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Trend Watch: Building a brand

Private label, value-added seafood spurs corporate growth

By Lauren Kramer
May 01, 2007

Walk into any major grocery store and the diverse number of private-label food products leaves no doubt the category is growing by leaps and bounds. The total U.S. market for private-label foods and beverages was $48.4 billion in 2006, a 12.9 percent increase from 2002, according to a January 2007 report by Packaged Facts, a division of MarketResearch.com. The report, "Private Label Food and Beverages in the U.S.," predicts retail sales of private-label foods and beverages will reach $56.5 billion by 2011.

That growth is reflected in private-label frozen seafood, which in 2006 increased 35 percent in dollar market share compared to the previous year.

"Consumers are no longer interested in simply making a sandwich," says Brian Sharoff, president of the Private Label Manufacturers Association. "They're looking for meal solutions. In the private-label category as a whole, there's been a shift in emphasis from price to quality, and the key to that quality is that it's value-added."

Matt Mariani, CEO of MS Intertrade in Santa Rosa, Calif., couldn't agree more. His company, which produces Sonoma Seafoods, has private-label seafood accounts with "two of the largest natural and most unique grocery chains in the country," - though Mariani refused to divulge their identities. "Private label constitutes 40 percent of our sales for value-added seafood items, and it was how our company began 15 years ago," he says.

MS Intertrade produces a variety of stuffed fish, including salmon, sole and crab cakes, as well as portion-controlled, fresh and frozen seasoned and marinated fillets. "Retailers are trying to build consumer loyalty around their private-label products today and change consumers' perception of them from being of generic quality to being premium and value-added," says Mariani.

"For example, 15 years ago private-label seafood might have consisted of some breaded fish sticks or portions and some bagged shrimp. Today, by contrast, it could be anything from fire roasted and seasoned shrimp skewers, to mahimahi with mango macadamia stuffing. There is probably still bagged shrimp in the lineup, but it is now in a re-sealable standup bag with art and graphics that would rival any of the national brands."

The category has seen a drastic increase in its breadth and marketing resources over the years, says Mariani. "That's primarily because major retailers came to the conclusion that they could use their private labels to build customer loyalty, as opposed to having them purchase a store brand simply because it was cheaper."

Building brands is an important component of this, confirms Steve Young, president of Bistro Fresh. His company produces private-label seafood for Hannaford Bros. and Whole Foods Market, including ready-to-cook meal solutions in 30 varieties, for oven, microwave and barbecue.

"We work directly with retailers, presenting menu ideas to them and helping them define their menu options," says Young. Bistro Fresh's oven-ready products include a Mexican-style seafood dish, the Tilapia Taco, which consists of tilapia with Mexican salsa, cheese and crushed taco shells. The frozen microwave product line includes Thai Curried Shrimp, which features shrimp, snap peas and rice with curry sauce that cooks in three minutes.

While private-label foods and beverages are not the primary draw for shoppers to visit a particular retailer, they can act as a linchpin in the total shopping experience and strengthen customer retention and loyalty, according to the Packaged Facts report. Therefore, consumers' trust in the private-label brand is a pivotal factor.

"The consumer has to have an expectation of the quality they will receive when they purchase that product, and then the product has to perform to that expectation," says Young. "Retailers need to define the brand for the consumer through marketing and consistent execution, so that over time, consumers will come to understand what that particular private-label brand means, making line extensions easier to execute."

To transform your private-label products into a brand, you have to add bells and whistles, says Sharoff. "I think almost every major supermarket chain in the United States and Canada has created a value-added, high quality private label for themselves, but it's epitomized by Whole Foods' 365 brand, and by Trader Joe's brand."

As the demand for private-label seafood grows, companies are looking for ways to differentiate themselves and their offerings. For Blue Horizon Organic Seafood Co., it's sustainable and organically farmed shrimp. The Aptos, Calif., company started supplying product to national brands four years ago, and 
today, private label constitutes 50 percent of its sales. Blue Horizon's repertoire of products includes value-added seafood, including organic versions of Coquilles St. Jacques and Panko-Breaded Shrimp.

"Over the past year, I've seen an accelerated, almost overwhelming demand for sustainable private-label seafood, driven by the coverage of the health of our oceans," says John Battendieri, Blue Horizon's CEO. "Once the U.S. Department of Agriculture has organic aquaculture standards in place, we predict a huge increased demand for [USDA-certified], organically raised seafood, particularly in the private-label category. Once those standards are in place, the customers will come flocking."

There is plenty of opportunity for innovative offerings in value-added, private-label seafood items, and it's easy to see why this segment is growing rapidly, says Young. "Seafood is an increasingly important part of most Americans' diets, yet they still have limited knowledge on what to do with the product once they get it home. Private label-seafood packaged in meal solutions offers both retailers and consumers a win-win."


Contributing Editor Lauren Kra m er lives in British Columbia


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