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How Grocers Can Make More Money with Food Private Labels

In the past, private labels targeted shoppers with low budgets. But today, they outperform well-known branded products 3 to 1.

Where Tide, Lipton, and Crest once ruled, retail store brands now sit atop the chain. Costco has its Kirkland brand, and Walmart has its brand Great Value.

Grocers can benefit from this and increase their earnings by utilizing food private labels. Let’s take a look.

Reasons Why Private Label Foods Offer an Opportunity to Grocers

Grocery store products traditionally have thin profit margins of an average of 1.3 percent. After subtracting costs such as wages, distribution, and additional expenses, grocery stores make mere pennies in profit. For this reason, price competition is ruthless.

Private labels help grocers competitively price their goods so that they can retain more profits. By keeping the manufacturing inexpensive and in-house, they’ve leveraged the knowledge they gained selling well-known brands for decades. Gross profit margins increase 25 to 30 percent on private labels as compared to the brands of manufacturers.

Kroger is an excellent example of success through private labeled products. Their private label brand, Our Brands, made up 29.5 percent of their unit sales as of March 2018. Its Simple Truth organic and natural products increased 19 percent over other years in the 4th quarter of  2017. Their private label products brought in $20 billion compared to $8.13 billion in Campbells Soup and $7.3 billion in J.M. Smucker.

Kroger has invested significantly in its private label manufacturing facilities for years now, and as a result, it has over 40 processing plants. It surpasses even J. M. Smucker’s, Campbells Soup’s and even the giant Kraft Food’s in-house processing capabilities.

What Factors to Consider When Deciding What Products to Private Label

Private label food sales in the U.S. rose 3 times faster than international manufacturer foods in 2017. Today’s shopper doesn’t just look for a great value; they have high taste, ethical, and environmental standards. These product requirements increase competition between manufacturer brands and private label products.

American consumers’ dependence on established, national brands is beginning to wane. They are looking for products with fewer unhealthy ingredients. Private label foods aren’t just for the budget conscious people. Private label products have extended to specialty and premium products as well. Prepared foods and other products such as salsa and granola also make great private label foods.

It’s important to factor in the cost of excellent quality ingredients that provide the most value to consumers. Also, certain products such as bottled water, alcohol, and other private label beverages are seeing an explosion in growth. Their price elasticity allows grocers to minimize cost while maximizing profits.

Utilizing customer purchase data to make their decisions on private labeling products has helped Kroger gain their current standing in the grocery industry. They share their 84.51° analytics platform with brand partners for promotions and coupons. Kroger’s 300 CPG customers can assess the platform to participate in marketing campaigns that the grocery store runs.

Grocers can also focus on creating and sourcing products that consumers don’t readily recognize as theirs as Kroger does. Their analytics platform has helped with this particular strategy as well.

To meet the demands of customers, you must source quality ingredients for your products. Enlisting the help of companies such as Linbro is an excellent choice since they help their customers find organic and sustainable ingredients for private label foods. Linbro expertly navigates the sourcing process and inspects the farms and companies they source their products from regularly to ensure they are the highest-quality.

Companies such as Linbro can help identify manufacturing partners that are low cost and high quality since you don’t want to pinch pennies when it comes to quality. There are thousands of manufacturers out there and picking out the best ones for your products can be daunting.

Study competing brands to price your private label. This strategy will help you see if you can establish that food product as a premium brand and invest significant money. Only careful research can help you decide if a particular product would make a profit as a private label premium food product. It can also help you determine whether a food should be a private label value product so that you can price it below the national brands.

The Takeaway

Grocers can make excellent profits with private label brands. Stores that offer a “good/better/best” line of products provide almost every consumer with the products that they are looking for and increase your profits. Even international chains such as Walmart have introduced their own private label food brands with great success.

Private label brands offer quality food and an excellent price. The competition to provide the best product for the lowest price is high, but the profits make it well worth it to join in the game.

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Why This is The Right Time to Invest in Food Private Label?

Shoppers today appreciate the quality and value that private label brands bring to them. While some people believe that private label products have run their course, Nielsen published a report in 2018 pointing to the contrary, illustrating that products with private labels are, indeed, rising again in popularity.

The private label product market is set to reach approximately $220 billion by the year 2020.

Now is the time to invest in food with private labels.

Why Now is a Good Time for Private Labels

Private label foods saw their most significant increase in popularity during the recession of 2008. While some think that these labels reached their pinnacle then, many know that they continue to increase in popularity as today’s shoppers appreciate the value they provide.

Eventually, there will be another recession. Also, penetration of private labels in Europe is significantly higher than in America. Penetration there is over 40 percent.

Consumers in America have started to shift their thinking as millennials, and other shoppers seek products they see as “clean-label” that haven’t benefited from branding. They tend to steer clear of foods with an extensive lists of ingredients.

