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Private Label v. Big Food:
How purpose pays off

Private Label v. Big Food:<br> How purpose pays off

By Brad Hanna
EVP, Business Strategy Director

Ten years ago, futurists would not have predicted the current decline of Big Food, one that’s dramatically transforming the food industry as major food labels struggle to maintain sales growth. Think about this list of mega food brands struggling to maintain sales or profit growth: Kraft Heinz, Del Monte Pacific, Dean Foods, TreeHouse, Conagra, Kellogg, Campbells Soup and JM Smucker.

These are icons of the aisles. If others avoided the list, it’s only thanks to aggressive acquisitions or global expansion that have masked the decline of their iconic flagship brands in the U.S. 

This is a major revolution in food, which means the following formula no longer works: 

  • Advertising on TV during peak seasonality
  • Securing quality promotions during peak seasonality and limited price promotions to sustain sales in between
  • Introducing 1-2 line extensions to protect shelf presence
  • Focusing on the functional benefits of quality, trust and value.

So how is this working today? According to Credit Suisse analyst Robert Moskow, the combined market share of the top 20 packaged-food companies fell to 42.4% last year from 46.8% in 2011.

Who’s to blame for the lost share? Private, niche and entrepreneurial brands. Nielsen data shows the growth of private label is outpacing brands. Private label sales are growing faster at the premium tiers where brands once dominated. This illustrates the trend of savvy retailers introducing private label brands that act and look like national brands versus value brands. 

If you look at Inc. Magazine’s fastest growing food brands today, you see six of the top 10 brands are going after mega categories with incredible innovation. Particularly popular are products in the following categories:

·  Vegetable and rice based pastas

·  Plant-based dairy-free dairy products

·  Grass-fed dairy products

·  Gluten-free, nut-free and vegan baking products

·  Plant-based protein drinks

·  Healthier meat snacks

Our recent book on the purpose advantage sheds light onto what is happening in the marketplace: brands that have traditionally won on price and quality are losing out to brands built on price, quality and purpose. Today's consumers look for brands that align with their beliefs and values. Smaller niche brands are aggressively filling this space and chipping away at the larger national brand sales. These niche brands are coming into the marketplace with a purpose advantage: building brands on sustainability, clean eating, connection to who raised/how raised, and frictionless experiences. These brands deliver against price and quality, but have doubled down on purpose as a differentiator.

The challenge for Big Food is to build a purpose advantage for every brand within their portfolios—many smaller brands within a portfolio strategy struggle to find purpose, while bigger brands cannot afford to invest in building a purpose under individual brands vs. the parent brand. Slow loss in sales is the result.

What are brands to do? Consider the following questions:

Have you built a winning brand from the inside out?  Do not miss the importance of culture first.

Do you have a brand promise that will connect with a consumer belief or emotion vs. a functional rationale?

Do you live your promise with dynamic brand that demonstrates you are a modern brand?

Do you allow for brand spontaneity and capitalize on here and now cultural opportunities?

When thinking about Brand Love®, do you show spontaneity?

***

Private label brands aren't what they used to be. The days of "stack 'em high and let 'em fly" have passed.  The private labels succeeding in today's marketplace are launched as brands - with purpose, voice and stories to connect to to the consumer. See how we helped ShopRite launch their two new own brands, Bowl & Basket and Paperbird. 


Barkley US

Feb 13, 2020

filed under:
Consumer Products, Purpose

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