (see PLBuyer, September 2011).
Private label accounted for almost half of frozen seafood sales in 2010, or roughly $1 billion, Mintel reports. “Smaller name brand companies accounted for nearly 40 percent of sales, which is nearly three times that of the larger name brand companies,” Mintel notes in its report. Gorton’s is the 800-pound tuna in the category with sales of $240 million in 2010, nearly double that of closest rivals Van de Kamp’s and Mrs. Paul’s, which together had sales of roughly $117 million, Mintel notes. Pinnacle Foods Corp. owns Van de Kamp’s and Mrs. Paul’s, while Japan’s Nippon Suisan Kaisha Ltd. owns Gorton’s. Other smaller brands accounted for $877 million in frozen seafood sales for 2010, Mintel adds.
There’s money to be made in private label seafood, if retailers know how to use the right bait, at the right price, to lure in hungry shoppers.
Dierbergs groups its frozen seafood together, wrapping offerings such as these shrimp skewers in trays with the Dierbergs name on the label.
Editor’s Note: PLBuyer secret shoppers are recruited through LinkedIn and Facebook as well as through personal contact by PLBuyer staffers. Each is given a questionnaire to complete on a category and told to shop where they normally shop for items in the category. PLBuyer endeavored to find shoppers who go to various types of food retailers. Future panels will look at other aisles. PLBuyer will employ a rotating group of shoppers for each aisle to provide a wide range of consumer views and insights for our reader