From The Winter 2005 Issue of Natural Grocery Buyer

Jump-Start Your House Brand

Premium natural products will invigorate organic private label

Lisa Everitt

For supermarket shoppers torn between the desire for healthier eating and the need to keep food prices down, private label organic lines provide a happy, healthy medium.

Once the exclusive province of health food stores and natural supermarkets, house-branded organic and natural items are showing up increasingly in mainstream supermarkets.

The top three supermarket chains in the United States all have made serious efforts in organic private label. Safeway added a Select Organics line extension to its Safeway Select premium products. Kroger continues to expand its range to include more organic items, including dairy, under the Naturally Preferred imprint. Albertsons sells such products as organic blueberry juice in its upscale Essensia line of store-brand offerings while its New England unit, Shaw’s, markets its Wild Harvest brand.

The Private Label Manufacturers’ Association estimates that one of every five items sold at retail in supermarkets, drug stores and mass merchandisers carries a house brand—more than $50 billion overall.

In research done for the New York-based PLMA, The Gallup Organization found that 75 percent of shoppers equated store brands with their national counterparts in taste and quality.

Reinforcing a brand statement is half the appeal. The other half is price. Private label shoppers save an estimated $15.8 billion every year, according to the PLMA.

“You can get value in organics by shopping well,” says Mark Retzloff, president and chief organic officer of Aurora Organic Dairy of Platteville, Colo., which supplies private label organic milk to supermarkets and naturals stores.

That message appeared to be hitting home at the PLMA’s annual trade show in November, says Retzloff, an organic industry veteran who ran Alfalfa’s Markets, Horizon Organic Dairy and Rudi’s Organic Bakery before joining Aurora Organic Dairy.

“Just walking around the show, there’s a tremendous amount of natural and organic products, more than I’ve ever seen before. It tells me there’s a lot of interest. … I keep bumping into people I know.”

Among the supermarket chains that have started or strengthened a private label organic and natural line:

• Giant Food launched its Nature’s Promise line in October and plans to offer 200 items in both its mid-Atlantic stores and its Northeastern Stop & Shop stores by late 2005.
• Wegmans Food Markets offers an organic line as well as a selection of items under the banner “Food You Feel Good About,” which range from low-sodium and low-fat products to items fortified with vitamins and fiber and meat produced without added hormones or antibiotics.
• Loblaws, a large Canadian chain, posts 35 percent of its sales in the private label column, according to ACNielsen. Its President’s Choice label includes a PC Organics line with products in virtually every grocery category.

Supermarkets, on average, derive 17 percent of their sales from private label brands, according to ACNielsen. Kroger, at 25 percent, and Safeway, at 29 percent, are more aggressive than average.

Discounters like Target—which sells 1,900 items under the upscale Archer Farms label, many of them organic—are moving into the business in a big way. But the innovation in this category has come mostly from the top down, in upscale chains like Whole Foods and Trader Joe’s.

Whole Foods Market set the bar high on organic and natural private label programs with its 365 Everyday Value line of pantry staples. The Austin, Texas-based natural supermarket chain has since expanded into two organic lines, including Whole Kids Organic; a co-branded artisan line in which products such as Cowgirl Creamery Cheese are labeled with their originating brand plus “Authentic Food Artisan, Presented by Whole Foods;” and a wide range of frozen entrees, natural meat and desserts.

Monrovia, Calif.-based Trader Joe’s has built an equally loyal clientele on the strength of its extensive private label program, which makes up an estimated 80 percent of sales and includes many organic and natural items. And Wild Oats has worked hard to expand its private label universe, which now spans such basics as milk and ketchup, as well as indulgent items such as Italian sodas and chocolate truffles.

Providing organic choices among shoppers’ daily basics is key for a supermarket’s private label plan, says Retzloff. “They’re looking for products they sell a lot of, and they’re selling a lot of organic milk and a lot of soymilk.”

Supermarketers envy the slavish devotion and large expenditures that Whole Foods and Trader Joe’s engender among their customers. To build a private label line that will inspire similar loyalty, grocers need to think outside the box and offer items that no one else has, like exotic salad dressings, luxurious soaps and lotions or hemp snacks.

High in essential fatty acids and protein, hemp seed nuts and oils have become strong sellers in Canada, says Mike Fata, co-founder of Manitoba Harvest Hemp Foods & Oils. Thanks to a summer ruling from the U.S. District Court of Appeals for the Ninth Circuit, hemp foods have emerged from under their cloudy legal status in the United States.

The most successful product in Manitoba’s private label line, which launched this year, is hemp seed oil, Fata says. At least in Canada, he expects private label demand to grow as sales of Manitoba’s branded line—half of which comes from supermarkets—continue to increase.

“Loblaws is a prime example of how good natural and organic foods can be in mass,” he says. “They have more than 200 [organic] items under their President’s Choice brand name.”

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