PLMA e-scanner March 25th, 2023

Issue #6 of 24
March 25, 2023

NEWS ROUNDUP
New Year, Same Double-Digit Sales Growth for Store Brands
bargraphup

When it comes to store brand sales, last year's performance will be a tough act to follow. But so far the products are overachieving.

During the first two months of 2023, store brand sales picked up right where they left off in 2022, with double digit dollar gains and increased market share in both dollars and units, according to Circana (formerly IRI and NPD) data as of February 26.

Information Resources, Inc., and The NPD Group, which merged in October 2022, announced on March 7 that it had named its new company Circana.

Across all U.S. retailing channels, store brand dollar sales increased by 11.2%, that is more than twice the gain of national brands (plus 5.5%), compared to the same two months last year. Store brand dollar share rose to 19.6% and unit share moved ahead to 21.1%, vs the same two-month period last year.

A sign that store brands may equal or even surpass last year's gains: In February alone, sales jumped 11.7%, vs last February; in all of 2022, store brand sales rose 11.3%.

As was the case last year, all brands shed unit sales. But like in 2022, store brand units declined far less than national brands: they were off 1.4% vs minus 4.3% for national brands.

Among the 17 departments IRI Unify tracks exclusively for PLMA, 15 saw increased store brand dollar sales during January and February. The top gainers were Beverages (up 18.6%), General Food (17.1%), Bakery (16.9%) and Refrigerated (16.8%). Eight departments improved in terms of store brand unit sales, led by Deli Cheese (plus 2.6%), Bakery (2.2%), Health (1.6%) and General Merchandise (1.6%).

The next report to PLMA from Circana is due April 3; that will conclude results for the first quarter of the year.

PLMA members and accredited retailers who want to dig deeper into the latest store brands and national brands sales data can go to the portal called "Exclusive Market Data From PLMA" on plma.com.

Lunch & Learn, April 27, to Focus on 'How America Eats'
LandL Banner

PLMA's popular Lunch and Learn series returns on April 27 with a program titled How America Eats. The presentation will shed light on why so many food and beverage trends come and go in the blink of an eye and what is behind this phenomenon.

Elizabeth Horvath, Vice President of Marketing of the Kerry Group, will share new research on what shoppers want from leading food and beverage categories and based on their needs, will provide context on trends retailers and manufacturers should watch for in the year ahead.

Kerry surveyed 5,000 U.S. consumers to understand the effects of the pandemic on their motivations and desires. The results presented by Horvath will reveal what’s driving purchasing habits across categories, gender, and generations. Leading a team of highly skilled Kerry professionals, Horvath drives strategic growth, using creativity and insights to connect needs to solutions.

This will be PLMA’s fourth Lunch & Learn session in 2023.

The first was held on January 26 and focused on growing private label sales and hosted by Kyle Patterson, Senior Vice President of Daymon. The session was held February 2 with a review of store brand sales from 2022 by MaryEllen Lynch of IRI. The third was held on February 23 by Gary Stibel of The New England Consulting Group.

Lunch & Learn sessions are conducted online for 60 minutes starting at 12:30 PM EDT. The professional development program is complimentary for all PLMA member manufacturers, brokers, and suppliers as well as for retailers and wholesalers.

To register for any session, please click here or please contact Julia Meehan at education@plma.com for more information.
 
USDA Proposes Closing 'Made in USA’ Loophole
Made in USA

The U.S. Department of Agriculture is proposing closing a regulatory loophole that enables meat and poultry producers to label their products as “Made in the U.S.A.” even when the animals are born and raised and much of the processing takes place outside the United States.

Under the proposed change, any meat, poultry or egg product would have to be “derived from animals born, raised, slaughtered and processed in the United States” in order to be labeled as a U.S. product. The USDA noted that the proposed change is a key component of President Biden’s executive order, Promoting Competition in the American Economy. 

Agriculture Secretary Tom Vilsack said “American consumers expect that when they buy a meat product at the grocery store, the claims they see on the label mean what they say. These proposed changes are intended to provide consumers with accurate information to make informed purchasing decisions. Our action today affirms USDA’s commitment to ensuring accurate and truthful product labeling.”

The USDA said a survey taken last summer revealed that nearly two-thirds of respondents (63%) incorrectly believe that all production steps must take place in the United States for manufacturers to apply the label.

The proposed rule will be open for public comment for 60 days after publishing in the Federal Register. Public comments can be submitted at www.regulations.gov.
 
