Private Brands continue to be a contender in the refrigerated and frozen food space as shoppers return to in-store purchasing and online storefronts improve their private label selection and search capabilities. For example, frozen entrées jumped 16.2% in e-commerce growth over 2021, according to NeilsenIQ. (NielsenIQ Omnisales Scan, Total US, Latest 52 weeks ending 12.31.2022).
Trust in Private Brands is at an all-time high, with private brand consultant Daymon’s proprietary research showing 89% of consumers trust Private Brands just as much as if not more than National Brands.
Jim Griffin serves as executive vice president at Daymon. With more than two decades in the industry, he discusses opportunities for manufacturers and retailers, what is trending with consumers and what is on the horizon in this category.
Private Brands are currently performing well, with the outlook for future growth appearing strong. Across the total retail market, Private Brands are outpacing National Brands in performance with double-digit dollar growth up 12.8% while maintaining a lesser unit decline pace as well (Source: Nielsen Discover, Total US xAOC, 52 weeks ending 2-25-2023). Continued growth, particularly in the frozen and refrigerated space, is executed best via strategies that meet a wide variety of key consumer needs. This stretches from omnichannel developments that elevate and promote Private Brands, product and assortment considerations to support key lifestyle expectations, and continuous execution against consumers’ desire for flavor exploration.
Over the last few years, best-in-class retailers have made significant omnichannel advancements, including increasing their Private Brand presence on the digital shelf and in suggestive search. While shoppers have resumed in-store purchasing, online sales continue to grow. We expect to see enhanced commitments from retailers to strengthen Private Brand omnichannel marketing strategies. This includes tools across all shopper touchpoints, including social media, website enhancements, apps, email marketing, and marrying strategies all the way to in-store communication. Increasing focus on Private Brand frozen and refrigerated categories across omnichannel touchpoints is a strategic tool that will further Private Brand success and retailer store loyalty.
Beyond activating omnichannel tactics, there are product and assortment strategies that we expect to continue dominating these categories, including in new ways. One approach is through assortment developed to satisfy the wide range of household sizes – for example, considering the needs of a multigenerational household versus a single Millennial shopper. Another strategy includes supporting the balance of organic and lifestyle needs with quick and easy meal solutions. We are seeing the expansion of clean label products, alongside health-forward and free-from options. Key examples include prebiotic yogurts, organic dairy options with value added functional benefits, and prepared entrees with superfoods or added protein.
Aside from dietary and health expectations, we expect Private Brands to continue strengthening the top driver of new product trial: flavor. Frozen and refrigerated foods are a convenient avenue for consumers to try a new cuisine while racking in the cost savings from dining in. Flavor is a critical tool for Private Brands to drive newness and excitement within frozen and refrigerated categories. Private Brands can capitalize on this trend by expanding into unique flavor pairings and global cuisine profiles.
Inflation continues to impact consumers’ purchasing decisions. To offset rising prices, one purchasing shift taking place is category shifting, such as from fresh to frozen. Frozen alternatives offer longer storage and expiration alongside bulk pricing, furthering their inherent value to meet a household’s need to reduce waste while also saving money. Private Brands are uniquely positioned to support this shift, as Daymon proprietary research shows that nearly 70% of consumers say Private Brand are a better value for their money. In fact, according to a recent Advantage Solutions consumer study, 53% of shoppers always or almost always purchase their favorite retailers’ frozen Private Brands. This demonstrates that shoppers recognize the benefits of Private Brands within frozen categories and their ability to meet their shopping needs.
Another component driving an appetite for frozen Private Brands is their proliferation across dayparts. From supporting breakfast, lunch, and dinner to snacks and desserts, best-in-class retailers have a strong Private Brand presence across frozen departments and use their vast portfolios to support their loyal shoppers. A key insight supporting how critical frozen is across dayparts is the finding that the top three categories driving Private Brand frozen unit volume are frozen vegetables, frozen prepared foods and frozen desserts. Whether shoppers are looking for fully prepared meals, convenient meal components, or an indulgent sweet treat, consumers are without a doubt turning to Private Brands across the frozen food departments.
Aside from inflation, what are some other factors allowing private brands to compete in the cold foods marketplace?
Historically, one of the largest barriers for Private Brand purchasing has been initiating trial. Throughout the last few years, supply chain issues causing rampant out-of-stocks has been an opportunity for Private Brands to convert shoppers and shift purchasing behavior. Consumers who previously may not have considered purchasing certain Private Brand items began shifting their mindset to try new brands due to these out-of-stocks and price increases. Across the total market, Private Brand unit share in frozen and refrigerated categories is up 0.5% over the past year, reaching 31%, while National Brands show a stronger unit decline pace compared to Private Brands (Source: Nielsen Discover, Total US xAOC, 52 weeks ending 2-25-2023).
With heightened consumer confidence in Private Brands, this has given retailers permission to expand within their portfolios to convert positive trial into long-term retailer loyalty. Continuing to innovate is particularly prevalent in capturing younger shoppers; with our research showing 46% of Gen Z and 43% of Millennial shoppers view Private Brands as better than National Brands when it comes to offering new and innovative products. Best-in-class Private Brand retailers can leverage flavor as a tool to capture these younger shoppers, such as with unique hummus options like sriracha and honey or avocado. With in-store shopping having resumed, this is providing motivation for retailers to invest in increasing their in-store sampling and experiential marketing of innovative Private Brand frozen and refrigerated items, increasing trial and engagement across these key generations.
Are there areas where private labels can set themselves apart from name brands?
Overall, consumer trust in Private Brands is giving retailers permission to treat them like true brands, rather than following the lead of National Brands when it comes to everything from assortment to packaging design. One way Private Brands can set themselves apart is by leading with a strong tier structure. A multi-tiered approach within frozen and refrigerated categories allows retailers to cater to a wide variety of consumer needs with respect to quality and price, while incorporating an ownable lens to innovation. The four tiers include Mainstream, Lifestyle, Premium, and Value, with innovation most critical within the first three. For the Mainstream tier, product innovation may translate to creating alternative suggested uses, such as new formats calling out cooking methods of air frying, roasting or skillet. When introducing Lifestyle-tiered products, retailers should look to develop items that support consumers’ needs to eat healthier and incorporate sustainability. In considering Premium tier additions, retailers must capitalize on elements that elevate these products (i.e., with unique ingredients, origins, or production processes).
Once a robust tier approach has been structured and activated, it is essential that these Private Brands be marketed across channels, as well with key callouts on-pack to induce purchasing. Within the Lifestyle tier, this means emphasizing a product’s unique attributes such as sustainable qualities or “free-from” ingredients. For the Premium tier, this translates to calling out restaurant-quality attributes that consumers can enjoy at home. Within the Value tier, as price is the main purchasing driver, the best recommendation is to center marketing efforts on emphasizing low prices.
How can private label brands work with/benefit startups and small food companies?
There can be a mutually beneficial relationship between retailers and emerging brands or smaller food startups if they are willing to sell their unique or innovative products as Private Brand solutions. These startups may not have the funding to scale a National Brand presence quickly, so by assessing the business benefit to potentially launch as a Private Brand supplier, small companies can achieve success. By focusing on the right retailer partnerships to secure Private Brand distribution, a food company can build fruitful, long-term relationships and scale accordingly. Additionally, the startup can then continue plans to build a branded presence across the retail landscape, while offering Private Brand exclusivity to retailers that supported their efforts to get them off the ground. Incubator programs from major retailers are becoming more commonplace as a way for retailers and Private Brand programs to invest in emerging brands or suppliers, supporting scalable growth with the end goal that the product will flow into the major retailer's stores in due time.
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