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Ingredients fundamental to private label innovation, PLMA

By Jess Halliday , 23-May-2008

The Private Label Manufacturers Association (PLMA) is inviting ingredients firms to exhibit at its US trade show for the first time this year, signalling the importance of being on trend rather than following in the wake of the brands.

Private label food and beverage products have been available in retail stores for decades. Typically, they are regarded as cheaper, lower quality food staples such as pasta, rice and tea bags.



Now, however, the times are changing and consumers are demanding the highest quality for their money - especially at a time when high food prices are on the rise and some consumers may consider switching away from their favourite brands to save a few cents.



In this context, private label is emerging as an innovating force, using ingredients that are on-trend with the modern consumer, PLMA has seen. This may include the addition of ingredient to bring special benefits to a product, or replacing artificial additives with natural or organic options.



"Private label in America has reached new levels of quality and consumer acceptance," said Brian Sharoff, president of the PLMA.



"Future growth will depend on keeping up the flow of the best ingredients, flavors and fragrances, so that retailers can offer consumers the most innovative and creative products possible."



The association has identified some of the important ingredients and product claims as being: organics, high fiber, low salt, trans fat free, and gluten free.



Interestingly, these same ingredients and claims have been used by brands as a point of differentiation and to justify a premium price position. It appears, then, that they are 'trickling down' through the food value chain, since having been established as popular with consumers that have more spending power.



The PLMA is claiming that the new ingredients section to its trade show will let private label manufactures steal a march on their branded competition.



"PLMA's new section will permit the private label industry to see the latest ingredients without waiting for national brands to introduce them first," said Sharoff.



PLMA says that market share for store brands is now in excess of 21 per cent - however this figure covers all private label products.



It says that forty-one percent of American shoppers now describe themselves as frequent store brand buyers. Five years ago the figure was just 36 percent.



Market researcher Euromonitor International says sees fat lower private label penetration in the US than in Europe, however - although that is starting to change.



In the UK, for instance, private label health and wellness packaged foods make up around a third of total health and wellness packaged food.



Retailers there have also split out their private label ranges to target different consumer groups. Tesco, for instance, has three lines at different price ballparks: value, mid-range and premium.



In the US, specialty retailers with an appeal to consumers interested in health and wellness are also in on the act, including Trader Joe's and Whole Foods.



The PLMA considers Wal-Mart, Kroger and Safeway to be amongst the retailers that have been responding to new consumer trends in a timely fashion.



The PLMA's Private Label Trade Show will take place in Chicago, November 16 to 18.

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