CPGmatters: Organic Products Change Perception of Store Brands
Through a special arrangement, presented here for discussion is an excerpt of a current article from the monthly e-zine, CPGmatters.
The introduction of high quality, store-brand organic products has changed consumer perceptions of private label grocery brands, according to results of a J.D. Power and Associates' Private Label Industry Report.
In particular, consumer attitudes about many store brands have shifted. Rather than being considered low-quality with bland packaging, private label brands are being thought of as unique and as having quality commensurate with that of traditional brands.
The report, conducted by the firm's Web Intelligence Division, found that the amount of online conversation about private label products has increased steadily during the past year. Volume peaked last fall as the economic crisis was unfolding.
While private label pricing motivates consumers, the quality and flavor of organic products drive the highest levels of positive sentiment. Private label food products from Safeway, Trader Joe's and Whole Foods received an especially high level of recommendations compared with other private label brands, and are seen as being particularly healthful and flavorful.
The report, which was previewed at the IRI CPG Summit in Las Vegas in February, also found that, among retailers included in the report, Safeway and Whole Foods get consumer raves overall for their mix of private label brands and categories.
"It's clear that consumers have begun to discard the idea that private label brands are of lower quality than traditional brands, which provides an opportunity for retailers to differentiate themselves with high quality, reasonably priced store brands," said Janet Eden-Harris, vice president of J.D. Power and Associates Web Intelligence Division.
Appreciation for non-food private label products such as diapers, paper products and cleaning supplies was not as high as that of food products. The report implied that these products are perceived as commodities, and were purchased for their lower cost rather than as a favored brand by itself.
"While retailers continue to gain ground with their private label products, there is still enormous opportunity for consumer packaged goods manufacturers," said Ms. Eden-Harris. "Innovation is still a big growth driver, and CPG companies still lead in that regard. New and differentiated products that are priced to value will win market share."
Discussion Questions: How has the introduction of upscale, organic products changed perceptions of private label food products? In what other ways can retailers be improving PL food's reputation? Is there a similar opportunity in non-food categories?