One of the latest wrinkles in the post-recession recovery
One of the latest wrinkles in the post-recession recovery (the recovery most people don’t see yet in their wallets) is the rise of joint promotions between brands and private labels in companion categories that together create meal and snack solutions. Think hot dogs and buns, cookies and milk, seafood and frozen vegetables, soup and bread, ground beef and cheese.
The pairings give CPG brands the exposure they require to excite and lift categories while growing their own volumes, they give stores the added margin dollars and consumer trial of private labels, and they give consumers a double dose of values.
Manufacturers have little choice but to go along with this – but it poses little if any risk to them, we feel at The Lempert Report. Their brands don’t suffer; it is the brands in the companion items that take a hit. The brands involved in the promotions pass the pain onto strangers, so to speak, while they benefit and enjoy stronger relations with the retail chains.
Undoubtedly, this serves the selfish nature of both retailers and CPG manufacturers with the clout to pull this off. But it also does serve consumers: “We continue to witness consumers creating a whole new rule book and skill set for shopping that’s based on value, not boasting of brands,” said Pat Conroy, vice chairman and U.S. consumer products practice leader at Deloitte, upon this summer’s release of The 2010 American Pantry Study: The New Rules of the Shopping Game, which Deloitte conducted with Harrison Group. “Most feel they have become smarter, more calculating shoppers…these new ‘badges of honor’ will not fade away.” Therefore, The Lempert Report feels, private label could be effective in more of a ‘star’ stance such as these promotions.
Findings of a recent GfK Roper study done for the Private Label Manufacturers Association suggest these pairings could expand. “Two-thirds of shoppers who changed their food-buying habits as a result of economic conditions say they are purchasing private label products in categories where they used to buy only national brand items…data indicates this trend will continue,” PLMA said.
In one example of joint brand-PL campaigns, Cargill promoted its ground beef with retailers’ private-label soups in a Souped-Up Suppers event that ran in more than 1,700 food stores from October 11 to November 19. Expect to see many more from the biggest names in food and beverage – because they marry familiar brands with value offers that make shoppers confident enough in the quality and the savings to buy.