Kroger's Store Brands Led to Strong Earnings in '22
Kroger logo

Kroger announced its Q4 and FY22 results and a major highlight was strong private label sales.Kroger’s store brand sales increased 10.1% in the final quarter of 2022, as the chain also saw Q4 identical sales without fuel increase 6.2%, while total company sales were $34.8 billion, compared to $33.0 billion for the same period in 2021. Gross margin was recorded at over 21% of sales and operating profit totaled $826 million for the company.

Kroger has used its extensive private label portfolio to its advantage and its store brand sales have seen positive growth throughout the year. It’s Simple Truth and Home Chef  lines have proved to be especially popular with consumers. The grocer has also continued to expand its product set, including the launch of its new value-tier line Smart Way this past fall.

“Our brands’ quality and value proposition [are] especially important when inflation is affecting so many of our customers’ lives,” McMullen said.

While Kroger did not release a figure of its total annual store brand sales they are estimated to be close to $30B in annual sales and consist of roughly 25% of all sales from the retailer. 

In addition, findings from Kroger’s retail data firm 84.51°’s February 2023 Inflation Wrapped report found Kroger shoppers continued to cut back in certain categories, as well as buy less expensive products in others, possibly leading to continued positive news for Kroger’s private brands in 2023.

For instance, the report found when it came to buying less expensive brands, Kroger customers were purchasing more in pet food (+3%), baby care (+2%) and paper products (+1%).

Kroger's private label chief -- Juan De Paoli, V.P. Our Brands -- is the keynote speaker at PLMA’s Annual Meeting & Leadership Conference, March 22-24 at the Hyatt Regency Grand Cypress, Orlando.

He will talk about how Kroger’s Our Brands portfolio contributed to the success of its corporate 2022 earnings. Juan will also share how he and his team are "winning with Our Brands by building loyal customers who choose to shop at Kroger for the value and quality of Our Brands’ products."

 

Research Firms IRI, NPD Rebrand as Circana
Circana logo

Information Resources Inc. (IRI) and The NPD Group unveiled a new combined company name and brand identity: Circana.

Circana is a leading advisor on the complexity of consumer behavior, the firm said. Through technology, analytics, cross-industry data, and expertise, Circana provides clarity that helps clients take action and unlock business growth. The two companies agreed to a merger in August of 2022.

IRI is also a partner with PLMA providing complementary online market data to PLMA members and retailers via its Unify data portal.

“We are proud to begin this new chapter together as Circana, a name that conveys our 360-degree, full-circle understanding of the consumer and market, and our unique ability to bring clients a complete view of the consumer, store and wallet,” said Kirk Perry, president and chief executive officer, Circana. “In today’s dynamic global retail and media environment, our value proposition has never been stronger. Circana is undeniably best positioned to advise the world’s leading brands and retailers across almost every industry on how to identify opportunity, ignite innovation and grow well into the future.”

Leveraging the data and expertise of its heritage firms, Circana tracks millions of products spanning more than 2,000 categories across more than 500,000 stores in 20 countries, the company said, with insights powered by technology platform Liquid Data. Today, Circana advises almost 7,000 brands and retailers worldwide, it said.

“The combination of IRI and NPD created a category of one. In the months since the merger, we have demonstrated—for our clients and for our team—the immense value of bringing our firms together,” said Tod Johnson, chairman of Circana’s board of directors. “Moving forward with a unified name and brand signifies that Circana is committed to delivering on the full value of our powerful combination for all of our stakeholders, with a relentless focus on innovation and growth.”
Amazon to Close Eight 'Go' Stores
Amazon go

Amazon has announced it will permanently close eight of its high-tech Amazon Go convenience stores. The move is the latest by the company to pull back on some of its brick-and-mortar retail operations.

“Like any physical retailer, we periodically assess our portfolio of stores and make optimization decisions along the way,” an Amazon spokesperson said in a statement explaining the move.

The closures will include two stores in Seattle, two stores in New York City and four in San Francisco, Amazon said in its statement. The affected stores will continue to operate until April 1.

The company stressed that despite the closures, this will not mean an end to the Amazon Go store concept. “We remain committed to the Amazon Go format, operate more than 20 Amazon Go stores across the U.S., and will continue to learn which locations and features resonate most with customers as we keep evolving our Amazon Go stores,” the company said in a statement.

Amazon’s physical stores in the U.S. include 535 Whole Foods Markets, 44 Amazon Fresh grocery stores, 28 Amazon Go c-stores and two Amazon Style apparel, footwear and accessories stores. The company opened its first Amazon Go store in 2018.

In another move, Amazon announced it was pausing construction on its second headquarters in Arlington, Virginia as it evaluates the space and size it may need for the project. 

