Private Label: Market Overview

Innova Market InsightsMay 2010

Different Response to Economic Downturn

Focus on core products/brands with extra marketing spend behind them

Pulling poorer performing brands off the shelf

Rising interest in cheaper and own brand alternatives

Growing presence of discount retailers

Overall, number of product launches recorded globally over 2009 has risen by 34.6%, but share of private label products has fallen in terms of product launches. Market shares for private label has actually increased.

Number of product marked as indulgent/premium has also fallen, however, number of products marketed on an economy platform has risen sharply.

Picture of overall activity and innovation is mixed

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Increase in Global product Launches

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Increase in Private Label Products

Retailers Look to Expand Market Share

Less emphasis is being placed by retailers on new private label product innovation. Retailers are now looking to expand their market shares.

For instance, AHOLD private label are now knocking off the most popular products like Bastogne cookies and Fruit2Day to grab sales.

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Product Launches 2007 2008 2009

Private Label 14.4% 16.7% 14%

Brands (other) 85.6% 83.3% 86%

Adapting To Economic Times

The current economic times leads to heavy discounting by branded products -tighter competition for private label.

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Carrefour Goes For Clean Look

www.carrefourdiscount.com is a dedicated website to promote its new range of low cost own brand products.

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Clean- lookingpackaging with simple, yet effectivegraphics. color onpackaging makes itlook “less cheap” andmore enticing.

Carrefour’s discount range reinforces theirbrand, which is in contrastto Tesco, who have chosen multiple new discount brand namesand packaging styles.

The facts

Looking To Health For Survival

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Products with a health positioning are on the rise.

Top Categories with Health Positioning

% Product Launches 2007-2009

Bakery & Cereals 17.8%

Soft Drinks 12.7%

Dairy 12.1%

Confectionery 8.2%

Ready Meals 7.5%

Sauces & Seasonings 7.4%

Meat-Fish & Eggs 4.8%

Snacks 4.7%

Baby Food 4.2%

Hot Drinks 3.8%

+30%

+31%

Company Launches Dominated by Health Claims

Health Claims – % Product Launches

2008 2009 % Change

Danone 77.1% 78.3% +1.2%

Nestle 45.3% 48.0% +2.7%

General Mills 56.8% 63.0% +6.2%

Kellogg 57.1% 65.2% +8.1%

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Health Claims – % Product Launches

2008 2009 % Change

Marks & Spencer 42.4% 67.0% +24.6%

Carrefour 49.3% 39.4% -9.9%

Albert Heijn 82.0% 78.8% -3.2%

Safeway 42.6% 47.3% +4.7%

Private Label: Positioning Standouts

North America

Positioning Category 2008 2009 % Increase in Product Launches

2008 to 2009

Microwaveable 6.89% 9.97% 3.08%

Kosher 22.64% 24.97% 2.34%

No Additives/Preservatives

12.13% 13.45% 1.32%

Children (5-12) 2.67% 3.49% 0.81%

Gluten Free 3.55% 4.23% 0.69%

Seasonal 0.64% 1.24% 0.60%

Digestive/Gut Health 1.44% 1.93% 0.49%

DHA 0.26% 0.63% 0.38%

Brain Health 0.26% 0.60% 0.35%

Omega-3 1.31% 1.58% 0.27%

Added Calcium 0.77% 0.98% 0.21%

Weight Management 0.05% 0.23% 0.18%

West Europe

Positioning Category 2008 2009 % Increase in Product Launches

2008 to 2009

Ethical 2.13% 3.99% 1.86%

No Additives/Preservatives

4.43% 5.86% 1.42%

Organic 2.54% 3.94% 1.40%

Economy 1.37% 2.22% 0.85%

Children (5-12) 1.86% 2.20% 0.34%

Wholegrain 0.79% 0.92% 0.13%

Lactose Free 0.08% 0.20% 0.12%

Low Calorie 0.52% 0.64% 0.12%

Low Sodium 0.71% 0.76% 0.05%

Bone Health 0.01% 0.04% 0.03%

Low Sugar 0.26% 0.29% 0.03%

Low Cholesterol 0.13% 0.16% 0.03%

Health Messages are Everywhere

Where are the opportunities?

Where are the opportunities?

