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Private-label fresh foods have finally come into their own, and implementation of store-brand programs is quickly moving supermarket merchandising in a whole new direction. Retailers say the timing of this trend couldn't be better. The expansion of post-consolidated, national chains into new markets has compelled all operators -- large and small -- to seek out fresh ways in the drive to attract shoppers

Private-label fresh foods have finally come into their own, and implementation of store-brand programs is quickly moving supermarket merchandising in a whole new direction. Retailers say the timing of this trend couldn't be better. The expansion of post-consolidated, national chains into new markets has compelled all operators -- large and small -- to seek out fresh ways in the drive to attract shoppers and develop new profit channels. Private label allows them to not only merchandise items under their own banner, but it serves to strengthen the relationship between retailer and vendor. These outsourcing partnerships have quickly proven to be "value-added" for the retailer, who finds a manufacturer can provide food-safety and packaging expertise, after-sale support and merchandising assistance in an increasingly competitive marketplace.

me program allies and what their expectations are for the future of private-label perishables as the lucrative category contiues to grow.

SN: What's your company's history with respect to store brands in meat, seafood and bakery? How did your program begin and how has it evolved?

Long: Chef's Market was introduced in our stores in 1995 as top-line, restaurant-quality, ready-to-cook items. The line started with 16 proteins and has evolved today to encompass approximately 80 items. Just this year, we introduced Seafood Chef's Market, a label that's currently on about a dozen items. Another private label brand we carry is our Gold Label Ham, which was introduced in 1992. That label began because the bone-in ham business was suffering and we wanted to elevate the quality of those products. It's a honey-glazed product that is glazed right in our stores.

Bergh: In the 18 years our company has existed, proprietary or in-house products that we offer have been an important part of the company's success. But our private label is not traditional in the sense that it's more product-oriented than package-, label- or brand-oriented. Our meat, seafood and bakery departments are heavily oriented to the service case so the customer doesn't really see any packaging until the selection has been made at the display case. Our Bristol Farms products for the most part have been developed in-house by our people. In each of these areas we offer a broad assortment of products that can be found in other stores, but which we try to differentiate through sourcing, preparation and merchandising. In meat, we offer up to 30 store-prepared, marinated beef, pork, lamb and poultry items; up to 35 sausage items; and up to a dozen signature items in fresh seafood. The same is true of our bakery, and so on throughout the store. Another example of what I classify as private label is our sushi line, representing more than 3.5% of total-store sales. This department prepares all sushi items that we offer, all made from scratch, including the cooking of the rice. Products that continue to move in reasonable volume remain in the mix, and we continually look to replace laggards with new additions. Ideas for new items come from our culinary professionals, personal restaurant experiences, trade magazines and from people at store level who have vast knowledge of food and food preparation.

Rzesa: Our direction is to overweight category distribution in favor of both private- and control-label products. This applies to all perishable and non-perishable departments. Consumers have recognized the D&W family of private brands as an excellent value. In consumer research panels, our brands are often mentioned with highly favorable ratings.

Hoffman: A&P had a private-label program for years, but in recent years we've tried to rationalize it by having an upscale private label that offers products we try to position as being as good as, or better than, the market leader in the category, as well as a second line that is more value-priced but not necessarily equal to the category's leading label. America's Choice is our regular private-label offering, while Master Choice is our premium line. The store-label meat program has expanded significantly. In the fresh meat area, we started by introducing Master Choice pork about 10 years ago, and we were probably the first to introduce an enhanced pork product. We differentiated it by adding moisture to the loins, enabling them to stay more juicy and allowing us to position it as more palatable. We rolled it out one division at a time and sales continued to increase so we expanded it. Now we sell a broad range of beef, pork and ham products mostly under the Master Choice label. In addition, we have an America's Choice and a Master Choice label in our prepackaged lunch meats and bacon.

SN: Now, for the suppliers, the same question. How did your store-brand story begin and how has your program changed since its inception?