 

Customers Prefer Pickup Over Delivery
Pickup grocery

Research from Incisiv and its Grocery Doppio digital grocery data platform has found grocery retailers continued to shift their customers toward store pick up and away from delivery in 2022 as they seek to unlock the potential profitability of online grocery.

Although pickup and delivery vied back and forth for share of the digital grocery market through the first half of the year, pickup has recently gained in popularity as a preferred method of fulfillment for customers. Incisiv reported that in the past year, from February 2022 to February 2023, curbside/pickup sales grew by 8.3%, an increase from $4.8 billion to $5.2 billion in sales during the same period.

Overall, 52% of all digital grocery sales in 2022 were fulfilled via pickup as opposed to delivery.

Many grocery retailers continued to expand their partnerships with third-party delivery services in 2022, however, as they sought to capture the growing percentage of sales that take place online and, in some cases, meet demand for rapid fulfillment of orders. However, this might be a trend that is waning.

Grocery sales through third parties fell to $1.8B in February 2023, down from $2.7 billion in February 2022 and $1.9B in January 2023, according to Incisiv. It also found most digital grocery sales were taken by grocers’ apps (5.9%), and grocers’ websites (75.8%).

In the stores

Dollar General has reformulated and rebranded its premium store brand dog and cat food line, Nature’s Menu. Nature’s Menu dry pet foods feature natural ingredients, vegetables, wholesome grains and are free from artificial colors, flavors and preservatives. This summer, Nature’s Menu will debut a newly reformulated wet pet food, made in the United States.

Target announced it will be discontinuing its Archer Farms brand from its stores. Target launched Archer Farms in 1995 and it eventually included items like bread, milk, pasta cereal, cookies, and yogurt, among many others. The line’s products will be replaced by its popular Good & Gather brand of products which accounts for more than $2 billion in sales.

Specialty retailer PetSmart is expanding its Arcadia Trail private brand pet line. The store brand will feature the launch of clothing along with gear and toys designed for dogs. They include dog harnesses, paw cleaners, portable showerheads, car seat covers and even a Pet Car Booster Seat.

Trader Joe’s has added a range of products to its shelves under the Trader Joe’s brand in recent weeks. They include Grilled Pitted Chalkidiki Green Olives, Slightly Coated Dark Chocolate Almonds, Organic Lemon Torchietti Pasta, which is imported from Italy, Korean Gochujang Sauce, and Bananas Bananas! Candy. This product consists of banana shaped milk chocolate candies will with banana flavored cream filling.

The home and holiday chain At Home has announced the launch of its new private brand Providence. Providence will include a wide arrangement of products from tabletop products, home décor and pillows, and furniture for both indoors and outside the home.

GNC has expanded its line of Girl Scout Cookie-Inspired Flavors with the launch of several new products. The new flavors can be found in items such as GNC AMP Wheybolic and GNC Total Lean Shake 25 in GSUSA's Toast-Yay, which will have a Cinnamon French Toast-inspired flavor.

 

Market research
Most Shoppers Buy Natural and Organic Foods
Organic sign

According to a report from the Acosta Group, natural product sales continue to rise while interest and usage has increased across all age groups, particularly Gen Z and Millennial shoppers buying natural/organic products.

The study found these shoppers also tend to be more affluent, placing a higher emphasis on leading a healthy life, being eco-friendly and concerned for animal welfare, and trying new products.

“When we ask natural and organic shoppers of all ages the most important influence in their product choices, the top response is their focus on being healthier, including the avoidance of chemicals, pesticides and processed foods,” said Kathy Risch, SVP, Consumer Insights and Trends at Acosta Group.

 “They place nearly equal importance on ingredients as they do on price, while conventional shoppers place more importance on price alone,” he added.   
However, the study also found consumers of natural and organic products had difficulty explaining the difference between natural and organic, often responding that the two are “similar” or that they are “unsure.”

“This knowledge creates an exciting opportunity for brands and retailers to further educate both natural and organic and conventional shoppers,” said Risch.  

For non-natural and organic shoppers, 73% list price as the primary reason they did not purchase natural and organic products, with 47% saying that conventional products are "more practical" and 44% expressing skepticism about the "hype" around the products.  

Acosta Group’s Natural and Organic online survey was conducted with 816 primary household shoppers, ages 18-76, from Acosta’s proprietary shopper community. The survey was conducted from Oct. 26 through Nov. 4, 2022.

 

PLMA News and Happenings
Store Brand Beverage Numbers Deserve a Toast!

