National Brands vs. Private Label

National-brand frozen food companies have been keeping an eye on the rearview mirror as private label sales have grown during the recession’s penny-pinching days. Store brands have made gains in several frozen categories. However, while tough times may have changed the shopping lists of some consumers, the times have not frozen out national brands, which continue to command 80 percent of frozen food sales.

In 2008, private label frozen foods represented one-fifth of total department sales of $29.4 billion (The Nielsen Co., 52 weeks ending Dec. 27, 2008). Over the past few years, statistics show store brands have increased their share in several frozen categories, including ice cream, desserts/fruits/toppings, juices, ice and, in particular, vegetables.

Grocers have followed private label sales increases with interest. “Categories where we have seen significant store-brand share growth include ice cream, vegetables, pizza, bread and dough products, toppings, and fruit,” says Chris Hardin, director of store brands for Tyler, Texas-based Brookshire Grocery Co. “Our store brands lead in volume in several categories, including fruit, ice cream and vegetables.”

“All private label categories are up, but ice cream is leading the charge,” notes Jack Wagner, center store frozen food business manager for Indianapolis-based Marsh Supermarkets. Private label has a significant share in frozen juice, potatoes and vegetables, whipped topping, and pasta, according to Rick Benner, frozen foods category manager for Grand Rapids, Mich.-based Spartan Stores. “There is strong growth in frozen potatoes and breakfast waffles — the major brands in both categories are experiencing growth as well,” he observes.

National brands continue to drive most frozen food categories. “Certainly, dinners/entrées, pizza, breakfast and frozen snacks are very much driven by national brands,” notes Spartan’s Benner. “Frozen pizza continues to be driven by Kraft, while frozen dinners and entrées are driven by Nestle and ConAgra,” says Marsh’s Wagner.

Growth of private label has caused some national brands to ramp up advertising or offer special deals to retailers. Other name-brand companies have decided instead to continue concentration on their own product lines. “Name-brand companies are definitely coming to the table with deeper deals in order to combat loss of share to store brands,” says Brookshire Grocery’s Hardin. “While we can’t divulge the actual deals, it is obvious that the growth of our own brands has created a healthy leverage with name brands.” Marsh’s Wagner concurs: “We have recently seen more aggressive, deeper deals from some brands, particularly in the ice cream category.” Spartan hasn’t seen national brands target the sales growth of private label brands, according to Benner.

Progressive Grocer asked frozen food manufacturers and industry experts for their perspective on how big brands and store brands are shaping the supermarket frozen food case today and what they think the future might hold.

On the National Front: Fruits and Vegetables
Dole may be the category leader in frozen fruit, but the company acknowledges that store brands grabbed roughly 70 percent of the category before the recession. To differentiate Dole from store-brand competition, the company has focused on its main attributes — quality and nutrition, notes Paul Panza, director of marketing for Westlake Village, Calif.-based Dole Packaged Foods, LLC. “We are very proud of the resources and very strict guidelines we have put in place with respect to the sourcing and packing of all of our frozen fruit items. We have won and proudly display the ChefsBest Certified Award on our package as a sign of our quality.”

Packaging is a big focus at Dole, with new standup pouches that are convenient and resealable for consumers, and help retailers with improved merchandising at shelf. The company is also promoting frozen fruit’s nutritiousness, versatility and usage, based on research. “As the branded leader in the category, we know that it is our responsibility to drive growth and penetration based on the fact that only 29 percent of households even buy frozen fruit, and those that do only buy three times a year,” Panza says.