private label in us grocery—five drivers of growth … · expansion of grocery discounters. ......
TRANSCRIPT
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Private-labelgoodscaptureaminorityshareoftheUSgrocerymarket,buttherearefivespecificfactorsthatcouldboostsalesoftheseproducts:
1) Risingfood-priceinflationmaypromptAmericanshopperstotradedownfrombrandedgroceryproducts.
2) ExpansionofgrocerydiscountersAldiandLidlintheUScouldfuelcompetitioninprivatelabel.
3) Amazon’sacquisitionofWholeFoodsMarketcouldjump-startAmazon’sgroceryprivate-labeloffering.
4) Retailerscouldcapitalizeonheightenedconsumerdemandformorefresh,organicandnaturalfoods.
5) Privatelabelscouldcapturegrowthinthemeal-kitmarket.KrogerandAlbertsonsaretwogroceryretailersthatarealreadytappingthiscategory.
Deep Dive: Private Label in
US Grocery— Five Drivers of
Growth
Deborah Weinswig
Managing Director
FGRT
US: 917.655.6790
HK: 852.6119.1779
CN: 86.186.1420.3016
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
TableofContents
ExecutiveSummary.........................................................................................................................................3
Introduction:PrivateLabelsinUSGrocery......................................................................................................4
PrivateLabelsCaptureJustOneDollarinSevenSpentonGroceries................................................................4
ThreeReasonsPrivateLabelCapturesSuchaSmallShareofGrocerySalesintheUS......................................61. PrivateLabel’sShareIsDistortedbyGroceryDiscounters.................................................................................62. Private-LabelDevelopmentReflectsSectorConcentration................................................................................73. WalmartIsaHouseofBrands............................................................................................................................9
FivePotentialDriversofGroceryPrivate-LabelGrowth...................................................................................91. RisingFood-PriceInflation..................................................................................................................................92. GroceryDiscountersSettoGrowRapidly.........................................................................................................103. AmazonandWholeFoods:NewChannelsandNewProducts.........................................................................124. DemandforFresh,OrganicandNaturalFoods................................................................................................125. RidingtheMeal-KitTrend.................................................................................................................................14
KeyTakeaways...............................................................................................................................................15
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
ExecutiveSummaryInUSgrocerystores,retailers’privatelabelscaptureonlyaminorityshareoftotalgroceryspending.Lastyear,private-labelproductsaccountedforjust14.5%ofallUSspendingonconsumerpackagedgoods(CPGs),accordingtoresearchfirmIRI.Thisequatedto$115billionofprivate-labelCPGsalesinthechannelsIRItrackedin2016.
Privatelabel’sshareofgrocerysalesisalsomuchlowerintheUSthanincomparablemarketssuchastheUK,GermanyandFrance.Weseethreereasonsforthis:
1. Thepresenceofgrocerydiscounterspushesupprivatelabel’sshareofthetotalgrocerymarket—andtheUShasaverysmalldiscountersegmentrelativetocomparablemarkets.
2. TheUSgrocerymarketisunusuallyfragmented,andfragmentationinhibitsthedevelopmentofsophisticated,tieredandinnovativeprivate-labelranges.
3. WalmartisbyfarthegroceryleaderintheUS,andispositionedasa“houseofbrands.”Thispositioningispartlyduetothefactthattheretaileroriginatedasageneralmerchandiserratherthanasafoodretailer.
Wealsoseefivetailwindsforgroceryprivate-labelgrowthintheUS:
1. Risingfood-priceinflationin2017.Privatelabelperformsmorestronglyinaninflationaryenvironmentbecausepriceincreasestemptshopperstotradedownfrombrandedproducts.
2. Expansionofgrocerydiscounters.AldiisgrowingitsUSstorenumbersandLidlhasjustenteredtheUSmarket.Bothareoverwhelminglyprivate-labelretailers.TheirgrowthcouldleadtototalUSdiscounterprivate-labelsales(groceryandnongrocery)ofaround$37.7billionin2020.