Two German discounted stores have exploded in popularity in the U.S., and they’ve expanded aggressively. The two stores, Lidl and Aldi, are both planning to expand across America and saw growth rates between 7 and 8 percent during the period between 2009 and 2014. Aldi currently is a top-20 grocer in the states.

Popular U.S. chains Trader Joe’s and Whole Foods newer store 365 by Whole Foods also increased their revenues steadily over the last 9 years and provided mostly private label products. Private label foods have branched further for people seeking less expensive options.

Now they’re seen in prepared foods, granola, salsa, and more. These chains dramatically changed peoples’ expectations of the products that they buy.

25-30 percent higher profit margins for retailers provide an incentive to bring private label products to consumers as alternatives to branded products popular in the past. Price is a huge factor for people when choosing products to buy and they want healthy, high-quality foods.

Studies show that when people had to adapt to cost-saving methods during economic depressions, they didn’t revert back to old spending habits when the depression comes to an end. For this reason, private label brands continue to grow in popularity.

Opportunities for New and Current Brands

There are numerous opportunities for private label brands in the United States. Enhanced product strategies meet consumers’ needs. Those offering tiered options such as “good/better/best” are seeing excellent success because they meet shoppers’ needs by brand positioning that utilizes different price points.

Branded suppliers will struggle because options like these contradict their branded offerings.

Fresh-to-go offerings are set to grow as everyone knows how popular prepared foods are for U.S. consumers trying to save time and money. Stores such as Whole Foods have pushed past plain sandwiches and sushi and expanded their ready-to-go foods exponentially.

The expansion of private labels into choices such as salsa, prepared food, and granola as mentioned above, provide incredible opportunities for all brands. Kroger’s Simple Truth product line is a fine example because this product line introduced products without 101 ingredients that concerned their shoppers. In 2015, Simple Truth saw $1.5 billion in sales.

Energy drinks also provide an opportunity for new and current brands. They don’t take up much shelf space, and the existing base for private-labels is small compared to categories such as sparkling bottled water. One Texas A&M study illustrates that consumers will swap between brand name energy drinks such as Rockstar and Monster when prices rise.

The Fastest Growing Trends

Private food labels exhibit trends that show some products are rising rapidly. For instance, Costco uses alcohol’s price elasticity in a strategy netting them $270 million in wine sales all over the world and proceeds are projected to continue growing for the next few years.

Studies illustrate that people buy more products when they are less expensive. 25 to 45 percent markups are standard in the alcohol industry. Costco maintains around 10 to 14 percent with their Kirkland brands. On a $7 wine, that’s a price difference between $7.84 and $9.50.

The bottled water market also has the same trends. Generic product offerings such as Stop & Shop’s Nature’s Promise Water Beverage and Walgreen’s Nice! Spring Water are becoming more popular than common household names such as Poland Spring and Dasani.

The generic offerings in the private label category for bottled water outperformed Dasani 2.3X for a total of 29 percent of all global sales in bottled water.

  As you can see, private food labels are becoming more popular, and studies illustrate that this upward trend will continue. Now is the perfect time to invest in them as consumers continue to crave high-quality products at economical prices.

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Here Are The 14 Coconut Products People Are Consuming Right Now

People associate coconuts with tropical vacations and foods. Botanically, coconuts are known as dry drupes or a one-seeded drupe. A drupe is a fruit with one seed in the center, and other drupes include olives or peaches. The coconut is often referred to as a nut, a fruit, and a seed because of the seed it contains.

Coconuts are known for their versatility. The term comes from the 16th-century Spanish or Portuguese word “coco” meaning skull or head. They are unique because of the clear liquid they contain known as coconut water or milk.

Manufacturers process coconuts for oil and milk. They are edible on their own when ripe. You can even make charcoal from the shell. Dried coconut is commonly known as copra and often eaten.

People use coconut leaves and shells for decorating and furnishings. Coconut even has religious and cultural importance in some societies such as India.

General Coconut Health Benefits

Once criticized by dieticians because of its high-fat content, people are now looking at the potential health benefits of coconuts. We used to utilize coconut in candy bars and sugary mixed drinks, but today we use this fruit for other purposes, too.

Coconut has gained popularity over the years as a healthy alternative to dairy milk. We now cook with coconut oil, add it to our oatmeal and coffee, blend coconut into smoothies, and hydrate with coconut water. People are even linking coconut to the word “superfood” though there is no scientific evidence supporting this use.

Coconut is a great source of satisfying and digestion-friendly fiber. It also contains essential vitamins and minerals such as iron, vitamin B6, manganese, magnesium, selenium, copper, and zinc. Lauric acid is a primary component in coconut’s saturated fat content and it’s known to assist in raising HDL or good cholesterol.

