Private Label Marketing in Times of High Inflation

“A beneficial situation”

While no one is saying a pandemic was worth it, many trends associated with COVID have worked to the advantage of national brands, experts said. In many cases, brands have been less affected by supply chain chaos than private labels, and have also benefited from high-incentive shoppers who “trade”.

Brands tend to characterize these effects slightly differently. “During COVID, consumers have shown their preference for brands they know and trust,” said Dirk Van de Put, CEO of Mondelez International, at the company’s Investor Day in May. Many brands are also highlighting strategic steps taken before or during the pandemic intended to help them withstand cheap competition and better leverage innovation and marketing to communicate value.

General Mills chief financial officer Jonathon Nudi told analysts last month that private labels today only compete with 10% of categories in General Mills’ current portfolio, compared to 18% penetration in all categories. categories. Mondelez has focused on categories where private labels have failed to gain traction, such as chocolate, which Van de Put says has dropped to 5% private label penetration.

General Mills’ strategy is to develop trendsetting brands that, once matured, would give it a head start in hard-to-replicate categories. An example is Bold Cultr, a brand of “animal-free” cream cheese currently being tested on the market. The company is also getting rid of brands for which it sees no future. (It recently sold its Helper and Suddenly Salad brands.)

Kraft Heinz Co. has reduced private label exposure from 17% a few years ago to about 11% today, Carlos Abrams-Rivera, executive vice president and president, North America, said at a call on the results in April. “It definitely puts us in an advantageous position,” Abrams-Rivera said, according to the Sentieo transcript.

One of the ways Kraft Heinz reduced its exposure was to remove some important brands and categories that it perceived as vulnerable to private label, including its Planters-led nut business. Meanwhile, a more focused portfolio and consumer insights work has allowed Kraft Heinz to creatively reload some items that might be considered easy brands for a private label, such as Philadelphia Cream Cheese or Kraft Mac & Cheese, harnessing the emotional appeal that counterfeits cannot.

Comments are closed.