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PL Buyer- March 2005 |
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With private label sales flat, manufacturers need to juice up the offerings. With many health-conscious consumers turning toward
healthier food and beverage alternatives these days, juices and waters
are getting a lot of attention as being the better-for-you alternatives
to high-sugar sodas. Not only are there fewer calories and chemicals
than in sodas, but juices and water can provide the vitamins, nutrients
and overall re-hydration that our bodies need.
With all the health benefits, then, it’s surprising that it seems as if all the juice has been squeezed out of the private label juices category. According to Chicago-based Information Resources Inc., overall private label shelf-stable juice sales are down 4 percent for the 52 weeks ending Jan. 23, 2005. The total category didn’t fare very well either, slipping 1.9 percent for the same time period. Subcategories for private label juices have fallen as well. Bottled cranberry juice cocktail, for example, fell 9.9 percent on the private label side and private label grape juice tumbled 13 percent. Private label apple juice remained flat with no increase or decrease, making it one of the few juice subcategories that didn’t have a completely negative year. So, with so much downturn on the numbers, can private label juices get a foothold to pull itself up? Manufacturers and retailers agree that it will take work, but it can be done. With new trends on the horizon, among the biggest being healthier lifestyle changes, there are opportunities for private label juices to “juice up” their offerings to consumers. Hello, Healthy
“The major trend we see in the category
is a return to healthy offerings,” says Jason Krause, director
of marketing for Cliffstar Corp., Dunkirk, N.Y. “Consumers are
looking toward their diet to improve their overall health. A more natural
diet is being preferred.”
Private label manufacturers are taking this trend of consumers ramping up their healthy-eating to heart, and new products have been making their way to the marketplace. Low-acid and low-carb orange juices have been dominating the retail aisles by branded manufacturers for some time, for example, and private label manufacturers are now getting into the game as well. Also, light juices are the latest to hit the shelves on the private label side, coming from the success of branded players such as Welch’s and Ocean Spray catering to those consumers who want a healthy beverage without all the calories.
“The retailer understands that juice is a high-volume, high-traffic area, and that the consumer is asking for more offerings,” notes John Graham, vice president of sales at Clement Pappas, Carneys Point , N.J. “The consumer is asking for a light-style, for example, and the retailer has to make sure that they’re supplying that to them.” In addition, consumers are also looking for flavor,
and we’re not talking the old standbys of apple, orange and grape.
“The private label category continues to
move into several new flavors and flavor combinations,” Krause
explains. “The flavors to watch this year are pomegranate, blueberry
and lime. These flavors will be added to update many of the core offerings.”
Diets are a key driver in juice trends as well, and while it’s subsiding now, the low-carb diet trend had a negative impact on the juice category, more specifically, the orange juice category, pulling consumers away from the product because of its high carbohydrate count. Several private label products have come out that offer consumers low-carbohydrate orange juices and though there’s no denying that it’s still out there, thankfully the low-carb craze has quieted down. “One of the clouds that existed over this category was low-carb diets,” explains Rodney Liddle, president of Southern Garden Citrus, Clewiston, Fla. “And the low-carb craze, although it’s part of consumers’ profile, it’s not quite as hot an issue as it once was. I think that people are seeing that this product, juices in particular, have such nutritional properties and vitamins that they really need for their diet, and it’s a convenient product, more convenient than peeling a piece of fruit.” Convenience and packaging is part of the juice category that has been undergoing some changes lately as well, and continues to look toward the future for category expansion. “We’re going to see a lot more convenience in terms of sizes,” Liddle explains. “The availability of small sizes for on-the-go consumption is not that high in juices. It’s pretty well-developed in water and carbonated soft drinks, it just hasn’t happened yet in juices. I think we’ll see more in chilled, ready-to-serve convenience sizes.” “I think there’s a whole avenue that we’re missing from a single-serve category,” agrees Graham. “If we’re not offering those out to consumers under the store brand, they’re buying them elsewhere. If you’re not buying a multi-serve bottle, you want a single-serve because kids can take it as part of their breakfast and adults can take it on the go. Our lifestyles are changing and that’s the next road.” Where the next road actually takes private label juices depends heavily on which road the retailers are willing to take. “We see the shelf-space devoted by retailers
to the chilled juice section has expanded over the last 10 to 15 years,
over a long period of time,” Liddle explains. “We also see
that the chilled juice section offers retailers a great return, with
high profits to it. It’s a great place for retailers to devote
time and attention. And from a private label perspective, we see that
retailers are not making as many initiatives and inroads into orange
juice and other blended juices as they probably should, as the category
wants, and that’s an area that offers opportunities for private
label folks like us.”
“Retailers are split,” Cliffstar’s
Krause adds. “Some are still following the lead of the brands.
The more proactive private label program is looking to drive the category
and offer consumers options that beat the brand.”
Water, Water Everywhere “The reasons for bottled water’s
continued success….are myriad,” Lempert writes. “Many
experts point to the public’s lack of confidence in municipal
water supplies, convenient packaging, increased availability and moderating
price points.”
Whatever the reason, bottled water sales are soaring, up 9.5 percent in the category overall for the 52 weeks ending Jan. 23, 2005, according to IRI data and up 10.3 percent to $717.2 million in private label sales. Private label bottled water only holds a 21.1 percent share of the total category, so there is still room to grow, though manufacturers still have battles to face. “Raw material costs have been incredibly volatile,” explains Rob Alshuler, operations manager for Niagara Bottling, Ontario, Calif. “High-density polyethylene and PET are both petrochemicals, so they are heavily dependent on oil and natural gas and the markets for them have gone crazy over the last year. And when you’re buying bottled water, you’re pretty much paying for the packaging. The cost of manufacturing the water is minor relative to the bottle, the cap, the label. To have your number one cost item increase dramatically is challenging. It makes you focus on running your business better and more efficiently.” Lempert points to the future of the water category growing through “enhanced waters,” meaning, “anything from flavored water to added oxygen to added nutrients.” But in general, the bulk of water sales are still coming from the basic distilled, spring and purified drinking water. Continued drive of the category will ultimately come not from new products, but from retailer attention and dedication to its private label water products. Alshuler explains that one of Niagara’s customers, a large retail grocery chain, took the job of strategizing and executing a marketing plan and design for the bottled water into their own hands and produced a top-notch private label offering for the bottled water category. “I can’t personally see how a consumer is going to go into the market and look at a branded product and then look at this private label product and choose the branded when it’s $2 or $3 more per case. Retailers are setting more and more aggressive price points, but they’re definitely getting more aggressive in the way they market bottled water.” “The majority of the growth in the bottled water category has been on the private label side,” Alshuler continues. “It’s really been the engine that’s moving the category forward. We’ve been extremely fortunate that the bottled water category has grown ridiculously over the course of the last decade. Do we expect it to continue at such a torrid pace? No, but we do expect to have solid growth moving forward.” Flavored or plain, these two beverage categories still have plenty of room to expand their offerings in private label – so long as retailers and manufacturers don’t keep their ideas all bottled up. PLB
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