Roberts: Our first store-brand line was done for the Ukrops Super Markets chain. We began talking to them in 1991, and then a year or so later began working with them on a controlled-source beef line that met a series of specifications, ranging from aging time to minimum days on specified feed to levels of Vitamin E animals are fed. They essentially wanted a design-build meat program that would offer superior quality under their name, which carried an image in the market of value and quality. However, it was only the second thing they ever put their name on. For us, that program evolved into what is today the only USDA source-verified beef program, one under which we control quality on the front end rather than having to sort for quality on the back end. It's basically a specification-driven beef production system in which only about seven or eight certified feedlots participate in a program to produce case-ready meat products for Ukrops, as well as Heinen's Supermarkets' Heinen's Own label, for which also we provide product. At the same time, we've also have developed our own "Ranch To Retail" source-verified label that allows retailers to use that tag line on beef products as an alternative to a traditional store label. It's akin to the "Intel Inside" added-value concept that the computer chip maker has developed in conjunction with computer box makers. We're trying to position it as a Good Housekeeping seal of sorts.

DeArmond: Store brand lines have been a natural evolution of Cooper Farms' overall focus on the private-label business. Mid-size retail and food-service distributors were our initial private-label customers, as they sought ways to differentiate themselves from the mega players. Since private/control-labeled product has historically been a large percentage of our business, it's been fairly straightforward to accommodate chains seeking to promote a store brand. The recent trend of supermarket chains promoting store-branded product has also helped enhance and expand our line of products. A decade ago, our private-label customers were simply seeking an economically priced turkey breast to compete with others. Today, stores are seeking to have product packaged under store brands to help portray a certain image. In terms of turkey, upscale whole-muscle items such as pan-roasted flavored breasts and netted "Old World" products seem to be the norm.

SN: It really seems that the trend is toward premium perishables. To that end, what role do store brands play in today's store? How have they affected the balance of the entire category?

Bergh: It's my opinion that our products play a supporting role in our overall marketing effort -- that being to grow our business through the marketing of Bristol Farms as living up to our official motto of "Extraordinary Food and Extraordinary Service." My goal with each of our departments is to identify or develop products and programs that can qualify what we call the "ultimate marketing program." We define that as one that a competitor cannot or chooses not to meet. When products and programs that meet that definition are in place, they really do qualify as private label.

Rzesa: Obviously quality and trust are the key positioning attributes for these private brands. The products occupy premium shelf space and are typically positioned next to the category leader by product type or product brand.

Long: We think it's advantageous to brand certain product lines under our own name because we can use our own price points and set margins on our unique branded items. The development process, packaging and everything that represents quality that we surround our store brands with helps afford us a higher margin. There's a big difference between having someone sell you a product with your name on it and developing a brand yourself. It's an expensive proposition. But we think by putting our name on our products we gain an advantage over national brands. For example, we began branding fresh turkeys in Lunds 11 years ago and in Byerly's three years ago. Now, fresh turkeys account for 87% of our year-round turkey business. Similarly, our own Gold Label brand hams account for about 70% of our total ham sales.

Roberts: I think the most valuable thing they offer is a point of differentiation, which is critical in today's retail world. If I'm a retailer and I want to differentiate myself from what, say, Wal-Mart or what Food Lion has in their meat case, the one place where they can't compete on an equal footing is with my name. Only I can have my name, and that means "x" and you can say that my product does these things. So being able to say to the customer that you can't find anything with my name on it anywhere else is powerful.

DeArmond: Our management team feels that store-label product will play an ever-increasing role in both the meat and deli case and will, in time, affect the balance of the entire private-label category. We're seeing growth in store-brand products, and we envision that one impact of this may be that the choice of brands available to consumers will decrease over time.

SN: What image do you seek to convey to consumers through name, packaging and presentation of the store brands?

Long: With our Gold Label hams, for example, we went to great lengths to wrap them in foil to impart a quality look to them. In the display case, we give ample space to our branded hams and turkey breast products -- a minimum of eight feet of exposure. The correct amount of exposure is key.