Featured in PLMA’s e-Scanner March 25, 2023 newsletter, created by Tom Prendergast, Director, Research Services

Throughout store brands' steady double-digit gains of 2022, which has continued through the first two months of this year, fully 16 of the 17 departments tracked by IRI showed store brand improvement.

One department demonstrated particularly strong sales performance -- Beverages -- a section once considered impenetrable for store brands due to the powerhouse national brands that inhabit it.

But that dominance may be changing. In this extremely competitive department, store brands have been growing at a faster pace than brands for the past 4, 12 and 52 weeks, reported IRI Unify exclusively to PLMA.

The numbers deserve a toast. Total private label beverage sales in 2022 were $12 billion and dollar sales grew by 19.3%. Double digit growth continued into the new year as dollar sales over the past four weeks totaled 18.6%, only a slight dip from the 20% sales growth in the past three months.  

The Beverages department is the third largest of the 17 tracked by IRI when it comes to national brand and store brand dollar sales ($130B) and second largest in unit sales with over 40 billion in sales. 

The largest category in beverages is bottled water. The category has sales of $6.8 billion in 2022 and dollar sales growth of 23.1%. While dollar sales did slow, from 21.3% over 12 weeks to 20.3% in the past four weeks, it remains the largest dollar sales category in the department.

Water is not the only growth category in this department. When you take a closer look at other areas you see while not everyone is showing growth but the ones gaining sales are especially strong.

For instance, carbonated beverages have increased from 15.8%-dollar sales growth last year to 32.4% in February and 28.9% over the past three months. This growth is also reflected in unit sales, as sales for carbonated beverages grew 4% in the past 4 weeks and 1.2% over the past 12 weeks. While unit sales did dip 2.5% last year, like dollar sales, sales of units of carbonated beverages continued to advance.

Two other growing categories over this period were refrigerated tea/coffee and tea bags. Refrigerated tea/coffee grew from 8.2% in dollar sales last year to 10.7% in the past four weeks. Tea bags had even more dramatic results, as dollar sales went from 5% in 2022 to 12.3% in the past three months to 17.5% in the past four weeks.

Other categories also stood out. These include bottled juices (10%), coffee (15.4%) and ready to drink tea/coffee (15.8%); all had double digit growth in 2022. In the past four weeks, while growth has slowed, it remains positive, ranging from 66.8% for ready to drink tea and coffee to 13.9% for coffee and 10.2% for bottled juices.

Unit sales improvements were also striking. Ready to drink tea/coffee saw units rise from 10.4% in 2022 to 84% over the past 3 months and 75.7% in the past 4 weeks. Coffee unit sales were up 2.8% last year but kept most of that growth in the past four weeks with a 2.5%-unit sales growth.

After decades of being a bottom shelf afterthought in a strong national branded department, store brands are evolving to become a presence if not a player in many parts of the huge Beverages sector.

To find out more IRI Unify data is available to all PLMA members and can be found at plma.com where these statistics and sales of 317 categories and 967 subcategories can be found.

'World of Private Label' Show Set for May 23-24
WPL Logo

The global private brand industry will again meet at PLMA’s “World of Private Label” International Trade Show at the RAI Exhibition Centre, Amsterdam, on May 23-24.

Some 25,000 professionals from more than 120 countries are expected to participate. Exhibitors will be joined by retailers, wholesalers, importers, and others, to examine products, strengthen partnerships, identify innovation in business practices and plan for profitable store brand growth.

Products on display will include fresh, frozen, and refrigerated foods, dry grocery, and beverages as well as non-food categories, including cosmetics, health and beauty, household and kitchen, auto aftercare, garden, and housewares & DIY. The show will also present more than 2,500 exhibiting companies including 50 national and regional pavilions.

For more than 35 years, PLMA’s annual “World of Private Label” International Trade Show has brought retailers and manufacturers together to help them find new products, make new contacts, and discover new ideas that will help their private label programs succeed and grow.

In the past year, private label has increased its position throughout nearly all national markets. The future looks to be bright for store brands as retailers expand internationally and take a larger role in marketing themselves and the products that they sell.

For more information, click here.
 

 

PLMA is Open to New Membership

The Private Label Manufacturers Association is the only trade association devoted exclusively to the private label industry. Founded in 1979, PLMA currently has over 4,000 member companies. Membership is open to manufacturers, brokers, trade suppliers and other companies. PLMA members enjoy exclusive access and discounted pricing to PLMA events and services. For more information about membership, please visit www.plma.com or contact Barbara Cruz at (212) 972-3131, EXT. 1225 or bcruz@plma.com.

 

Events