June 1, 2018
In an effort to attract a wide range of shoppers, the grocery giant has added a premium store brand to a portfolio that also includes value-priced, natural and organic, and everyday selections. Other grocery chains have pushed into premium offerings, too, including Southeastern Grocers, Ahold Delhaize and Kroger.
Nielsen reported recently that even as sales of private label demand products rose to $125 billion in 2017, premium brands are driving much of the growth. Premium private label sales accounted for nearly one-third of dollar volume and drove 8% of the growth in the segment in 2017.
As private label products have shed the stigma of being inferior to brand name products, consumer demand has grown and grocery stores have responded. Kroger generates more than $20 billion a year from its private label brands, including the $1.5 billion generated by its natural and organic line, Simple Truth. Amazon is expected to stock its private label brands in Whole Food locations. And there is growing competition from Trader Joe’s, Aldi, Lidl and dollar stores that have expanded into the space. Last summer, in a sign of just how competitive private label has become, Kroger sued Lidl over what it claimed were unacceptable similarities between the two chains’ premium store brands.
Albertsons is no stranger to private label success. It can gather value consumer data around its premium private label ice cream line before expanding it into other products at its namesake chain as well as at its Safeway, Jewel Osco, Shaw’s and other banners. The new ice cream flavors, which will highlight trendy flavors and ingredients, include Brazilian Guava Cheesecake, Bourbon Maple Blondie and Indian Cardomom Pistachio that could attract consumers, especially millennials.
“With our team’s unique insights across the industry, we can react faster than ever to changing consumer trends. The result is a rapid expansion of high-quality products in every department that are exclusive to Albertsons Cos.,” White Geoff, president of Albertson’s Own Brands, said in a statement last month.
It’s no longer enough just to carry private label, prompting Albertsons, Southeastern and others to expand into premium products that contain better ingredients and flavor profiles but also command a higher price. As retailers boost their private label offerings, the segment moves further away from from the bland, inferior profile that long defined store brands.