Hoffman: We're interested in positioning our store-label products as not just low-priced but consistent with, or superior to, the best quality that's out there. We've actually tried to price a lot of our products pretty close to those of competing items. One of the things we've done with our packaging to help differentiate our products and create an image is to include cooking instructions. We also take that opportunity to inform customers that our beef and pork items are all natural and contain no artificial ingredients. And with our Master Choice lean boneless pork chops and cutlet products we've put the American Heart Association's Heart Check on the packaging to indicate that it meets that group's standards for foods that have acceptable fat content. We've also begun putting some food-safety information on some of our Master Choice ground beef products, reminding customers about the need to cook products to 160 degrees, use different plates for raw and cooked product, and the like. Another thing we do differently with our store-brand ground beef is use color-coded labels to quickly communicate product leanness values. So with respect to labeling, I think we're ahead of many of the national brands. Overall, we think we have a lot of customers who recognize that the Master Choice name has come to mean a premium product in many different respects that is also priced competitively.

SN: How do you promote your store brand, and how are they positioned in advertising and in the store?

Long: We essentially promote them through food tastings, food demonstrations, signage and some print advertising. When we do advertise in print, we try to highlight the fact that the product's main point of differentiation is its quality.

Hoffman: When we have extra pages available in our store circulars we'll often try to tell the store-label story, what the Master Choice label means, about the Heart Check label on the lean pork items, that kind of thing. We take the opportunity to do that when we can, but we don't do it every week. But when we feature beef in our ads we do make sure to identify it clearly as Master Choice, which helps to reinforce the connection when they actually see the product with the Master Choice label in the case.

Bergh: In addition to promoting them generally in regular weekly print ads, we'll highlight one or two particularly meaningful items each week in television ads. And, at the point of purchase we communicate the differentiated points of certain products under the heading of "Farm Facts." As well, all advertised and promotional items carry some form of point-of-purchase communication.

Rzesa: Our own brands enjoy weekly ad placement and are advertised with specific language and icon identification. Additionally, they may be advertised in brand-specific marketing campaigns. Currently our "School Bucks" program identifies our private brands as those items on which D&W will donate an allocated cash value toward school programs based on purchase participation. A recent "Brand Bucks" campaign rewarded customers with rebate dollars based on private brand purchase behavior. In-store, successful store-brand programs rely on trial and participation to create trust and loyalty. Active promotion and sampling activity need to be routine.

SN: As suppliers, what do you bring to the table to help your retail customers promote their store brands more effectively?

Roberts: We have a wealth of beef expertise and it's our job to come in and keep them ahead of the curve on issues like food safety. We and the retailer need to anticipate them and make sure that we're living up on our end to the demands that heightened interest in food safety demands. Our "Ranch To Retail" program, for example, helps crystallize that and helps to further define the store brand product in terms of food safety. In the course of providing these products, we've also worked with retailers on various promotional programs. But ultimately, the retailers have to push their own name. However, they are looking for the category expertise that we have and for us to develop new and more value-added product lines. They want us to come in and look at what the trends are in the marketplace and then make sure that we're providing the best quality possible, and a high level of honesty and openness with respect to our business dealings.

DeArmond: Retailers have usually given considerable thought and consideration to the image they'd like to portray to customers before the project reaches us at Cooper Farms. At that point, our role becomes that of lending a helping hand as they look to manufacture and package the product in a manner that best represents the image they want to convey. Although the retailer often knows what he'd like in his program and is in need of little assistance, we do offer an extensive array of services, from product and label development to marketing the brand and the product itself. We believe the greatest assistance retailers are looking for from their suppliers is a partner who can respond quickly and efficiently to meet their special needs and requests.

SN: What is different about your relationships with suppliers of store-branded products, as opposed to national or regional suppliers? What specifications were most important in deciding with whom to partner?

Bergh: The ultimate criterion for supplying Bristol Farms is never to deviate from our quality specifications. Our suppliers are chosen for their commitment to quality, and because of that commitment we use single-supply arrangements for many of our key store-brand categories.