In-line with Health & Wellness Trends

Innovating in Niche Areas

Matching Competitors

Pushing Premium Boundaries

Knock-offs and Price Comparisons

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In-Line with Health & Wellness Trends

Global Growth: Organic-> Natural-> Traditional-> Sustainable

There is growing trend in the food industry for all things “natural” Consumers demanding natural-> healthy Organic lends itself to the natural trend Traditional farming methods:

– without pesticides– more natural food– sometimes more labour intensive - demands premium pricing

Sustainability & Environment:– traditional methods more environmentally friendly

Claims North America West Europe

2007 2008 2009% Change (2007-2009)

Health launches2007 2008 2009

% Change (2007-2009)

Health launches

Natural 20.2% 23.6% 25.2% +5.0% 8.7% 10.8% 11.3% +2.6%

No Additives/Preservatives

12.7% 15.2% 16.2% +3.5% 24.8% 32.4% 35.2% +10.4%

Increase in PL Launches with Ethical Claims

Offering Sustainable Choices

Sustainable farming practices followed for private label products.

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The Importance Of Cleaner Labels

With the natural trend, there are more and more products with claims stating, for example “no artificial colors, flavors or preservatives”. This type of claim is being used as a selling point to consumers and is boldly displayed on the front of the packaging.

-1.4%+0.6%

+1.8%

Total Transparency For Natural Appeal

Netherlands: AH Albert Heijn Alleen met Natuurlijke Ingredienten Hollandse Gehaktbal met Spercieboontjes: Dutch Meat Ball with French Beans and Potatoes, in Gravy Sauce

Onlynaturalingredients

Sense of Simplicity: Back to Basics

Complex and stressful times are calling for simpler products, which is why Sense of Simplicity tops our trend list for 2010

The downturn is making people nostalgic for simpler times, and simpler foods. The interest in “back to basics” has driven interest in natural and clean-label foods

More natural ingredients are on the rise, including natural sweeteners extracted from source such as:

– apple– agave– maple syrup

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Sense of Simplicity: Homemade

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Using the word “homemade ” or “homestyle” in the promotion of new products is on the rise

Real Authencity: The Face Of Europe Is Changing

It is no longer enough to simply create a product with a regional positioning: the product should be based on ingredients from that region and ideally even be produced there

With the growing number of immigrants and a rising interest in authenticity, regionally-produced foods will undoubtedly be on the rise

Ethnic and exotic products have become more specific. Mainstream Indian style products shifted from being merely Indian, to indicating the region of India where the product

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Inherent Nutrition: Keeping It Simple With Ingredients

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Netherlands: AH Albert Heijn Water & Fruit Rood: Fruit Juice with Red Fruit & Water. With 9 sorts of fruit.  

France: Casino Ondilege Mousse Aux Fruits Peche-Mangue: Yogurt with Peach & Mango Mousse Flavor. Contains 50% fruits. These dairy specialties contain sugars which are naturally present in milk and fruit. 0% fat. 0% sugar.

Healthy Soil, Healthier Vegetables

Selenium enhanced soil could hold greatpotential for better health.

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UK: Marks & Spencer Young Super Spinach. Young super spinach grown in selenium enhanced soil.  Fresh and prepared. Rich in vitamin A. Natural source of calcium. Grown in selenium rich soil. Selenium is an essential mineral which is important for a healthy immune system. Washed, prepared, and ready-to-cook.  

Healthy Innovation

Private label offers consumers many healthy, innovative choices.

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USA: Trader Joe’s Shortbread Blueberry Bites with Almonds and Omega-3’s

Brazil: Carrefour Viver Light Quiche Integral Legumes: Light Wholegrain Quiche with Vegetables. "Viver" is a health line product from Carrefour brand. 26% less calories. This is a microwavable product. 63% less saturated fat. Source of fiber.  

UK: Aldi Optifit Liquid Breakfast Probiotic Yogurt Drink with Apple and Mango Flavors with Added Vitamin C

Fresh Daily Offerings

Combining freshness, health and convenience on a daily basis.

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Innovating in Niche Areas

Innovating By Addressing Allergies

Private Label has led the way with their “free from” ranges. Recognised a gap in the market. Gluten free product launches in

particular, have shown significant growth in recent years.

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UK: Sainsbury's Freefrom 5 Muesli Bars. Five gluten, wheat and dairy free muesli bars with mixed dried fruits, flaked almonds and hazelnut nibs.

France: Auchan Mieux Vivre Spaghetti A La Farine de Mais: Spaghetti Made From Corn Flour. Gluten free.

Catering For Individual Needs

Identifying demand and supplying the solution.

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  USA: Kroger Carb Master Strawberry and Banana Flavored Yogurt. Vitamins A and D and calcium added. Net carbs 3 grams. 

Netherlands: Albert Heijn 1 person Japanese Sukiyaki Wok Dish

Cooking For One Carb-Conscious Dieters

In-Store Bakery Innovation Booms

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Hungary: Fitberry Vorosszolos Kenyer: Bread Loaf with Red Grape Concentrate and sunflower and caraway seed. The red grape extract contains flavonoids which has a significant antioxidant effect.