3. Amazon-WholeFoodssynergies.WeexpecttoseetheWholeFoodsMarketacquisitionjump-startAmazon’sgroceryprivate-labeloffering.
4. Heightenedconsumerdemandformorefresh,organicandnaturalfoods.Thisdemandcanserveasaspringboardforprivate-labelgrowth,becauseprivate-labelmarketsharealreadyoverindexesinfreshfoodcategories.
5. Meal-kitmarketgrowth.Groceryretailers’expertiseinofferingaverywiderangeofprivate-labelfoodproductsacrossfreshandambientcategoriesmeanstheyareuniquelywellpositionedtocapitalizeonthemeal-kittrend.
Privatelabel’sshareofgrocerysalesismuchlowerintheUSthanincomparablemarketssuchastheUK,GermanyandFrance.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Introduction:PrivateLabelsinUSGroceryPrivatelabelsallowshopperstoenjoylowerpricesandretailerstoenjoyfattermargins.Theyareawin-winoffering—unlessyouhappentobeabrandownerthatislosingsalestoretailers’ownlabels.Despitetheirappeal,privatelabelsmakeuponlyaminorshareoftheaveragegroceryshoppingbasketintheUS.
Inthisreport,welookatthescaleoftheprivate-labelsegmentinUSgrocery,discussthreereasonsprivate-labelpenetrationratesarerelativelylowintheUSandoutlinefivedriversforgrowthingroceryprivatelabel.
Source:iStockphoto
PrivateLabelsCaptureJustOneDollarinSevenSpentonGroceriesAmericanswillspendaround$1trilliononfood,beveragesandothergroceryproductsthisyear.Alargemajorityofthatspendingwillflowtobrandownerslargeandsmall.Lastyear,private-labelproductsaccountedforjust14.5%—orapproximatelyonedollarinseven—spentonCPGsintheUS,accordingtoresearchfirmIRI.
Thisequatedto$115billionofprivate-labelCPGsalesin2016,basedonIRI’stotalcoverageuniverse,whichincludesmostfoodstorechains,massmerchandisers,warehouseclubs,dollarstoresanddrugstorechains,butexcludessomechainsandsmallerretailers.
AccordingtofiguresfromthePrivateLabelManufacturersAssociation(PLMA)andNielsen,2016salesofprivate-labelgoodsacrossallcategories(includingnongrocery)totaled:
• $60.2billionbysupermarketretailers
• $49.6billionbymassmerchants,warehouseclubsanddollarstores
• $8.3billionbydrugstorechains
Acrossthesetypesofstoresintotal,privatelabelcaptured17.5%ofvaluesalesand21%ofunitsalesin2016,accordingtothePLMAandNielsen.
Lastyear,approximatelyonedollarinsevenspentongroceriesintheUSwasspentonprivate-labelproducts.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Figure1.US:Private-LabelSalesasShareofTotalSales,2016(%)
Allcategoriesdataareforallproductssoldthroughtrackedsupermarkets,massmerchandisers,warehouseclubs,dollarstoresandchaindrugstores.CPGsdataareforsalesattrackedmultioutletandconveniencestores,whichtotaled$795billioninthe12monthsendedSeptember22,2016.Source:PLMA/Nielsen/IRI
Retailersthathavebuilthighlysuccessfulprivate-labelrangescomfortablyexceedtheseindustryaverages.TwoexamplesareCostcoandKroger.Costco’sKirklandSignatureprivatelabelmakesupaboutone-quarteroftotalcompanysales,permanagementstatements.Byvalue,Krogerseesprivatelabelcaptureasimilarshare,asshownbelow.
Figure2.Kroger:Private-LabelSalesasShareofTotalSales(%)
ShareofKrogersalesexcludingautomotivefuelandpharmacysalesSource:Companyreports
17.5
14.5
21
17.1
AllCategories CPG
Value Volume
24.0%
25.5%26.0% 26.0%
27.0% 27.1%
28.0% 28.0%
2013 2014 2015 2016
Value Volume
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
TheUStrailsanumberofcomparableWesternmarketsintermsofprivate-labelgrocerypenetration.FranceandtheUKhavegrocerysectorsthat,liketheUS,arefocusedonlargesupermarketsandhypermarkets,yetprivatelabelsaccountformuchhighersharesofCPGsalesinthosecountries.