Hoffman: Our non-store brand meat suppliers have all been complimentary of what we've done in our stores with our own label in terms of adding value. After A&P became the first retailer to bring a private label, enhanced-quality pork to market, the pork industry as a whole really came to see us as a leader. And when they saw how successful we were with it, they developed their own enhanced products. So we kind of helped set a direction for the industry with our store brand. The same is true with our Master Choice fresh chicken line. We were one of the first retailers to launch a store-label program of seasoned and flavored boneless breast products, and we've developed a steady business on items like the teriyaki and lemon pepper-flavored chicken. But at the same time, we still carry a lot of similar Tyson and Perdue chicken products. We also entered into a partnership with ConAgra Foods when they launched their Butterball turkey line years ago, but at the same time we also created some unique things in the turkey category that they weren't doing. So I don't think store-brand programs necessarily have to alienate your other branded suppliers.

Rzesa: Relationships with suppliers are often proprietary with some agreements being exclusive to market. Economics are an important consideration, but quality and competitive differentiation are the key factors in private-brand partner selection.

SN: Any suppliers' thoughts on what retailers are looking for from those responsible for furnishing a store brand?

DeArmond: Price and quality undoubtedly top the list of priorities discussed when we work with a retailer on developing a brand, and it would be difficult to determine which is the most crucial. Customers typically approach our company with a recognized brand as a "target" product and give us the challenge of creating a product of similar or superior quality, for significantly less money.

Roberts: A microbiologically safe product definitely is number one, but also being able to create a product that has true value for the consumer, something that takes into consideration the relationship between a product's price and its benefit. But, as well, consistency of product is important, as are eating qualities like flavor and juiciness, appearance factors such as meat marbling and color and size. As retailers move further into case-ready, store-branded products, those factors will become even more important. Also, our USDA process verification audit procedure, in particular, is something we bring to the table for our store-brand customers.

SN: What are the requirements for building a successful store-brand perishables program?

Hoffman: You absolutely have to offer what you're saying you are in your promotion of it. The cost factor is secondary to delivering on a product promise. If you say you have the best pork, you simply have to do it and do it consistently. It's challenging, but we've been able to do it by aligning ourselves with packers who've done an outstanding job of providing superior products.

Bergh: Start with quality specifications that truly deliver an extraordinary eating experience and then never deviate from that specification. Next, make certain that the product is handled and prepared in a manner that protects the integrity of the product so at the moment of truth -- the time of eating -- the product delivers at a level that exceeds the expectations of the customer.

DeArmond: The number-one requirement is an absolute commitment to building a successful and profitable program from the top of the organization all the way down to store level. One of the most critical elements of this commitment is the proper training of personnel -- particularly those in the deli department -- on selling the store brand versus other products in the case. This part of the equation is essential to the success of a program because profit margins on store brands can range from 13% to 30% higher than on the national brand. That, in itself, is an excellent reason for the store to work to aggressively promote and sell their brand.

Long: Having a good-quality product and effectively communicating that to your customers is number one. But carefully selecting your suppliers is another important consideration. One of the rules that we've followed for years in building our program is you never link up with a supplier until you've gone through their facility, and that's particularly important in today's climate of heightened food-safety concerns. You have to physically look at the facilities of the company you're going to be dealing with and ensure that they have a good HACCP plan in place.

SN: Indeed, what about the food-safety issue with respect to perishables, and particularly store brands, which put your name or that of your retail customer on the product? What's the approach to ensuring that store brands are consistently safe?

DeArmond: It's a known fact that there are food-safety challenges whenever, and wherever, you have people handling food. Cooper Farms has always treated food safety as its number-one priority and we constantly monitor all phases of production to ensure proper handling procedures are in place and followed. Recently, we took another step forward in making a significant investment in a process commonly known as post-pasteurization. Any ready-to-eat product, not sliced, which has been exposed to air after the cooking process is pasteurized in its final package. The process provides an additional -- and we think unique -- food-safety step that also helps extend shelf life.

