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Private Label Products Not Just For Penny Pinchers

Slow economy spurs growth of upscale private label goods

By James Limbach
ConsumerAffairs.com

July 24, 2009
It's not your grandma's stick-to-the-roof-of-your-mouth generic peanut butter.

The Mintel Global New Products Database reports that amid rampant private label food product development, manufacturers stay current with the latest food trends. Providing more than just cheap alternatives to national brands, the newest private label foods woo shoppers with premium ingredients, portability and health benefits.

GNPD, which monitors product innovation in consumer packaged goods markets worldwide, says nearly 1,800 new US private label foods have appeared on retail store shelves so far this year. That works out to 27 percent of all food products introduced this year. In 2005, private label foods accounted for just 13 percent of new food product launches.

"Not only have private label introductions increased, but product innovation is reaching unprecedented highs," says Krista Faron, senior analyst at Mintel. "Retailers no longer only launch 'me-too' products to compete against major national brands. Instead, private label lines are hotbeds of creativity, driving markets and establishing themselves as trend leaders."

As over half of consumers try to spend less at restaurants, Mintel sees private label retailers creating premium in-home meals that boast restaurant quality and fresh ingredients.

Supervalu's Culinary Circle, for example, features an upscale Pork Carnitas Enchilada Casserole, while Wal-Mart claims fresh-baked taste in minutes with Sam's Choice Thin Crust Pepperoni and Canadian Bacon Pizza.

Portable, high-quality lunches are another hot area of private label development, says Faron. People want to save money by lunching at the office, and new private label foods like Safeway's Rice Noodle Soup Bowl (retailing for just $1.55) make desk-dining easy and enjoyable.

Convenience remains a driver for private label prepared foods, but Mintel GNPD sees health and nutrition increasingly influencing product development. Lucerne Foods gives shoppers convenience, nutrition and private label pricing with its Eating Right brand. Products span the store, including kids' Whole Wheat Mini Ravioli with fiber and protein, plant sterol-fortified Apple Cinnamon Granola, and Light Ice Cream Cups containing probiotics.

"Private label manufacturers realize 'value' means more than 'low price' to consumers, so they're wisely creating new products that deliver on some of today's most exciting food trends," notes Faron.

As the recession causes more consumers to cut down on food spending, both at home and by dining out less, private label has benefited: the US market grew 9.3 percent in 2008, compared with 4.5 percent for branded food sales.

Mintel forecasts it will grow another 8.1% by the end of 2009.

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