Figure3.SelectedCountries:Private-LabelSalesasShareofCPGValueSales(%)
Dataarefor2015,exceptfortheUS,whicharefor2016,andtheUK,whichareasofJuly2017.Italydataareforhypermarketsandsupermarketsonly.USdataareformultioutletandconveniencestores.Source:IRI/KantarWorldpanel
ThreeReasonsPrivateLabelCapturesSuchaSmallShareofGrocerySalesintheUS1. PrivateLabel’sShareIsDistortedbyGroceryDiscountersThepresenceofgrocerydiscounterssuchasAldiandLidlhasameaningfulimpactonprivatelabel’sshareofacountry’soverallgrocerymarket.ComparedwithanumberofEuropeancountries,suchasGermany,theUKandFrance,theUShasaminorharddiscountsector.Aldihadjusta1.3%marketshareintheUSin2016,perEuromonitorInternational,andLidlenteredtheUSmarketonlyinthesummerof2017.Thisrelativelysmallpresenceofharddiscountersdepressesprivatelabel’sshareoftheoverallmarketintheUS.However,oncegrocerydiscountersarestrippedout,themajorEuropeaneconomiesseerelativelysimilarlevelsofprivate-labelshareastheUSdoes,ataroundone-quarterofCPGsales.
14.5%
51.0%
38.4%34.1%
17.2%
US UK Germany France Italy
TheUStrailsanumberofcomparableWesternmarketsinprivate-labelgrocerypenetration.
ThepresenceofgrocerydiscounterssuchasAldiandLidlhasameaningfulimpactonprivatelabel’sshareofacountry’soverallgrocerymarket.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Figure4.SelectedEuropeanCountries:Private-LabelSalesasShareofCPGValueSales,2015/2016(%)
UKexdiscountersdataexcludeMarks&Spenceraswellasharddiscounters.Dataarefor2015,exceptforUKincl.discounters,whichareasofJuly2017.Source:IRI/KantarWorldpanel
2. Private-LabelDevelopmentReflectsSectorConcentrationThegrocerysectorisunusuallyfragmentedintheUS,withonlytworetailersenjoyingdouble-digitmarketshare.WalmartisbyfarthemarketleaderinUSgrocery,witha26%sharein2016,accordingtoEuromonitor.Itsclosestcompetitor,Kroger,hada10%sharelastyear.Thisfragmentationlimitsthepotentialfortiered,innovativeandwell-knownprivatelabelsthatconvinceshopperstoswitchfrombrandedgoods.Inothermarkets,retailerswithaverysubstantialmarketsharehaveusedtheirscaletodevelopsophisticated,tieredprivate-labelranges.
Figure5.TheImpactofGrocerySectorConcentrationLevelsonPrivateLabel’sShareoftheGroceryMarket
Source:FGRT
Thecorrelationbetweenprivate-labelmarketshareanddegreeofconcentrationingroceryretailingappearstobeconsistentacrosscountries.
51.0%
38.4%34.1%
28.2%24.5% 27.7%
UK Germany France
Incl.Discounters ExDiscounters
TheUSgrocerysectorisunusuallyfragmented.
GroceryRetailConcentrahon
Private-LabelQualityandInnovahon
GreaterConsumerAcceptanceofPrivate
Label
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Figure6.SelectedCountries:Private-LabelCPGValueSharevs.TopFourGroceryRetailers’AggregateMarketShare(%)
Source:PLMA/IRI/KantarWorldpanel/EuromonitorInternational
14.5%
51.0%
38.4%34.1%
17.2%
45.3%
70.9%67.4%
51.4%
31.2%
US UK Germany France Italy
Private-LabelCPGValueShareTopFourGroceryRetailers’AggregateMarketShare
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
3. WalmartIsaHouseofBrandsMarketleaderWalmart’slong-standingstrategytobefirstandforemostahouseofbrandsappearstohavelimitedprivate-labeldevelopmentintheUSmarket.Thecompany’soriginsasageneralmerchandiser,ratherthanasafoodretailer,naturallyledtoitsmorebrand-focusedpositioningrelativetomanycompetitorsinthegrocerysector.