USA: Safeway Premium WheatHot Dog Buns

Netherlands: C1000Melkbroodjes. MilkBread for Children

UK: Marks & Spencer Green Olive Ciabatta Rolls

Germany: VollkornBrot. Wholemeal breadwith sunflower seeds.

Wowing With Flavours

Unique flavours represent an opportunity to stand out from the rest on the shelf.

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Greece: AB Tangerine Sanguine Carrot Juice

USA: Trader Joe's Rice & Bean Chips with Adzuki Beans

France: Auchan Dark chocolate with violet. USA: Safeway Select

Mandarin Orange Naturally Low Fat Sherbet

New Texture & Flavour Experiences

UK: Snackrite Be Light Satin Crunch Thai Sweet Chilli Flavour. Six packs of Thai sweet chilli flavored crisps. 70% less fat. Less than 2% fat per pack. Only 80 calories per 20g pack. No artificial color, flavors or preservatives. Suitable for vegetarians. 

France: Casino Ondilege Mousse Aux Fruits Peche-Mangue: Yogurt with Peach & Mango Mousse Flavor

Belgium: Delicieux Aardbeien sorbet Sorbet Fraises: Strawberries Sorbet. Strawberries sorbet, a refreshing sorbet for one intense strawberry experience.

New Product Ideas

South Africa: Woolworths Breakfast Fruit Booster. Ready-to-eat dried bananas, apricots, and raisins in a plastic bag.

UK: Tesco Apple & Blackcurrant Juicy Water. 75% fruit juice + 25% water = 100% natural.

Australia: Coles Hot Smoked Salmon Portion 

USA: Market Pantry Mozzarella Double Twist String Cheese. Twelve individually wrapped mozzarella double twist (yellow and white) string cheese. Great for snacking.

Packaging Advantages Which Stand Out

UK: Sun Quench Fruity Shots Orange. Six bottles of orange flavored drink with squirty sports cap. With added vitamins. No artificial colors or flavorings. Suitable for

vegetarians. 10% fruit from concentrate.  

Netherlands: Plus Tuinerwten Extra Fijn Vriesvers: Frozen Extra Fine Fresh Garden Peas in a cardboard box with see-through aperture.

Speedy Step-by-Step

Accommodating single person households withcooking for 1 dishes.

Netherlands: AH Albert Heijn 1 Persoons Wok Schotel Japanse Sukiyaki: Stir & Fry Meal Japanese Yukiyaki. Ready to stir and fry Japanese sukiyaki meal with chicken breast, white rice, Chinese cabbage and sauce, separately held in a PET dish.

With ingredients ready prepared and simple step-by-step instructions, theconsumer can have a freshly cookedmeal from the wok in not much more time than a microwave ready meal.

Big Idea: Small Serves

“Small meal small salad small soup” is a range from AH which includes ready salads, ready meals and soups, all in small servings (280g).

Can be consumed for snacks or main meals.

AH Albert Heijn SmallMeal SmallSalad SmallSoup Beef Japanse Teriyaki - Japanese Teriyaki Meal

So Easy With Steaming

Netherlands: AH Albert Heijn Stoommaaltijd Tilapiafilet Kormasaus - Steam Dish Tilapia Fillet with Korma Sauce. Contained in a special plastic microwave dish, with a unique steam valve. Ready to heat in microwave.

Microwave 750W 5 ½ minutes or1000W 4 ½ minuteswith innovative steamvalve.

Steaming is associatedwith healthy cooking.

Clever Use Of Secondary Packaging

  France: Auchan dos de Hoki-Hoki with Potatoes

The steam valve which is uniqueto the product is highlighted witha clever aperture in the secondarypackage, drawing the consumer’sattention to it.

Secondary Packaging Colour

Using secondary packaging to convey the meal theme.

 UK: Waitrose Crab & Chilli Linguine. Prime Scottish crab dressed in a sunblush tomato and chilli oil, served on a bed of egg pasta in a plastic bowl held in a cardboard sleeve.

UK: Sainsbury's Espana Paella. Spiced rice seasoned with smoked paprika, garlic and white wine, mixed with red peppers, chorizo, chicken and prawns.

Seasonal/Limited Edition

Offering the consumer a unique flavour and experience for a limited time.

