Industry News | July 23, 2009

Private Label Foods Moving in on Quick-Serve Territory

Mintel GNPD reported that private label food products are providing more than just cheap alternatives to national brands, but are attracting shoppers with premium ingredients, portability, and health benefits.

So far in 2009, Mintel GNPD has seen nearly 1,800 new U.S. private label foods appear on retail store shelves, accounting for 27 percent of all food products introduced this year. In 2005, private label foods comprised only 13 percent of new food product launches.

"Not only have private label introductions increased, but product innovation is reaching unprecedented highs," says Krista Faron, senior analyst at Mintel. "Retailers no longer only launch 'me-too' products to compete against major national brands. Instead, private label lines are hotbeds of creativity, driving markets and establishing themselves as trend leaders."

As most Americans try to spend less at restaurants, Mintel sees private label retailers creating premium in-home meals that boast restaurant quality and fresh ingredients. Supervalu's Culinary Circle, for example, features an upscale Pork Carnitas Enchilada Casserole, while Wal-Mart claims fresh-baked taste in minutes with Sam's Choice Thin Crust Pepperoni and Canadian Bacon Pizza.

Portable, high-quality lunches are another popular area of private label development, reports Mintel's Krista Faron. People want to save money by lunching at the office, and new private label foods like Safeway's Rice Noodle Soup Bowl (retailing for just $1.55) make desk-dining easy.

Convenience remains a driver for private label prepared foods, but Mintel GNPD sees health and nutrition increasingly influencing product development. Lucerne Foods gives shoppers convenience, nutrition, and private label pricing with its Eating Right brand. Products span the store, including kids' Whole Wheat Mini Ravioli with fiber and protein, plant sterol-fortified Apple Cinnamon Granola, and Light Ice Cream Cups containing probiotics.

"Private label manufacturers realize 'value' means more than 'low price' to consumers, so they're wisely creating new products that deliver on some of today's most exciting food trends," Faron says.

As the recession causes more Americans to cut down on food spending, both at home and by dining out less, private label has benefited: the US market grew 9.3 percent in 2008 (compared to 4.5 percent for branded food sales). Mintel forecasts it will grow another 8.1 percent by the end of 2009.

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