Rzesa: Food safety will always be a critical concern, especially with products bearing a retailer's name. Ownership of excellent safety attributes are a marketable benefit. We have recently played up our ground beef production program in an information piece called "Grounds for Comparison," in which we clearly outline the safety benefits of our strictly controlled production facility. As safety issues continue to provide a basis for sensational media, more information pieces like this will be necessary to maintain that trust that people have recognized D&W for through the years.

Bergh: It's very simple with respect to what the focus has to be. Time, temperature and sanitation practices are critical to maintaining perishable products at peak customer satisfaction levels. Products must be kept at their optimum temperatures, be handled and prepared under highly sanitary condition and moved through the system in a timely manner.

Long: The biggest challenge for any retailer supplying fresh foods is dealing with the potential of foodborne illness. We do several things to be as proactive as we can in dealing with food-safety issues. In all our stores, we have a HACCP program in place for most of the items in meat and seafood, and we plan to continually work on it so we are 100% by this November. We also monitor all our ground beef for source -- processor, distributor and amount of grind. Off-site testing of product takes place with all our stores and facilities. We also try very hard to educate our customers by providing proper food-handling and preparation information through brochures and even seminars. Recently, we partnered with ConAgra Foods and the American Dietetic Association to jointly produce a brochure entitled "Home Food Safety: It's in Your Hands" that we make available in our department.

SN: What kinds of changes in skills and mindset are going to be required of retailers to enable them to seize opportunities in store-brand programs?

Bergh: My belief -- and many will not agree -- is that it's necessary to take control of the product preparation as opposed to purchasing such on a commercial basis. That is why, for example, the salads and entrees that are offered in our service delis are made in our commissary.

DeArmond: There are several new areas of expertise stores must develop to establish and grow store-brand perishables. One of the most important skills involves the process of the retailer becoming an effective marketer, since skillful promotion is essential for the program's success. Training is another. Retailers must become adept at developing programs to teach employees about the features and qualities of the store brand.

Roberts: They're going to have to focus on what customer expectations of their store name are -- what does that name mean to the customer? From that, they'll need to build products that match that perception. Also, they're going to have to employ some different costing models, especially as they get into case ready, where the definition of success is going to shift from gross margins to net dollars. And they're going to have to look more closely at yields in that same respect and compare it to the amount of product returns they'd be getting if they stuck with their old boxed-beef program.

SN: In closing, what's your outlook for the future of store-brand perishables? Are there untapped opportunities in specific areas of the perishables mix?

Bergh: With the continued homogenization of the supermarket industry, I do not expect to see much happen in the way of product innovation and new fresh-food department concepts. These activities will be left to the independents, who will have to differentiate their offerings in order to compete.

Hoffman: Stores brands in perishables will continue to grow, as evidenced by the huge growth track for branded fresh meats. As we move toward more case-ready product, we're seeing packers take an approach similar to what's been done in poultry by the likes of Tyson and Perdue. We're going to see less generic beef and pork items just like we've seen less in poultry. Store brands, in particular, may have a jump on this because many are already established in other areas of the store, including deli meats, for example.

Long: In our department, we plan to expand into the branding of fresh poultry and shrimp. These are two untapped perishables categories where we see some opportunity for additional growth, in addition to what we've already seen

DeArmond: Considering the number of buyouts and consolidations taking place in the supermarket industry, Cooper Farms anticipates a bright future for store brands. It's conceivable that large chains will narrow each category in their deli, for instance, to a national brand and a store brand, and that's all. While this would eliminate most regional packers, category management and control would be greatly enhanced.

Roberts: The outlook is bright. As more brands start appearing in the meat case, if I'm looking for a point of difference, I'm looking to put my name on products. If a retailer already has good brand equity, why not put it into perishables? It's the last place in the store for store brands, but you have to be very sure that you do your due diligence before you sign up with anyone to build your product.