Coconut water also contains potassium that regulates blood pressure and helps to balance the body’s sodium levels. Coconut flour is a popular alternative to white flour for people following gluten-free diets. There are 5 g of fiber in 2 Tbsp of coconut flour. According to the Academy of Nutrition and Dietetics, it is not more hydrating than regular water, however.

Coconut Products and Latest Trends

Coconut trees can grow in a variety of soils but typically grow in tropical or humid climates. The top 5 countries that produce coconuts are India, Indonesia, Brazil, the Philippines, and Sri Lanka. Small-scale farmers usually harvest coconut.

Most retailers would go through a distributor/importer to purchase coconut products in bulk and/or wholesale from countries that export the most coconut products. Companies such as Linbro that specialize in locating and procuring high-quality products can help locate the right suppliers for you.

For the general consumer, many of these coconut products are available in ethnic or local grocery stores. You can always contact local ethnic or specialty stores to see if they carry coconut foods. If they don’t often these stores can tell you where you might find them.

Common local grocery stores such as Martins and Kroger carry more unique products than ever before. Amazon, Thrive Market, and Publix are other great places to find common coconut products as well as specialty foods.

Raw Coconut

The term copra refers to the coconut extracted for use in food. They also contain milk and water that people cook with and eat alone. It’s a refreshing drink, and you can cook with coconut oil. Coconut shrimp is a trendy seafood dish found in beachy and tropical areas. Coconut is also an excellent additive to make recipes and food sweet such as granola bars.

Cooks bake with coconut since it’s a great ingredient for coconut pies and cookies. It also goes in many mixed drink recipes and flavors some alcohol such as Parrot Bay and Malibu.

Coconut Aminos

Coconut Aminos are a popular and healthy alternative to soy sauce. It’s an umami, savory seasoning created from coconut blossom sap that’s fermented and vegan salt that is gluten and soy-free. Coconut Aminos are great for those on a diet low in sodium because they have 65 percent less sodium than traditional tamari or soy sauce. The taste is sweet- and salty with a buttery note.

Use it as a dip for your sushi, a marinade for poultry and meat, seasoning for salad dressings, stews, and soups, as well as a substitution for soy sauce in Asian dishes. This sauce is popular for those on the paleo diet.

Coconut Cream

Coconut cream is a condensed, delicious cream similar to coconut milk but less watery. The difference is much like that between whole milk and cream. With a mild, coconut flavor its consistency is paste-like. Coconut cream has a higher fat content than coconut milk and is a little sweet.

This cream is a great product to add to smoothies, shakes, and Pina Coladas. Many Southeast Asian cultures use coconut cream as a mainstay ingredient such as Singapore, Thailand, Cambodia, Indonesia, and Vietnam. Its also used in Polynesian recipes. Examples of recipes are Coconut Curry Sauce, Thai Fish or Chicken Curry, Coconut Cream Pie, and Coconut-Chocolate Mousse.

Coconut Milk

Unlike the name suggests, coconut milk is not a dairy product. It’s almost as creamy, however. You obtain coconut milk by shredding a mature coconut’s fruit, mixing it with water, and pureeing it. Afterward, strain the milk to eliminate any pulp. Coconut milk is not the same as coconut water that comes from green, immature coconuts.

Use coconut milk as a healthy substitute for dairy in smoothies, cereal, tea, and more. It’s also great for the paleo diet.

Coconut milk promotes healthy metabolism and heart health. It also reduces inflammation and fights bacteria and viruses. It’s vegan-friendly and reduces stomach ulcers.

Coconut Water

This water packs more potassium than 4 bananas and is naturally cholesterol and fat-free. Many athletes use it as a natural sports drink instead of commercial ones sold today. Coconut water is an excellent way to hydrate your body and help with kidney stones and hangovers.

This sweet, nutty water comes from inside the coconut and its easy to digest with electrolytes and sugar. Coconut water comes from young coconuts before they mature fully.

This water can possibly lower your blood pressure and replenish electrolytes that you lose when you are sick in cases of diarrhea. Coconut water is versatile, packed with nutrients, combats diabetes, contains healthy anti-oxidants, and much more.

  Coconut Whipping Cream

If you’re allergic to dairy-based whipped cream then coconut whipped cream is for you. Its vegan-friendly as well as gluten and soy-free. This whipped cream comes from coconut milk and is more concentrated than traditional whipped cream.

Dip fruits in it and use it in recipes to replace dairy whipped cream. You can also top smoothies and coffees with this delicious cream. Thai Kitchen Coconut Cream is a great brand that is decadent and creamier for richer smoothies, curries, and soups.

Coconut cream promotes a healthy metabolism and heart health. It fights bacteria and viruses and reduces inflammation in the body.