Source:iStockphotos
DavidCheesewright,PresidentandCEOofWalmartInternational,saidinaJune2016earningscall:
[I]fyoustartedlifeasafoodretailer,youviewprivatelabelastheplaceyoustart,andbrandisthethingthatyouonlysellifyoucan’tcreateaproperprivatelabel.Becauseifasignsayswesavepeoplemoney,thenwhywouldyouwanttosellsomethingthatcostsmoreforthesamequality?Ifyoustartingeneralmerchandise,Ithinkyoutendtoviewthingsasahouseofbrands.
However,onanApril2015earningscall,Walmartmanagementsaidthatitwasthelargestprivate-labelplayerintheUS.
FivePotentialDriversofGroceryPrivate-LabelGrowthPrivatelabelisnotafast-growingsegmentinUSgrocery:infact,in2016,privatelabellostshareoftotalUSCPGsales,accordingtoIRI.However,weseeseveraltailwindstogrowth,includingtheexpansionofgrocerydiscounters,innovationfromAmazonandWholeFoodsMarket,andthepopularityofmealkits.
1. RisingFood-PriceInflationPrivatelabelperformsmorestronglyinaninflationaryenvironmentbecausepriceincreasestemptshopperstotradedownfrombrandedproducts.Wethinktheveryweakfood-priceinflation—andsporadicdeflation—seenintheUSin2016wasaprincipalreasonbehindtheabovementionedweaknessinprivate-labelCPGsaleslastyear.
MarketleaderWalmart’slong-standingpositioningisasahouseofbrands.
Privatelabelperformsmorestronglyinaninflationaryenvironmentbecausepriceincreasestemptshopperstotradedownfrombrandedproducts.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
In2017,foodandbeveragepriceinflationhasstrengthenedeachmonth,climbingfromdeflationof0.1%inJanuarytoinflationof1.1%inAugust(latest),accordingtoS&PCapitalIQandtheUSBureauofLaborStatistics.
Below,wecharttherelationshipbetweenconsumerpricesinflationinfoodandbeveragesandtheperformanceofprivatelabelrelativetototalgrocerysales,accordingtoIRI.Thehigherfood-priceinflationseensofarthisyearsuggestsimprovedprivate-labelgrowth—andanyfurtheruptickinpriceswouldlikelybenefitprivatelabels.
Figure7.US:GroceryPrivate-LabelPerformanceRelativetoTotalCPGMarketvs.ConsumerPricesInflationinFoodandBeverages
*ThroughAugust31,2017Source:S&PCapitalIQ/IRI/FGRT
2. GroceryDiscountersSettoGrowRapidlyGermany’sAldiandLidlaresettogrowtheirpresenceintheUSmarket,whichwillboosttotalUSprivate-labelsalesandlikelyspursomeestablishedrivalstostrengthentheirownprivate-labelofferings.Around90%ofLidl’sUSproductofferingisprivatelabel,acompanyspokesmansaidinJune2017,andasimilarproportionofAldi’sUSrangesarereportedtobeown-brandgoods.
LidlopeneditsfirstbatchofUSstoresinmid-June2017.Thecompanyhadstatedearlierthatitintendedtoopen20storesintheUSoverthesummeracrossthreeeasternstates:NorthCarolina,SouthCarolinaandVirginia.WhenwecheckedtheLidlwebsiteonAugust23,itsaidthatthecompanywasoperating22storesintheUS.
WeestimatethatLidlwillgrowitsUSpresencetoapproximately300storesbytheendof2020andgeneratealmost$4billioninUSsalesinthatyear.
PrivateLabelOutpacesMarket
PrivateLabelKeepsPacewithMarket
PrivateLabelUnderpacesMarket
PrivateLabelKeepsPacewithMarket?
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2014 2015 2016 2017YtD*
Food
and
BeverageInflaho
n
Around90%ofLidl’sUSproductofferingisprivatelabel.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Source:iStockphotos
RivalGermandiscounterAldihasbeenintheUSfor40years,butisnowacceleratingitsexpansionprogram.InJune2017,thecompanyannouncedthatitwouldinvest$3.4billiontogrowitsUSstorecountfrom1,600to2,500by2022.
