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A different direction


Merchandisers of store brands are having difficulty gaining traction in the oil and vinegar landscape. Despite substantially lower average prices, store brand sales activity remains significantly below the national brands.

While unit sales of vinegars rose 6.7 percent for the 52 weeks ending Oct. 30, 2016, store brand activity was down 0.1 percent, reports Chicago-based market research company IRI.

In addition, unit sales of olive oil were up 5.3 percent, while store brands rose just 0.7 percent.

Sales of edible oils in 2016, meanwhile, will total approximately $3.5 billion, up about 2.7 percent from approximately $3.4 billion, reports Euromonitor International Inc., a Chicago-based market research firm.

Growth is forecast to be about 2.6 percent over the next five years, with sales reaching approximately $3.6 billion in 2021, Euromonitor forecasts.

Yet, even with such flat activity, the growth potential of store brands is promising. Private label suppliers, for instance, are developing products for the vibrant base of health-oriented shoppers, while also seeking to design more visually appealing packaging.

“To best compete against the national brands, store brands should be different from what currently is on shelves,” says Salvatore Russo-Tieri, managing director of Bono USA Inc., a Fairfield, N.J.-based producer of extra virgin olive oils. “That includes bottles of different shapes and sizes and perhaps engraving on the glass. The products must catch the eyes of shoppers and have great presentation.”

Bottles also should have labels that clearly list product ingredients and attributes, adds Kaylee Mikolon, sales and marketing manager for Modena Fine Foods Inc., a Clifton, N.J.-based provider of balsamic vinegars and glazes.

“There often is a lot of misleading information or lack of information that prevents consumers from understanding the vinegars they are buying,” Mikolon notes. “Providing accurate information on labels, shelf displays or via educational programs would be most beneficial.”

Packaging materials, meanwhile, already are evolving, with more merchandisers switching to polyethylene terephthalate (PET) plastic from traditional glass bottles, says Mark Coleman, senior vice president of retail for Cantania Spagna Corp., a Ayer, Mass.-based supplier of vegetable, olive and blended oils.

Follow the leader

While presentation is important, it’s also crucial that store brand oils and vinegars match or exceed the quality of the national selections while also meeting evolving consumer demands.

Such interests include foods that emphasize health and wellness, Coleman states, adding that organic selections already are becoming prevalent.

Organic canola oil and olive oil are growth drivers in their respective categories,” he notes. “Organic farming has grown to high levels, and sustainability is much better than it was 10 years ago when organics tried to launch in this country.”

Better-for-you options, including organics, also are becoming more prominent in the vinegar sector, Mikolon adds.

“Unfiltered raw vinegars along with other healthy drinkable vinegars are popular consumer trends,” she says. “There are more of these products on shelves from both the national brands and store brands.”

Other health-oriented product attributes include natural flavors, fewer additives, no preservatives or added sugars, and non-GMO ingredients, Mikolon says.

“Retailers need to respond to the direction consumers are moving in,” she notes. “At the same time, they should promote alternative usages for vinegars that consumers may not be aware of, and provide more premium options.”

Detailing the host of conventional and untraditional uses of oil and vinegar can generate revenues for store brands, Coleman states. “The American consumer is waking up to the fact that there are different quality levels for olive oil as well as a wide array of uses in the kitchen such as for frying and cooking,” he says. “As long as the profits for private brands are there, the staying power will only grow stronger in the years to come.”

Accentuate the positive

Merchandisers of extra virgin olive oil, meanwhile, can distinguish their selections by spotlighting that the items have gone through a certification process that traces the olive oil back to its source, Russo-Tieri states. That is crucial because many sellers are allegedly calling conventional olive oils “extra virgin” and charging an unwarranted premium for the items, he notes.

Producers of the higher-priced and higher-quality extra virgin olive oil typically crush olives and extract the juice without the use of chemicals and industrial refining.

“More consumers are becoming wary of what they are buying and are putting a strong emphasis on traceability,” Russo-Tieri notes. “Certifications are the best ways to regain trust and attract additional customers.”

Because many national brands do not certify that their olive oil is extra virgin, retailers should aggressively spotlight the store brands with that designation in their marketing, he says.

“It gives the store brands a leg up if customers know that their extra virgin olive oil is the real deal,” Russo-Tieri adds. “It lets shoppers then know that they are getting the proper health benefits and flavor.”

To best highlight store brands within outlets, meanwhile, retailers should situate items on shelves in the “hip to shoulder range and never on the top or bottom shelves,” Coleman notes, adding that product demos are a powerful way to generate activity.

For maximum visibility, retailers can place bread and an open bottle of olive oil on the middle shelf of a display for tasting, with selections for purchase above and below the items, Russo-Tieri states.

The store brands also should be situated alongside the national selections for an “apple to apple” comparison, he says.

While it is important to give shoppers a choice of product options, retailers still face the challenge of determining the optimal amount to merchandise, Coleman says, adding that an excessive array of national selections can impact store brand sales.

“Many retailers are still stocking too many branded products,” he notes. “This only eats away at their own store brand penetration and share.”

Look beyond price

Determining the optimal pricing also can be mystifying. While lower-cost store brands help entice consumers to eschew comparable national selections, it is most important for the store brands to meet or exceed shopper quality expectations if retailers are to sustain revenues, Coleman says.

Indeed, Russo-Tieri says that while pricing of store brands should be in line with the national selections, it is more important to compete on taste.

“Products with certifications are naturally going to cost a specific amount so it can’t turn into a race for a lower price than the national brands,” he notes. “There is a certain value connected to the items, and it doesn’t always turn out that extra virgin products will be the lowest price.”

In developing such products, it is important that retailers work closely with their suppliers and that each party knows the other’s plans and ideas, Russo-Tieri states. Retailers should visit suppliers’ processing plants and ensure that their inventory needs and timetables can always be met, he says.

The parties also should expect to maintain a long-term relationship in order to “grow together and learn how each other works,” Russo-Tieri adds.

have displays that allow shoppers to sample the product.

ignore the importance of traceability and “extra virgin” authenticity

consider uniquely and attractively shaped bottles for oils and vinegars.

Because many national brands do not certify that their olive oil is extra virgin, retailers should aggressively spotlight the store brands with that designation in their marketing, he says.

place store brand oils and vinegars on the top or bottom shelves.

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