Some inspiration and creativity could pay off big time for grocery retailers building up their own-brand portfolios as more consumers embrace eating at home, Brad Studer, senior director of Our Brands at The Kroger Co., said today at the Private Label Manufacturers Association’s Private Label Week virtual conference.
Introduced by PLMA President Peggy Davies, Studer led a session titled “The Artful Economics Fueling Our Growth,” giving a peek at Cincinnati-based Kroger’s private-label development practices and growth strategies.
“Private brands are becoming a behemoth of the grocery industry, even more so as a result of the pandemic, which has driven more and more customers to try private brands — in some cases by choice and in others by circumstances, with the pantry-loading that occurred early on,” he said.
“Customers are taking the time to connect around the food and the dinner table like never before.” — Brad Studer, The Kroger Co. (Photo from PLMA)
Citing data from the Boston Consulting Group, Studer reported that private labels now represent 18% of the U.S. grocery market.
“The industry has shifted, and customers aren’t just looking for private brands for the knockoff of the national brand. These customers are looking for fresh foods and for private brands to be innovators, to introduce new foods and flavors,” he explained. “Customers are turning to private brands for elevated, premium experiences, and all at an amazing value.”
Displaying a sales growth chart of key Kroger own brands, Studer noted that the retailer’s Kroger store brand and Simple Truth better-for-you and Private Selection premium brands eclipsed 2020 year-over-year sales gains in the overall private-brand market, based on IRI data.
“Our culinary food brands and natural/organic brands outpaced the industry, with high double-digit growth in 2020,” he said. “The success of our relentless pursuit for perfection is paying off in terms of results. Our customers tell us they love our brands, and the results show it.”
Among consumers, there’s a “renewed passion for recreating restaurant meals in the comfort of their own home,” Studer said. According to research from Kroger’s 84.51° data and analytics subsidiary, more than 60% of the retailer’s shoppers are spending more time cooking at home.
“This trend will accelerate in 2021 as customers look to spice up their routine,” he explained. “Private Selection Tikka Masala Simmering Sauce is a great example of a product that brings a sense of comfort and allows customers to make an incredible, tasty, global-inspired meal at home. Though it has been on the shelf for a few years now, in 2020, this SKU alone has shown double-digit growth. This one SKU is growing the overall category, and the repeat rate of this item is more than double the category average.”
Own brands stand to play a key role in seven foods trends that Kroger predicts for 2021. They are “futureproof foods,” “seeking comfort,” “ketotarian foods,” “restaurant and global flavors,” “mushroom mania,” “for the planet” and “fresh innovation.”
Plant-based foods, for example, continue to exhibit strong appeal to eco-conscious customers focused on sustainability, according to Studer.
“We hold our plant-based products to the same quality standards as the rest of the portfolio, ensuring we don’t just introduce a product, but we deliver the delicious plant-based products that widely appeal to vegans and flexitarians alike,” he said. “Our Simple Truth Emerge Plant-Based Burgers and Grinds are a great example of this. Though launched just a year ago, we continue to refine and hone the recipe to deliver the best eating experience. Another of our plant-based innovations, Simple Truth Cauliflower Debs, brought to new shoppers to the produce dip set, with half of the sales stemming from new buyers. On the poll side of the equation, we’re creating customer-driven demand for Our Brands by delivering insights to understand what experiences and connection opportunities our customers value and how we can create a desire for them to engage with Our Brands on a deeper level.”
Studer said his team conducts more than 10,000 product evaluations each year and, of that, he has “probably tasted 2,000 of those products.” The Our Brands staff — which he described as a “passionate team of customer-obsessed, food-curious product developers, innovators and brand marketers” — aims to take emerging product concepts “from Post-It note to customer mouths and hearts.”
The team members also represent the first of the “4 Ps” mantra for Our Brands: People (passionate, food-curious and unique), Perspective (distinct point of view), Performance (high standards) and Pride (accountability and ownership).
“Our department has three primary goals: to provide a clear vision, implement at a pace that matters and instill pride among associates who bring the products to show,” Studer said. “The Our Brands team at Kroger is fueled by a relentless drive of perfecting the craft, the merging art and economics.”
Studer said he’s often asked, “What is the secret to Simple Truth’s sustainable success?” He attributed the robust growth of the brand, one of the largest in the Our Brands portfolio, to meeting customer needs, innovation and strong enterprise support.
“This has been a dynamic time in the food and beverage industry, and it’s going to change the American psyche forever,” Studer noted. “Customers are taking the time to connect around the food and the dinner table like never before.”