Less than a year ago, online natural foods retailer Thrive Market launched its first private label product, rolling out a line that would soon become a resounding success. The 60 products it has launched to date account for almost 7 percent of total brand sales, and Thrive has another 75 products it expects to launch by the end of the year or in January, with a goal to reach 15 to 20 percent of sales by the end of next year, according to VP of merchandising Jeremiah McElwee.
The best surprise for both Thrive and the brands it already sells? Rather than displace branded sales—even while outselling them at about four to one—Thrive’s private label appears to be driving overall category growth, at least in categories that have a strong branded presence.
“When we launched the pasta sauce, for example, we came out of the gate at the same level as Rao’s; Rao’s is the top-selling pasta sauce," he said. "We thought, now we’re going to cannibalize Rao’s. Instead what we found was that our product continued to grow, and so did Rao’s. All boats have risen.”
Where that’s not true is in categories with less branded strength, such as nuts and seeds. When there aren’t brands for customers to stay loyal to, there seems to be more of the displacement effect that might be expected.
Thrive’s private label line now includes items such as coconut oil, olive oil, coconut aminos, nuts and seeds. “From here our goal is just to knock out all the pantry staples and have this good assortment of healthy, sustainable foods for our members,” said McElwee.
He emphasized that Thrive is not striving to become a predominantly private label retailer. “We’re not trying to be the online Trader Joe’s. We don’t want to be 90 percent private label. We want to have a nice balance,” he said. “We’re passionate about our branded catalog, too. But our members are definitely responding favorably to private label.”