South Africa: Woolworths Limited Edition Moroccan Lamb & Lentil Soup

Netherlands: AH Albert Heijn Seizoens Vla Appel-Kaneel: Apple Cinnamon Custard

USA: Publix Premium Limited Edition Monkey Business Banana Ice Cream

Private Label Seasonal Launches

Private Label Profiting From Upcoming Events

South Africa: Woolworths Soccer Champion Shapes Pasta South Africa: Woolworths England and Argentina

Money Box World Cup Soccer Selection Jellies

Matching Competitors

Tesco Competes With Discounters

At the end of 2008 UK retailer Tesco launched a new range of 350 products under new discount brands in 10 categories to compete with Aldi.

Similar packaging and price scales to Aldi products.

Tesco also cut prices on existing Tesco and branded products.

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Tesco or Aldi?

Carrefour Fights Back in France

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Carrefour has launched a new range of 400 low cost food and non-food items and is promoting them via a dedicated Carrefour Discount website.

The launch of 'Carrefour Discount' is the company's latest initiative to defend itself against falling spending from the increasing cost-sensitive consumer.

As well as providing product information on each of the 400 items in the Carrefour Discount range, the website provides low cost recipe ideas and explains in detail its quality promise.

Getting Back to Basics

Offering more value and basics lines can win over consumers on a budget but still wanting a choice.

Discounters do not offer much choice.

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PL Copy Cats

UK: Tesco Crunch Duo Mix Banana Choc Crunch. Deliciously thick and creamy vanilla flavored yogurt with a separate portion of crunchy milk chocolate coated cornflakes.

UK: Asda 2 Chapattis: 2 Flatbreads. Two unleavened Indian style flatbreads.

Australia: Coles Chocolate Mint Supremes  

UK: Asda Loaded Cookies & Cream Ice Cream

Pushing Premium Boundaries

Differentiating Through Premium

Premium is an area where private label in recent times has excelled-providing the consumer with excellent quality

Excellent, select, choice etc are all examples of premiumranges.

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Provenance = Premium

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Many Fine Dining Options

Consumers staying in to save money may take advantage of private label premium dining options.

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Restaurant Inspired Products

UK: Menu from Waitrose Mains for 2 Shepherd's Pie. Slow-cooked minced lamb, carrots, celery, mashed potato.

UK: Tesco Finest Oriental Duck & Plum Noodle Bowl.   Description : Egg noodles tossed with shredded aromatic duck, pak choi, and spring onion, with a rich, sweet, plum and five spice sauce.

Netherlands: Plus Appetit Pappardelle Dried Pasta

Following Foodservice

Angus beef has been promoted heavily in foodservice (eg McDonalds angus beef burgers)- private label follows trend.

UK: Asda Extra Special 2 6oz Aberdeen Angus Beef Burgers Canada: President's Choice Angus All

Beef Frankfurters

Packed For Effect

Beautiful packaging make premium private labelproducts more appealing.

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Knock-offs and Price Comparisons

Special K

EUR 2.49

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Spain: El Corte Ingles Fit Way Copos de Arroz y Trigo Integral Tostadas con Frutas Rojas: Rice & Wholemeal Wheat Toasted Flakes with Red Fruit

EUR 2.69 or EUR 8.97/KG

Netherlands: AH Albert Heijn Special Flakes: Breakfast Cereal with Red Fruits

EUR 2.49 or EUR 8.30/KG

EUR 12.97/KG

Muller Yogurt

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0.39 EUR or 2.23 EUR/KG 0.49 EUR or 3.27 EUR/KG

Germany: Real Knick-Jogurt withChocolate and Vanilla Balls Germany: MullerJoghurt Ecke with Chocolate Balls

Magnum (Almond)

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Launched Internationally Magnum Almond

4.99 EUR or 14.51 EUR/KG

Germany: Real Mattea mit Mandel

1.99 EUR or 4.15 EUR/L

Joseph Banks Vegetable Chips

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UK: Aldi Snackrite Passions Vegetable Chips

1.38 EUR or 13.88 EUR/KG

Netherlands: Vegetable Crisps

1.69EUR or 16.90 EUR/KG

USA: Joseph Banks Cassava Root Vegetable Chips: Original Sea Salt

1.60 EUR or 14.19 EUR/KG

Functional Copy Cats

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$4.97 $4.97 $4.28 $5.19

Price/Kg

Summary

Private Label product launches numbers are growing annually, with the most product launch activity happening in the UK, USA and France.

Cakes- Pastries & Sweet goods and Sweet Biscuits & Cookies are the market categories with the most product launch activity.

Difficult economic times have called for some private label brand restructuring and deep discounting in order for retailers to compete with discounters such as Aldi.

Private label also has been innovative in its own right, with super premium offerings, innovating in niche areas and offering comparable and sometimes better products than their branded competitors.

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THE ENDThank you for your attention