Private label’s diversified revenue potential
In January 2015, IRI, Chicago, published a new report, “Private Label & National Brands: Dialing in on Core Shoppers.” Private label now accounts for $120 billion in annual packaged goods sales, up 2.1 percent over the past year.
And according to the data from IRI, as published in our recent June and July “State of the Industry” issues, private label has tremendous traction in snack and bakery categories.
In the report, IRI smartly contextualizes its analysis within overall product categories—including both private label and name/national brands. During the course of my ongoing analysis of private label over the past few years, I’ve found that this is exactly the right approach. Retailers continually seek to grow overall category sales, something that comes from balance in terms of the specific products offered in any given category or subcategory. And retailers craft many of their private label lines today with the same branding dynamics applied by name/national brand manufacturers, thereby giving rise to the terms “retail brands” or “private brands” to supplant the more-generic-sounding “private label.”
Many snack producers and bakers already find a good source of diversified income through business relationships with retailers to supply their private label lines (and others not currently operating in that space should consider how such a move could benefit the bottom line…). Companies who feel incapable of satisfying the needs of retailer requests should reach out to their supply chain. More suppliers these days have strong vertical integration and wide-reaching networks built specifically to streamline private label R&D.
When entering into discussions with retailers, do so with a big-picture mindset, providing analysis of the entire category where possible, with the end goal of driving growth of the entire set through a well-balanced selection that appeals to the retailer’s core demographics, building shopper loyalty. The long-term gain is a win-win for all involved.
This is the type of insight Boulart brings to the table for its retail partners, whether offering Boulart-branded products or private label. This diversified strength is one of the many reasons we have named Boulart our 2015 Bakery of the Year (see p. 12 for our story on this impressive bakery).
The more a snack producer or baker can participate in discussions with retailers related to overall category strategy, the better its long-term prospects of seeing sustainable, ever-increasing revenue gains.