she said. “I didn’t know anything when
I started and they took us through
everything step by step.”
Adapt to their system. Retailers will
control the brand and p roduct devel-o pment
p rocess, but
a re juggling a
l ot of priori-t ies and
c ompetitive
i ssues,
which can
r esult in
p roject delays. Generally
Once Again Nut Butter,
which saw 14 percent new products
growth in their private take around
label from January to June 27 weeks to
2008, works with a broker bring to
to take a big bite off their market, with
private label workload.
line exten-
sions in existing retail brands taking 9
to 12 weeks.
One area that a new packer might
need to invest in up front is an employee or consultant who can evaluate
and understand legal requirements for
labeling. Most branded folks have this
anyway, but the volume of work might
be heavier than anticipated. Private
label retailers are notorious for piles of
paperwork, so be prepared.
Make a commitment to quality and
innovation. Avoid the temptation of
thinking of private label as just way to
fill down time. A commitment to the
retailer to provide service and quality is
absolutely necessary to be successful in
organic private label. These days, private label vendors are held to a much
higher standard than in the past, and
the product must pass many cuttings,
even consumer panels, before the account launches the product. Also,
today most major retailers have extensive quality control resources in place
for their private label contracts. This
means that they often conduct plant
audits, pull random products from
shipments or from shelves for testing
and demand more explanation from
the packer on the source of ingredients, certification of suppliers, etc.
Monitor sales. While it is not your
job to market the private label product, it is important to make sure to
watch sales and be proactive with the
retailer to ensure that your product
gets into store ads and doesn’t get
pushed to the bottom shelf. Product
sales in main line aisles should be at
least one case per store per week; any
less, they are vulnerable to deletion
with resulting label liabilities and business loss.
Future Opportunities for
Organic Private Label
There are several opportunities for
continued growth of organic private
label. For one thing, Europe has
proven that it is possible to gain a
much higher market share. Tesco and
Sainsbury in the UK, Albert Heijn and
Delhaize in Benelux, and Carrefour
and Auchan in France, all regularly report penetration rates for private label
at 55 to 60 percent.
Also, U.S. retailers are continually
evolving. In the United States, most supermarkets have opted to develop sub-brands. For example, Safeway’s O
Organics and Ahold’s Nature’s Promise have become multimillion-dollar
brands in their own right and helped
to re-position the store banner competitively in their markets. And what of
the recent success of organic private
label in the mass and club channels?
Club-channel organics is still dominated by national brands, but will this
change in the future as programs like
Costco’s Kirkland co-brands and
Earth’s Pride at BJ’s begin to develop
the same treasure hunt with organic
and gourmet private label products? If
the goal is to sell organic at the club
store at the retail price of conventional
national brands at the supermarket,
club stores could gain a sizeable share
of the wallet from both natural and supermarket chains.
Overall, no matter what retail venue
you are talking about, as long as
“value” and “values” remain important
to consumers, the future looks very bright for organic private label.
Ron Rash is a partner at
Organic Food International
(OFI), a consulting firm
that offers retailer and
vendor services ranging
from complete program
development to brand positioning, and
product development to sales and marketing services. He has helped pioneer private
brand organic products in the conventional
grocery channel and brings a wealth of manufacturing experience. Ron has held executive and senior positions in his career at
Maxwell House/General Foods, Bake-Line/Keebler, Hain-Celestial, International
Nutrition, Allied Old English and Wizard’s
Cauldron. You can reach Ron at ron@organ-icfoodsinternational.com
Bob Johnson is the
founder of OFI and was integral in transforming
Trader Joe’s into today’s
powerhouse retailer. He
was also the co-founder of
the Whole Foods Brand 365 label, and has
consulted with some of the most successful
natural and organic private label brands in
the United States. You can reach Bob at
bob@organicfoodsinternational.com.
Graham Mitchell, the
founder of Sustainable Innovations consulting
(
www.sustainableinnova-tions.com) works with retailers and national brands
to expand sustainable and organic sourcing
and manufacturing programs, and develop
new brands and distribution. He led Stop &
Shop’s and Giant’s development team for
private label food and beverage programs as
well as the Ahold’s Global Innovation Team.
He was also responsible for the launch of
“Simply Enjoy” gourmet and “Nature’s
Promise” organic and natural private label
products. You can reach Graham at gra-ham@sustainableinnovations.biz.