  Condensed Coconut Milk

  People who are lactose intolerant as well as paleos and vegans love condensed coconut milk because of the flexibility it offers with recipes. Manufacturers make condensed coconut milk from the shredded flesh of fully mature coconuts. The flesh mixes with water to create the finished product but requires more water to make it palatable for recipe use.

Replace traditional condensed milk with the coconut version, and chefs love it for making coconut whipping cream. It also adds richness to slow-roasted ribs or chicken thighs.

Like the other coconut products, it promotes heart health and a healthy metabolism. Condensed coconut cream is soy, gluten, and lactose-free.

  Dairy Free Coconut Milk Beverage

These delicious, rich drinks bring the same health benefits as other coconut products and are great for a creamy drink to-go. Coconut milk beverages are very portable and are excellent alternatives for students that live in small spaces.

So Delicious has tasty coconut milk beverages that you can drink alone or mix in recipes and coffee. Their products don’t contain, gluten, nuts, soy, or dairy making them a great drink for people with allergies. These products allow people who are lactose intolerant to enjoy creamy, milky beverages that they never could before.

  Desiccated Coconut

Ordinary coconut doesn’t have a stable shelf-life alone. Desiccated coconut is a form that chefs prefer to use for cooking because it stores well. Coconut manufacturers craft this product by removing the moisture from the flesh and then grating it.

Besides utilizing it for cooking, you can sprinkle it on dishes such as berries and cream or oatmeal for extra flavor. Desiccated coconut has a mellow sweetness and also pairs well with trail mix.

As a delicious promoter of heart health and healthy metabolism, desiccated coconut is paleo and vegan-friendly. It’s an excellent product to use in cooking and baking. People with allergies can enjoy dishes that previously used dairy products by replacing them with coconut.

  Flavored Coconut Water

This hydrating water harvested from immature coconut comes in a variety of flavors from plain to guava. Mixing other flavors with the plain water enhances is subtle coconut taste. Like other coconut products, it has many health benefits including fighting bacteria and viruses and reducing inflammation. It’s full of electrolytes and promotes a healthy heart and metabolism.

Flavored coconut water is a great beverage for traveling or going out for a walk. Many people prefer to drink it after exercise instead of plain or filtered water.

  Sparkling Coconut Water

Sparkling coconut water is a new way to enjoy this hydrating beverage, and it adds a touch of sophistication to your diet. Just like other coconut water, it’s full of electrolytes and the same health benefits of other coconut products.

It’s a refreshing alternative to sports drinks and is naturally full of Vitamin C, manganese, potassium, calcium, fiber, and magnesium. Sparkling coconut water also contains antioxidants and may help control blood sugar levels. It can assist with the reduction of stone and crystal formation in your kidneys and is packed full of amino acids such as alanine, arginine, serine, and cysteine.

  Toasted Coconut Bites

This decadent and nutritious treat is great as an after-dinner dessert or coffee accompaniment. It’s great for people with a sweet tooth that want an alternative to sugary sweets. Toasted coconut bites are low in calories, too. They make an excellent snack for those on the go.

With a mild, nutty taste, toasted coconut bites make a great snack at parties and are sure to impress. Their biggest health benefit is their reduced sugar and calories making them an excellent choice for those on a diet as well. These treats are also an alternative snack for people with wheat allergies.

  Toasted Coconut Chips

Toasted coconut chips have a bit of crunch and chewiness that makes them a great topping for desserts and meals. They are naturally a little sweet and rich in nutrients. These chips are extremely versatile. Add them to savory dishes and use them in cake-baking. You can also add them to shakes and smoothies, and they are a popular additive in trail mix because they have no sugar added.

This treat is also high in protein and low in calories. Toasted coconut chips are a healthier snack option than sweets or chocolate and great for people eating gluten-free.

  Virgin Coconut Oil

The primary difference between virgin coconut oil and coconut oil is the extraction process. Virgin coconut oil is from fresh coconuts and then spun in a centrifuge. It does not include any heat or bleaching step. This process yields a pure, wholesome oil that’s nutrient dense because it preserves the natural phytonutrients and antioxidants.

It has many health benefits including the removal of dead hair and skin cells as well as repairing tissue. It improves your vibrancy and gives your skin and hair a youthful look. It’s also a great anti-aging ingredient.

Virgin coconut oil is wonderful in dishes such as Coconut Crusted Jumbo Shrimp, cakes, and margaritas. It’s a versatile product that adds flavor to any meal. Nutiva Organic Virgin Coconut Oil is a fine example of an excellent brand of cooking oil.

  As you can see, these coconut products provide a broad range of health benefits. They also add flavor, vitamins, and minerals to many recipes and foods. Try any of these foods for a flavorful boost to your health.

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