The advance of private label candy
Private label has long shed its generic, lower-priced, lower-quality image.
All done with turkey leftovers, I hope! Trust you and yours enjoyed the bounty that represents Thanksgiving in the United States, and that the family feast was blessed with love, good food, plentiful wine and tasty sweets — particularly good chocolate.
This year I purchased an organic turkey — those were the only ones left at Costco last Wednesday afternoon before the holiday — and added a box of chocolates to the grocery cart while on the way out. In my case, I only two choices, the Kirkland private-label brand and a Belgian chocolate brand, the name which escapes me now.
In taking a closer look, I opted for the Kirkland box. Yes, it was a couple of dollars cheaper, but that wasn’t the prime motivator. First, the selection looked more interesting to me; there were more darks versus milk chocolate truffles. And second — and I may be wrong about this — I believe it was probably the same Belgian manufacturer whose branded box was on sale that supplied these for Costco.
In any case, the family was pleased, as was I. Private label has long shed its generic, lower-priced, lower-quality image. Some of you in my age bracket may remember those black-and-white packages on the shelves.
It was Loblaw’s, however, the Canadian grocery chain, that changed the entire raison d’etre of private label in the United States in the mid-1980s. After finding success with a private-label coffee that actually proved better than many brands, the company launched its President’s Choice line of products, all designed to be as good or better than the leading branded products.
Today, many store brand labels follow that “brand equivalency” formula. And while, there are several areas where private-label has considerable market share in a category, confectionery hasn’t been one of them.
That may be changing. I’ve come across several articles as well as private conversations with confectionery manufacturers that suggest we can expect to see more private label or store brands in the confectionery aisle.
David Hawk, chairman of Gertrude Hawk Chocolates and a 2005 Candy Industry Kettle Award recipient, is one of them. In a Confectionery News interview back in October, he indicated that private label production for supermarkets represents one of the fastest growing areas for the company.
And back in August, when I had occasion to sit down with Sal Ferrara, president and ceo of recently merged Ferrara Candy Co., the 2002 Candy Industry Kettle Award recipient indicated the same, pointing out that private label will have a greater impact on the U.S. confectionery landscape.
Current estimates peg private label confections as accounting for 3% of all candies sold. Ferrara says the sector is growing and will continue to do so.
“Private label will grow to 4% by the end of the year,” he told me. “You look at the West European model and the United States is nowhere near the amount of private label confections sold there. But consider the success of Aldi here. Then there’s the expansion of Wal-Mart’s Great Value brand and continued product extensions behind Walgreen’s Delish & Nice brands.”
But you don’t have to take Sal’s or Dave’s word for it. Consider the stats mentioned in a white paper published by Trace One and Planet Retail: private-label food sales ranged from a high of 27% at Kroger to a low of 18% at Costco and Wal-Mart. In addition, the Private Label Manufacturers Association indicated store brand sales grew by 3.9% in 2011 compared to national brands flat performance of 0.6%
How does this translate to confectionery? Well, Walgreen’s, Whole Foods and Trader Joes have done a fine job with private label. I expect many of the mainstream guys will customize that model to their needs.
This, of course, opens up opportunities for many midsized confectionery manufacturers and challenges for the big boys. This should stimulate innovation and quality improvements, all good things. Of course, others might view it as a variation of that old-age Chinese curse, “May we live in interesting times.’’ Let me know your thoughts.