• Aldi’sUSsalesstoodat$13.1billionin2016,accordingtoEuromonitor,whilerivalTraderJoe’sturnedover$13.4billion.
• IfAldiandTraderJoe’scontinuetogrowrevenuesatthesamepaceastheydidfrom2011through2016(perEuromonitor),theywillgeneratesalesof$19.5billionand$18.6billion,respectively,in2020.
• Thosesales,combinedwithLidl’sestimatedsales,suggesttotalUSharddiscountersalesof$41.9billionin2020.
• Withprivatelabelaccountingforapproximately90%ofsalesattheseharddiscounters,totalprivate-labelsales(includingnongrocerysales)throughdiscounters’USstorescouldpotentiallyreach$37.7billionin2020.
Thispotentialboosttoprivatelabelisonlythedirectimpact.TheremayalsobeindirectimpactsascompetitionfromAldiandLidlpromptsestablishedgroceryretailerstooverhaultheirownprivate-labelofferings.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
3. AmazonandWholeFoods:NewChannelsandNewProductsWeexpecttoseetheWholeFoodsMarketacquisitionjump-startAmazon’sgroceryprivate-labeloffering.InAugust,AmazonannouncedthatitwouldmakeWholeFoods’privatelabels,includingits365EverydayValueandeponymousWholeFoodsMarketlabels,availableforpurchaseonAmazon.com.BylateSeptember,manyWholeFoodsprivate-labelproductswereofferedtothoseshoppersabletopurchasefromtheAmazonFreshserviceorthroughAmazonPrime.
Source:Amazon.com
WeexpecttoseetheWholeFoodsacquisitionprovideaparticularboosttothefreshfoodrangesavailablethroughtheAmazonFreshdeliveryservice,asprivatelabeltendstooverindexinfreshfoodcategories.
Amazonalsohastheoptiontoextenditsownprivate-labelgroceryoffering.Itsstill-smallWickedlyPrimegroceryrangenumberedjustafewdozenproductswhenwecheckedinlateSeptember.AmazonfeaturedWickedlyPrimeproductsprominentlyduringitsJuly2017PrimeDayevent.
OtherInternet-onlyretailersarepushingintoprivate-labelgroceries,too.InlateSeptember2017,Walmart-ownedJet.comannouncedthatitwouldbelaunchinganewprivatelabel,UniquelyJ,acrossarangeofnonperishableitemssuchaslaundrydetergent,coffeeandoliveoil.
4. DemandforFresh,OrganicandNaturalFoodsGroceryretailersareseeingasteady,incrementalconsumershifttowardfresh,organicandnaturalfoodsandawayfrompackaged,processedproducts.Thisisatrendwehavediscussedatlengthinseveralpreviousreportsfocusingon,respectively,millennials’groceryshoppingbehavior,growingconsumerdemandforhealthierfoodsandmajorfoodcompanies’responsestoconsumers’shiftinggrocerypreferences.
USorganicfoodsalesjumpedby8.4%in2016,accordingtotheOrganicTradeAssociation.Thiscomparedwitha1.8%increaseintotalfoodanddrinkspendingin2016,pertheUSBureauofEconomicAnalysis.TheOrganicTradeAssociationsaidthatthisstrongperformanceledtoorganicsaccountingformorethan5%oftotalfoodsalesintheUSforthefirsttime.
Consumers’shifttonaturalandorganicfoodscanserveasaspringboardforprivate-labelgrowth.Private-labelgoodsalreadyoverindexintermsofmarketshareinfreshfoodcategories,asweshowbelow.Fruitandvegetables,fish,meat,anddairyproductsaretypicallycommoditygoodsratherthanbrand-ledcategories,andthisboostsprivatelabel’sshareofsalesinthosecategories.
WeexpecttoseetheWholeFoodsMarketacquisitionjump-startAmazon’sgroceryprivate-labeloffering.
