COPPELL, Texas — Continuing what could be a private-label trend, Minyard Food Stores may distribute its new Carnaval-brand Hispanic label to noncompeting companies.
“We hope to export it to other retailers outside Dallas,” Bob Highsmith, merchandising senior vice president, told SN.
The chain has had preliminary discussions with at least one retailer, which Highsmith declined to name. The timing of such a venture hasn't been decided, but Highsmith said it could be within the next year.
Introduced about one year ago, Carnaval is a top-tier Hispanic store brand geared mostly to Mexicans. It is sold primarily in Minyard's Carnival-banner Hispanic format stores, although several Carnaval staples — including cheese and tortillas — are also carried in the retailer's Minyard and Sack 'N Save banners.
The retailer created the line to fill a need in the Hispanic community, said Highsmith.
“There's a lot of major Hispanic labels, like Mission, but there's few, if any, Hispanic private labels in this market area,” he said.
Priced at 20% or more below the leading national and regional brands, Carnaval currently spans 100 stockkeeping units. An additional 100 to 200 SKUs are planned.
The full rollout has been put on hold pending Minyard's transition to Kansas City, Kan.-based Associated Wholesale Grocers. The company announced in June that it agreed to outsource its warehouse and distribution functions to AWG. The switch is expected to be completed by the end of the summer or early fall.
“If it were not for the AWG transition, we would have expanded [Carnaval] by now,” he said.
About 75% of the mix is dry grocery, and 25% refrigerated. Along with tortillas and cheese, items include spices, jalapeño peppers and dry red peppers. New items to roll out over the next year include candy, cookies and canned beans.
Minyard is sourcing the products via local and national private-label vendors. Several items are produced in Mexico.
If Minyard goes ahead with the plan, it will become yet another retailer to distribute a private-label line to a noncompeting company. Loblaw Cos. markets its President's Choice label to other retailers.
The strategy gained momentum a few months ago when Wild Oats started marketing its Wild Oats brand of natural and organic products in Price Chopper and Pathmark stores.
While the trend may not become rampant, it certainly will play an increasingly important role in private label, said Frank Dell, president of Dellmart & Co., Stamford, Conn., a management consulting company.
“It makes sense that a company with experience and a strong brand will want to share it on a regional basis,” he said.
The strategy could be a win-win for both business partners, Dell said. Retailers that market another company's private label benefit in terms of getting an exclusive, established brand. And the company that owns the brand profits from increased product volume and, as a result, a lower cost of goods.
The birth of Carnaval comes at a time when other retailers have developed Hispanic private labels, including Carlita from Supervalu and Buena Comida from Kroger.
The success of such brands depends on product quality and the target market, said Karla Fernandez Parker, president and chief executive officer of San Antonio-based K. Fernandez & Associates, a Hispanic and multicultural communications agency.
Quality is first and foremost, as Hispanics would rather spend more for a brand they trust than one they don't, Fernandez said.
“While Hispanics traditionally have tighter budgets and feed larger households, many times they'll opt for a higher-priced item if it's a brand they know,” she said. “They don't want to make a mistake by buying a product that their families won't like.”
A variety of factors play into Hispanic private-label purchasing decisions, such as level of acculturation. But basic Hispanic staples can be a success in the private-label business, Fernandez said. That's because if a lower-priced product provides the taste and texture Hispanics demand, they may buy it to save money, she explained.
“Hispanics are very conscious of the value equation,” Fernandez said. “Pinto beans are pinto beans, so Hispanics will often like the idea of buying a private label if it saves them 15 cents.”
Highsmith is confident the line will gain a following among the many Hispanics who want to reduce their grocery bills.
“Yes, Hispanics are brand-loyal. But they're also very much in favor of saving money,” he said.
To build brand awareness, Minyard samples one or more Carnaval products at least once a week. The company also advertises the brand with in-store ads and displays.