Editorial

Label revolutionUntil recently, when people talked about the rising popularity of so-called private label products in national advertising agency and brand marketing circles, interest in the conversation rarely rose above a ho-hum.What could shopkeepers, whose marketing orientation is so influenced by...

Label revolution

Until recently, when people talked about the rising popularity of so-called private label products in national advertising agency and brand marketing circles, interest in the conversation rarely rose above a ho-hum.

What could shopkeepers, whose marketing orientation is so influenced by the ringing of a cash register, possibly know about brand image, and all those intensely fought for, carefully layered advertising communications programs that make people want to pay a premium price to be able to walk around with a can of Coke in their hands or a pack of Marlboros in their pockets?

The unspoken presumption was that the building of national brands and private labels were, if related, very distant cousins. A city-mouse and country-mouse kind of thing.

How times have changed.

Not only have the private label marketers out-thought their national brand counterparts, but they have out-performed them in Canada by just about every important measure.

In the soft drink market for instance, private retailer-controlled labels accounted for about 5% of the Canadian soft drink market just two years ago. Today, their share is considered to be more than 20%. Recently, the Canadian Coca-Cola operations reported a loss of $45 million for last year while reporting sales declines of some 11%.

The private label charge has been led in Canada by Loblaw Companies’ dynamic David Nichol, a president, marketing inspiration and advertising spokesperson all rolled into one.

Now two of Loblaws’ main competitors, the Great Atlantic and Pacific Tea Company, which operates the a&p, Dominion Stores, Miracle Food Mart and Ultra-Mart chains, plus Oshawa Foods, operators of the iga and Food City chains, are overhauling their private brand programs.

At a&p, a brand consolidation is under way in which several lines of mid-value house brands will be brought a single label, Canada’s Choice, and a series of sub-brands are being developed under the Master Choice premium label.

If there are national brand people who have any lingering doubts over whether retailers are legitimate players in the brand-building business, they should get a copy of a speech that David Nichol gave to a Private Label Manufacturing Conference in Miami this spring.

Not only are Nichol’s numbers impressive (‘Today, we have the world’s most successful generic program with annual sales in excess of $750 million’), but the ideas that underpin his marketing vision are consistent with basic marketing principles.

And the very first is to create a better product. In describing the success of Loblaws’ President’s Choice Decadent Chocolate Chip Cookie, Nichols pointed out that while the national brand is made with shortening and has 25% chocolate chips, the Decadent is made with 100% butter and 39% pure chocolate chips.

Nichol also said that President’s Choice Draft Beer, sold in stores controlled by Canada’s major breweries, was outselling Miller Genuine Draft after three months and he could not keep up with demand.

‘A brand is really a series of expectations that a product creates in the consumer’s mind,’ according to Nichols.

Obviously, private label products are connecting with the expectations of consumers in a very big way.