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Sky’s The Limit For Private Label Dairy Products
The Private Label Manufacturers Association held its 33rd trade show this week in the Chicago area, and if there’s one conclusion that can be reached after walking the show floor(s), it’s that the sky appears to be the limit for private label food and beverage products, including dairy products.
This point was obvious just after looking over a few show statistics from the PLMA. The total number of exhibit booths in the three halls of the Rosemont Convention Center was 2,535, up 10 percent over last year’s show, while the number of exhibiting companies, at 1,229, was 14 percent more than in 2012.
Pre-registration for PLMA’s Private Label Trade Show also reached record highs. Some 9,500 individuals in all categories registered before the show, an increase of about 12 percent.
The largest gain was among non-members of PLMA, ahead by 35 percent. What this appears to indicate is that the private label segment is attracting interest from companies that previously showed little or no interest in it.
Among retail buyers from leading US supermarkets, drug stores, discount stores, dollar stores and other chains, pre-registrations increased by 5 percent or more over last year, PLMA reported. Visitor registrations, which topped 4,500 last year, were expected to set a new record for 2013.
What all of this boils down to is that there is more interest today than ever before in store brands, at both the industry and at the consumer level.
And to put a dollar figure on that, Todd Hale, senior vice president at market research firm Nielsen, reported in an opening speech for PLMA’s annual seminar program that store brand sales reached $111.6 billion for the 52-week period ending August 31, 2013, up 18.5 percent from calendar year 2009.
National brand sales are still far greater; Hale noted that during the period ending August 31, 2013, national brand sales reached $529.4 billion, up 8.0 percent since 2009.
Those sales figures show that not only have store brand sales increased impressively in recent years, but also that there’s plenty of room for growth, given the $418 billion gap between private label and national brand sales.
What about private label prospects for the dairy industry in particular? Well, historically, private label has been extremely important to the dairy industry. Fluid milk, for example, has for a number of years been the number one supermarket private label category both by dollar volume and by unit volume.
(As an aside, this hasn’t necessarily helped fluid milk sales. According to a recent USDA annual report to Congress on the dairy producer and fluid milk processor promotion checkoffs, “One of the more significant differences between milk and its competitive set is the dominance of private label milk in the category, and the lack of major national brands to compete with significant brands in competitive categories.”)
Obviously, national brands are still tremendously important for the dairy industry, both in terms of historical and current sales (such as Kraft and Sargento in cheese, just to cite two examples), as well as some of the fastest-growing new products (such as Chobani and Oikos in Greek yogurt).
But private labels are becoming more important in the dairy business, if this week’s PLMA Private Label Trade Show is any indication. Among the cheese and dairy companies exhibiting at the show were some companies traditionally associated with the private label business, such as Schreiber Foods, Masters Gallery Foods and Great Lakes Cheese.
But at least a couple of other exhibitors are probably best known for their own brands. Saputo Cheese USA is known for brands such as Frigo, Stella, Treasure Cave, Lorraine, Dragone, and Schneider Cheese. And Saputo is also now targeting the growing store brand market.
Then there’s Lactalis American Group, which is best known for its President, rondele and Galbani brands (the latter of which includes the former Sorrento and Precious brands). Here again, Lactalis American Group was exhibiting at the PLMA show and is obviously interested in the private label as well as the branded businesses.
One other very large (though not primarily a dairy company) exhibitor also caught our eye at the PLMA show. That was ConAgra, which is known for well-known brands ranging from Swiss Miss and Reddi Wip to Healthy Choice and Marie Callender’s.
But on its website, ConAgra points out that it is “the national leader in private brands, or ‘store’ brands, providing food for brands that retailers commonly sell as their own.”
What’s going on here? Ever since the Great Recession started, interest in private label products (not just food) has skyrocketed as financially squeezed consumers tried to get “more bang for the buck.”
Retailers have responded by focusing more on their store brands and, among other things, increasing their quality and improving their packaging. Store brand products are now much better equipped to compete on qualities other than just price.
How much might private label products grow in the future? This week’s Private Label Trade Show was the largest in the 33-year history of the PLMA’s trade shows. As noted earlier, PLMA reported double-digit increases in, among other things, the number of exhibition booths, the number of exhibiting companies and the number of people who pre-registered for the show.
Will double-digit sales increases for private label products follow? DG
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