AccordingtotheOrganicTradeAssociation,USorganicfoodsalesjumpedby8.4%in2016.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Source:iStockphoto
Figure8.US:PrivateLabel’sValueShare,byCategory,2015(%)
Source:IRI
Anumberofretailershaveledthewayindevelopingnaturalororganicranges.AsidefromWholeFoodsMarket,Krogerisaprominentexample:itsSimpleTruthrange,whichfocusesonnaturalandorganicproducts,rackedupsalesof$1.7billionin2016,andKrogerstatesthatitisthebiggestnaturalandorganicbrandinthecountrybyvolume.
Wethinkthestrengthofprivatelabelinfreshfoodsgivesretailersanaturallystrongpositionfromwhichtodevelopnaturalandorganicranges.Moreover,becausetheUSgrocerymarketisfragmented,therelativelyfewretailersthathavesubstantialscalehavethechancetorunwiththebaton,andgainaheadstartonbothbrandsandsmallerretailers.
0.1
3.3
10.1
11.0
12.5
17.2
18.7
20.0
31.1
AlcoholicBeverages
Confechonery
PetFood
NonalcoholicBeverages
PersonalCare
AmbientFood
Household
FrozenFood
ChilledandFreshFood
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
5. RidingtheMeal-KitTrendMealkitsarethetrenddujouringrocerye-commerceandtheyarenowmovingintostoressuchasKrogerandAlbertsons,too.BrandssuchasBlueApronandPlatedofferconsumersalltheingredientstheyneedinonekittocreateselectedmeals.Whetherconsumerdemandforthesekitswillremainrobustoverthemediumisuncertain.Wethinkthetypicallyhighpricesofsuchmealkits,coupledwiththegrowthofmoreconventionalgrocerye-commerceintheUSmarket,coulddepresscategoryperformance.
Source:Plated.com
Nevertheless,therelooktobenear-termopportunitiestotapthismarket.Groceryretailershaveexpertiseinofferingaverywiderangeofprivate-labelfoodproductsacrossfreshandambientcategories,whichmeanstheyareuniquelywellpositionedtocapitalizeonthemeal-kittrend.
• KrogerlauncheditsownrangeofmealkitsunderthePrep+ParedprivatelabelinMay2017.InSeptember,KrogerannouncedthatitwasextendingitsPrep+Paredofferingtomorethan50storesacrosstwocities—Cincinnati,OH,andLouisville,KY—anditsRalphssupermarketchain.
• InSeptember2017,privatelyownedAlbertsonsannounceditsacquisitionofmeal-kitfirmPlated.NewssiteTechCrunch.comreportedthedealtobeworthbetween$175millionand$200million.
• AmazonlauncheditsMealKitsrangeinJuly2017.
• BlueApronisthebiggestnon-private-labelUSmeal-kitbrand.Weseebarrierstoentryforfurtherentrantsinthecategory,however,assuccessfulbusinessesinthesectorneedexperienceinsourcingawiderangeoffoods—fromfreshmeattovegetablestopreparedcookingsauces—atscale.
Groceryretailershaveexpertiseinofferingaverywiderangeofprivate-labelfoodproductsacrossfreshandambientcategories,makingthemuniquelywellpositionedtocapitalizeonthemeal-kittrend.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
Source:Blueapron.com
Beyondmealkits,e-commerceprovidesfurtherpocketsofopportunitytoboostprivate-labelsales.Onlineretailershavemorecontroloverwhatshopperssee,andwhattheyrecommendtoshoppers,thandoofflineretailers,asin-storeshoppersarepresentedwithaislesofcompetingproductsinphysicalstores.Retailerscanusethatpowertopushtheirownproductsandencouragetheircustomerstoswitchfrombrandstoprivatelabels.
KeyTakeawaysRetailerscantakeadvantageofseveraltailwindstoboostprivate-labelgrocerysales:
• Higherinflationinfoodpricesthisyearthanlastyear.
• Consumerdemandformorefresh,organicandnaturaloptions.
• Thepopularityofmealkitsandconsumers’shifttoe-commerce.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
October19,2017
DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnMercerSeniorAnalyst
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