How can grocers capitalize on small brand allure?

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine. Why are small food brands suddenly such big sellers? It all starts with consumers. Not surprisingly, Millennials are leading the charge. Thanks to technology-driven companies like Netflix, Amazon and Google, the “iTunes Generation” is accustomed to having lots of choices and being able to purchase niche products and services that meet their very specific needs, explains Bob Shaw, president of Concentric Marketing. “The days when the majority of categories in a store had, at most, three brands and a private label, are long gone,” says Mr. Shaw. Other reasons, according to market observers, small food start-ups are gaining share:

• The growing diversity of the U.S. population,
• A basic mistrust of big brands and institutions,
• The ease of bringing small brands to market, thanks in part to being able to raise awareness online,
• The ability of small entrepreneurial companies to often move faster on trends and be more flexible than larger, established brands.

For retailers, selling small brands can play an important role in setting a store apart. If you offer the same products as everyone else, you compete only on price and convenience. Because they aren’t in every store in your market, “You’re going to have less competition and less price sensitivity in the market,” says Luke Abbott, SVP KeHE Distributors. “It’s not that price doesn’t matter; it just doesn’t matter as much.” Retailers should consider shelf tags or signage that call out family-owned, locally produced or just new brands. Start-ups, often headed by tech-savvy younger people, can also drive traffic to retailers through both social media and grassroots marketing at farmer’s markets, community events and health fairs. On the other hand, small vendors are at a disadvantage when up against big-brand tools and metrics. Slotting and heavy promotional spending make it difficult for emerging brands to prosper. Stores may have to work closer with smaller players to catch up with demand. Mr. Abbot says, “If working with small brands is part of your strategy and you believe it will help you reach your sales and margin objectives … then you need to have people in your organization that can help them be successful.”

• Frozen & Refrigerated Buyer June 2017