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David Smania
Phoenix, Arizona
David Smania is the founder of Foodservice.com - the first online community and social network serving the $566 billion dollar foodservice industry.
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David Smania is now following The Typepad Team
Mar 16, 2010
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AdAge reported today that Walmart has sent Glad and Hefty packing as the big retailer streamlines categories and positions its own private label brand for success. The news is a major blow to the traditional brands, as Walmart makes up a third or more of their sales. The good news for Pactiv (who owns the Hefty brand) is that they've been granted the privilege of manufacturing Walmart's Great Value bags. But is this really good news for Pactiv? Clorox (Glad) exited the private label business last year after deeming it to be non-strategic. Pactiv has taken a different approach, preferring... Continue reading
Thanks for the comments Steve. We're definitely seeing more and more consumers embracing private label food products. Interestingly enough, the percentage of private label consumption is still relatively low compared to other countries. The true impact is yet to be felt.
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The Financial Times is reporting that Walmart is now aiming to cut supply chain costs by moving to a direct purchasing model. The consolidation of its purchasing operations is a global initiative to cut billions of dollars in costs from its supply chain. Walmart is suggesting that this move could reduce costs by 5 to 15 percent within five years - or a savings of 4 to 12 billion dollars. So how will this latest move potentially affect branded manufacturers? Here are my thoughts: As a retailer who is already known to squeeze suppliers for every last penny, expect even... Continue reading
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Ouch! A one-two punch by the San Francisco Chronicle. Not only have they named their column "Taster's Choice" (owned by Nestle), but they've also announced the results of recent consumer taste testing, where five experienced panelists - local chefs, cookbook authors, and food professionals - do blind taste testings on various food products based on texture, appearance, and taste. The findings? Time and time again the grocery brands come out on top. I wonder how many of these products are manufactured by the very companies they are competing against? Read the full results Continue reading
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Brandweek is calling 2009 as the Year of Private Label. And why not?As consumers continue to cut back, branded manufacturers often do the same with marketing dollars. But this time, consumers have options. Alternatives come in attractive packages that might say "Archer Farms", "Kirkland", "Sam's Choice", or "O Organics". The Results According to a report by Nielson Co, unit sales of baby foods grew 22.3 percent for the 52 weeks ending October 3rd. Frozen pizza and snacks were another category where branded manufacturers took a serious hit, as private label made a 20.4% gain. This was followed by salad dressings,... Continue reading
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Go Heinz! Go Heinz! While many manufacturers react to an economic downturn with drastic cuts to marketing, clearly Heinz knows better. Can branded manufacturers afford not to advertise when consumers are looking for any excuse to save money by switching to private label? And once they switch, how will you ever get them back? The H.J. Heinz Co. plans to push its products even harder in the second half of the fiscal year, increasing its marketing budget to combat intense competition in the frozen food and condiments aisles as well as pressures from private label rivals. William R. Johnson, Heinz... Continue reading
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Here are a couple of interesting quotes from a recent earnings call with Sysco, where analysts sought clarification on Sysco's internal brand focus. The response shouldn't surprise anyone. Sysco is only looking out for its own best interest by reemphasizing private label products with its national sales force. Jason Whitmer (Cleveland Research Company): Last question on your own brand, the Sysco brand, is there any return of a focus on that to drive that business again? Or to kind of continue to define that platform and anything that could change the mix shift or even the margin components of branded... Continue reading
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Well, well. Look who's talking private label? None other than QSR Magazine, one of my favorite print publications. In his blog post, Steffen Weck touches on several good points about private label's insurgence and rapid acceptance on the retail side. His point that private label products are no longer considered inferior rings true, as consumer-based surveys have proven time and time again. But what about foodservice? The other half of the food dollar? This happens to be the industry that QSR Magazine covers. As broadline distributors introduce additional products, and ramp up sales efforts to emphasize their own labels through... Continue reading
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And the winner is... Walmart Great Value? Absolutely. It's one of the top brands of the year, with Andrea Thomas overseeing the stewardship of the Great Value private label. The re-staging of the Great Value brand began in April, and two months in, Walmart's private label share was already up .02 percentage points. Expect this to continue, as they have clearly differentiated themselves with new, crisp packaging that stands out from the crowd of branded manufacturer alternatives. Marketing costs remain low, as Walmart focuses efforts internally through in-store promotions. According to Ad Age, they've also started to branch out into... Continue reading
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Well...here's a way to fight off private label copy-cats. According to the Daily Mail, Kellogg's has been so concerned about cereals in similar packages, that it will now be laser-zapping its logo on individual flakes.While I'm personally fascinated that they can actually do this, I have to wonder. Is it really the logo that sells product? Or is it the taste? Typically it is the taste. But a corn flake is a corn flake, and I'm sure it's fairly easy to duplicate as a private label manufacturer. Reverse engineer corn flake...and presto! You have a product that is confused for... Continue reading
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Fast forward 20 years. What will the store shelves look like? For foodservice operators, what will your delivery look like? It seems that quarter after quarter, private label brands continue to solidify themselves in the minds of consumers in terms of quality and price. Consumers no longer need or seek brand comfort as they did in years past. Today, we have a vast network where people search and share information instantaneously. Bad product experiences are shared with the world through websites, blogs, Facebook, Twitter, and many other outlets in milliseconds. We no longer seek comfort in brands. We simply seek... Continue reading
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Let's play a game. Here are links for two of the largest foodservice distributors in the United States - SYSCO and US Foodservice. Together, they serve about 650,000 customers (restaurants, hotels, hospitals, etc) each day. Here's the challenge. Are you ready? How quickly can you find branded manufacturer product on each web site? Go ahead - give it a try! SYSCO US Foodservice Tick-tock, tick-tock, tick-tock, tick.... I'm waiting. Take your time. Try again.This is quite a challenge, because as of today's date, I'm unable to find ANY manufacturer branded product listed on their web sites. If I'm a foodservice... Continue reading
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THEN 1. Limited media outlets meant that manufacturers could reach a large percentage of the American public through the "Big 3" - ABC, NBC, and CBS, driving home a message of value or prestige in purchasing branded product. 2. Retailers were fragmented. Grocery stores were independent (mom and pop) or part of much smaller chains than today. As such, retailers did not have the purchasing power or clout to influence manufacturers. 3. Due to the strength of their brands, manufacturers could dictate placement and price with retailers. Retailers who didn't comply would find themselves without key brands. NOW 1. Fragmented... Continue reading
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Here's something that caught my eye during a recent trip to Target. Note the Target's brand of jelly (Archer Farms) next to the tradition brands like Smucker's. What do you notice? The first thing that caught my eye was the beautiful packaging and branding that Target has selected.The square jar suggests "gourmet", while the label is inviting and intriguing. But here's the kicker. Look at the price. It's HIGHER than our traditional branded products. Target is positioning Archer Farms not as a low cost alternative, but as a product of higher quality! Add this to the fact that the margins... Continue reading