« October 2008 Table of Contents
Trend Watch: Private seafood
Competition, not lagging economy, pushes generic store brands
By Lauren Kramer
October 01, 2008
Consumers curtail spending as much as possible during tight
economic times. It would make sense that growth in
private-label products would appear to be a natural
consequence, given the traditional lower prices of private
label as compared to national brands. But a recent study by The
Nielsen Co. clarifies this misperception.
Released in June at Nielsen's Consumer 360 Conference, the
analysis demonstrates that growth in private label is being
driven by rising commodity and food prices, not as a result of
consumers abandoning national brands. While dollar sales of
private-label products are up, the fact that unit sales are
down slightly indicates that higher unit pricing is the main
driver of growth, particularly in categories with strong
private-label sales, such as milk, eggs and cheese.
"This increases the appearance of private label sales
increasing, but when unit sales are flat it means people aren't
buying more private label products they're just paying more for
what they're buying," says Tom Pirovano, Nielsen's director of
The reason the market hasn't witnessed more shifting to
private-label products is that consumer behavior is hard to
change when it comes to spending habits. "They tend to buy what
they've traditionally bought over the years, even though they
know they need to be saving money," he says.
Unit sales showed slight decreases for both national brands
and private label. For the 52-week period ending April 19,
Nielsen statistics show that national brand sales across all
categories were down 0.4 percent, while private-label sales
were down 1.2 percent.
"The prices seem to be rising more rapidly in categories
where private label is strong," says Pirovano.
In the unbreaded frozen seafood category, grocery store
dollar sales were up 16 percent for the 52-week period ending
June 14, yet unit sales increased only 5 percent. "That tells
us people are eating more frozen seafood and prices are
increasing, but they continue to eat it," says Pirovano.
Figures from the New York-based Private Label Manufacturers
Association are more encouraging for those in the private-label
seafood business. PLMA's statistics show that private-label
frozen seafood sales totalled $713 million last year, an 11.4
percent increase over the previous year. By contrast, national
brands in the same category increased only 1.5 percent. The
unit increase for private-label sales was more modest at 1.6
percent, while national brand unit sales declined 0.7
Similarly, for the quarter ending June 16, private-label
frozen seafood sales increased 4.4 percent over the same
quarter a year ago, while sales for national brand seafood
declined by 0.4 percent. Private label units increased 4.8
percent while national brand units declined 4.6 percent.
At Blue Horizon Seafood, CEO John Battendieri says the
company has seen increased interest in its private-label
offerings, which it sells to retailers, wholesalers and brand
marketers, but has not capitalized on that interest yet. "In
this country private label still represents a low percentage of
products compared to Europe, and we think there are more
opportunities in Europe because of the strength of the
categories we're in," says Battendieri.
The Aptos, Calif., company focuses on value-added, certified
organic seafood ingredients in its frozen packaged products,
such as crunchy garlic shrimp with herbs and spices.
"We have to pay a premium for our products, but we're
pleased to say that the health-conscious consumer is still
willing to pay for the difference," he adds. Private label
constitutes 15 percent of Blue Horizon's overall business.
MS Intertrade, which produces the brand Sonoma Seafoods in
Santa Rosa, Calif., supplies private-label seafood to specialty
and higher-end regional grocers throughout the United States.
CEO Matt Mariani says the company has not seen increased demand
due to the recession in the larger economy.
Private label represents up to 40 percent of the company's
business, and Mariani speculates that as a whole private label
in processed food categories will do better during a
"Retailers will try to push it more during a recession, as
opposed to pushing the slightly higher priced national brands
in a stronger economy," he says.
So far there have not been any significant in-store changes
when it comes to private label, said one industry
representative from a major grocery store who requested
anonymity. "Moving into private label with commodity type items
is more about trying to communicate to the customer that the
quality they bought is associated with the banner of the
store," he says. "It's used more as a differentiator for your
quality items than just as a price point.
"Typically the items we'd be doing in private label, be they
steaks or fillets or the shrimp program, are the best quality
we can get and are comparable to national brands, but they
don't give us a cost advantage like cornflakes in the main
aisle," he continues. "At least at this point, our
private-label sales haven't been strong enough to make a huge
In part, the reason there's been no change in the push for
private label seafood since the recession set in is because the
push was so strong to begin with, says Steve Young of
BistroFresh, a company where private label represents 75
percent of business.
"It's not recession driven, just competitive driven," he
explains. "The competition has become so much more intense that
the stores are having to find ways to define themselves as
individuals, and the only way to do that is through private
Contributing Editor Lauren Kra m er lives in British