The economic global crisis has been a catalyst for the development of retailers private label industry, and frozen food is amongst the store departments with the strongest private label growth.
Frozen food suppliers had not only a strong presence at this years’ edition of PLMA Amsterdam – the biggest trade show in the private label industry in Europe – but they also made themselves very attractive to the public, due to the impressive number of newly launched ready-meals, such as ethnic food (Italian pasta, Chinese food, German hamburgers and sausages, etc) and due to their innovations in packaging. Brian Sharoff, the PLMA president, explains why frozen food is amongst the store departments with the strongest private label growth, therefore getting a bigger exposure at PLMA trade shows every year: “It’s all about the changing lifestyle we have witnessed over the last 10-15 years: with the increasing number of working women, there is a higher demand for fresh prepared meals and frozen food. As women have less time for cooking at home, they buy more frozen food which can be easily prepared in the microwave ovens. Furthermore, more and more people are cooking just for themselves, as the number of single person households increases. Retailers have responded to these trends by being very creative with food, including the innovations in ethnic food”. Every year, popular trade show attractions at PLMA Amsterdam include the “Idea Supermarket”, which displays private label products from around the world, and “New Product Expo” section, which shows innovative products and packaging new to private label. This year, „New Product Expo” section of PLMA Amsterdam promoted a large number of frozen food products, such as: frozen yoghurt presented as a dessert, frozen ready-to-eat cup-cakes, organic and vegetarian ready-meal, while the “Idea Supermarket” focused on exposing new marketing initiatives of big international retailers for their private labels: celebrity campaigns, green packaging with recipes ideas, low calories vegetarian ready-meal range, etc.
Vegetarian and Bio setting the new trends
Vegetarian ready-meal and bio food have been two of the biggest stars at PLMA trade show this year. Retails came up not only with impressive innovations in terms of products characteristics, but also with new packages. The “Idea Supermarket” section exposed plenty of examples: intense green colored packages for SPAR vegetarian food range; natural design for Active Life products developed by Mercator; Waitrose private label ready-meals highlights the number of calories per portion on the upfront of the package with very large characters. Many of the food products promoted at this year’s edition of PLMA are substitutes for meat and dairy. Dutch frozen food manufacturer Encko exposed at its stand the ready-meal “File Chicken Stile” which is actually made of soy, but with a strong chicken taste. Still, the producer had also animal origin food at its stand, such as cheese soufflés, frozen omelets and frozen scrambled eggs. Even if the economic conditions are tough, premium products remain a strong segment in Western Europe, according to First Fruit representative. First Fruit is a Serbian frozen food producer exporting to a large number of countries. “Private label is slowly increasing every year in our category. This is our 3rd year at PLMA trade show in Amsterdam and we are satisfied on the visitors’ interest on our products” – said the First Fruit representative. One of the innovations promoted at the company’s stand was a premium frozen fruits mix: blackberry and forest strawberry. The packaging innovations exposed at PLMA have the purpose to reduce the preparation time. For instance, Crop’s manufacturer promoted the innovation “steam bag” available for different frozen rice-vegetables mixes or just for the frozen rice. The food inside the steam bag needs only 4 minutes in order to be ready to eat and it must be introduced in the microwaves in the bag, just as it was purchased in retail, because the innovative package can create steam out of ice at high temperature. Such products are produced by Crop’s for Tesco retailer under private label. Another innovative package promoted at the company’s stand allows the coating of vegetables in just 12 minutes in the microwaves.
Opportunities for the private label industry
The increasing competition challenged retailers’ private label industry to go beyond the entry level price segment, which had been its steak when entering the market, more than 30 years ago. The innovations presented at this year’s edition of PLMA’s World of Private Label trade show in Amsterdam reconfirm this trend, demonstrating that increasing quality and image of private labels is a priority for each major retail chain in Europe. They demonstrate, as well, that big retailers already set up the private label strategy for the post-crisis era. “While we might have believed that retailer brands were reaching their peak during the worst of the recession, it looks as though they are positioning themselves to succeed very well in an improving economy as well”, Gill Aitchison, President Ipsos Marketing at Global Shopper & Retail Research said. “Our data indicates that retailer brands still pose a formidable threat to national brands — perhaps now more than ever”, he added. Researcher Nielsen, as well, noticed that, comparing global markets, there is a steady continuation of private label progress, which is actually the result of more retailers deploying private label products in a growing number of categories. PLMA pre-show seminars highlighted the private labels opportunities for the years ahead. Richard Wallace, B
siness Analyst at IGD, talked about the e-commerce and its incredible growth pace registered over the last years. Exploiting the infinite shelf in the online channel is, therefore, one of the biggest opportunities for the private label industry. “Retailers must prepare for the connected shopper: a seamless multi-channel experience will be a must, not a nice to do”, he said.
IGD representative also quoted the IGD ShopperVista survey from March 2012 which shows that recognizing quality is a strong point of private labels on the market: 73% of European shoppers think that the quality of supermarket private label products has improved over the last couple of years. The same IGD research shows that supermarket private label products tend to provide better value for money than the alternative brands – this is the perception of 69% of shoppers in Europe. For retailers, private label is, as well, a strong lever to differentiate: 71% of shoppers in Europe think that some supermarkets have significantly better quality private label products than others (IGD ShopperVista survey, March 2012). The same idea was highlighted by Brian Sharoff, PLMA President: “The problem with selling producers brands is that you can find them in any store and their price is constantly decreasing in this tough economic environment”. He made, as well, some predictions for the private label industry in Europe. “Private label products are successful on the market for over 30 years; they didn’t develop due to the economic global crisis. But I think it is accurate to say that recession has been a catalyst for their development, putting a disadvantage on the producers’ brands evolution. When the economy rebound after the crisis, private label will maintain the market share. It is a pattern we have witnessed in several countries which experienced the recession and the rebound over the last 35 years of existence of private label industry: the economic crisis is an impulse for private label development and then, in the recovery phase, it usually stays flat. In any case, it would not be realistic to claim that the present increasing trend of private label sales would stay forever”.