Issue #2 of 24
January 28, 2023

Industry and Government News
Kroger Store Brands VP to Speak at PLMA Conference

Juan De Paoli, Vice President Our Brands at Kroger, arguably the most influential store brand executive in the country, will be the featured speaker at PLMA's 2023 Annual Meeting and Leadership Conference, March 22–24, at the Hyatt Grand Cypress, Orlando. 

De Paoli will speak at a breakfast session on Friday, March 24.

“We are pleased to welcome Juan De Paoli to our annual Meeting and Leadership conference,” said PLMA President Peggy Davies. “Juan’s 20-plus years of experience, vision and talent has greatly contributed to consumer engagement with retailers’ own brands.”

De Paoli joined Kroger in 2021 and he is responsible for driving Kroger’s private label vision, strategy, and program development to deliver long-term growth and enhance the company’s brand equity, strategic positioning, revenue, profit, and market value. He also provides leadership to and develops high-performing team members, oversees product development, testing, sourcing, vendor selection and private label marketing programs related to private label products. Prior to Kroger, he served as senior vice president of Private Brands, Ahold Delhaize USA; and spent 12 years at H-E-B in its Own Brand organization.

Additional conference speakers include Kevin Ryan of Malachite Strategy and the Culture Matters newsletter; James E. Dillard III, Executive Vice President and President, Consumer Healthcare Americas, Perrigo; Roger Davidson, an industry veteran and leading consultant in the food retail industry; Tim Pollard, Founder & CEO of Oratium; and Julien LeBlanc, Co-Founder and President, Blueprint North America.

The conference is themed What Does Winning Look Like for Store Brands?, reflecting the expanding role store brands play in U.S. retailing, particularly in the wake of 2022's record-breaking sales.

Kroger exemplifies that role, and De Paoli is responsible for driving the chain's private label vision, strategy and program development to deliver growth and enhance the company’s brand equity, strategic positioning, revenue, profit and market value. Prior to joining Kroger in 2021, he held leadership store brand positions at Ahold Delhaize, Ahold, Topco and HEB.

The annual conference brings together manufacturers, retailers, and many others and focuses on expanding private brand knowledge of the industry in general, as well as for personal and professional development.

To register for the conference please click here or for additional information, contact Carleen Foster at conferences@plma.com

 

 

Lunch and Learn Session to Focus on Store Brand Sales Feb 2

PLMA continues its popular Lunch and Learn series on February 2 with a review of store brand sales from 2022 and what it means for the industry, manufacturers, and retailers.

Titled “Consumer Demand for Private Brands: A Look Back & Ahead” the session will be presented by IRI’s MaryEllen Lynch, Principal Consultant and Team Leader for Center Store.

Lynch will have a different view of store brands sales in 2022. Rather than focusing on double digit increases in dollar sales, Lynch will focus on products. She will offer what she believes is a more accurate measurement of how much the products grew, or didn't grow, last year.

Examining select product categories that IRI Unify tracks exclusively for PLMA, Lynch will explain in detail how store brand sales changed in terms of the number of pounds of products were sold. She will explore what were the winning food and non-food areas of the store as measured not just by dollar and unit sales but by increases in product volume sold. 

This session of PLMA's Lunch and Learn program will also look at challenges ahead for 2023, analyze why certain "pockets of time" during 2022 had disproportionate changes in store brands sales and the impact of more at-home family time on the purchase of private brand staples.

Lynch will also review how retailers can do a better job "making their store brand the product of choice of their customers" and how national brands are managing price increases by reducing volume per package and other methods.

The online Lunch and Learn session will be held Thursday, February 2, for 60 minutes starting at 12:30 PM ET. The professional development program is complimentary for all PLMA member manufacturers, brokers, and suppliers as well as retailers and wholesalers. To register for the event, please click here, or contact Julia Meehan at education@plma.com for more information.

 

USDA Increasing Oversight of Organic Foods

The Agriculture Department has announced new guidelines for products labeled “organic,” which is a term that has been increasingly misused as shoppers have sought out healthier, environmentally friendly food.

The USDA has strict definitions of how a product can be labeled “certified organic” since the rules were introduced in 1990. They allow the label to be used only for products that meet certain standards for soil quality, animal-raising practices, pest and weed control, and use of additives. The new updates issued by the USDA aim to protect organic integrity, bolster consumer confidence and eliminate ingredients that don’t meet the criteria to be used.

“Protecting and growing the organic sector and the trusted USDA organic seal is a key part of the USDA Food Systems Transformation initiative,” said Jenny Lester Moffitt, undersecretary for Marketing and Regulatory Programs in a press release announcing the move.

“The Strengthening Organic Enforcement rule is the biggest update to the organic regulations since the original Act in 1990, providing a significant increase in oversight and enforcement authority to reinforce the trust of consumers, farmers, and those transitioning to organic production,” Moffitt added.

Key changes will include requiring certification of more of the businesses, like brokers and traders, at critical links in organic supply chains; requiring National Organic Program (NOP) Import Certificates for all organic imports; requiring organic identification on non-retail containers; standardized certificates of organic operation, and additional and more frequent reporting of data on certified organic operations.

 

Kroger Celebrates 10 Years of its Simple Truth Brand

The Kroger Co. is celebrating the 10th anniversary years of its private-label Simple Truth line, which holds the distinction of being America's No. 1 organic and free-from brand.

Simple Truth offers more than 1,500 products that are free from 101 artificial colors, flavors, preservatives, and sweeteners, and contain no artificial ingredients.

"A decade ago, Simple Truth was born when we identified that our customers wanted a simpler way to shop for Free From and Organic products," said Juan De Paoli, VP of Our Brands. "The mission we started with 10 years ago remains our promise today – to offer delicious foods that are Free From 101 artificial ingredients our customers do not want in their products at an accessible price.”

Simple Truth also includes minimally processed, naturally raised meats, and organic items produced by growers and handlers certified by agencies and organizations accredited by the USDA, free from synthetic fertilizers and genetic engineering.

“During the past 10 years, Simple Truth stayed true to that commitment, making it a customer favorite and America's number one Organic and Free From Brand. We are so proud of all we have achieved together and even more excited about what is ahead for Simple Truth,” De Paoli added.

Kroger also published a list of the most popular Simple Brand products over the past 10 years. They were Organic Garbanzo Beans, Mixed Berry Granola, Organic Apple Juice, Organic Creamy Peanut Butter, Organic Whole White Mushrooms, Natural Cage Free Large Brown Eggs, Organic Mixed Vegetables, Exotic Vegetable Chips, Organic 100% Whole Wheat Penne Rigate, and Organic Baby Spring Mix.

 

FDA Issues New Rules for Sesame Allergen Labelling

The U.S. Food and Drug Administration (FDA) has added sesame to the list of foods that must be labeled as allergens on packaged products.

In announcing the sesame labeling rule, the FDA also cautioned people who are allergic to that ingredient that it could be a while before they notice the change. The new rule went into effect on Jan. 1.

“The law establishing this sesame labeling does not require food products that were already on their way to the store or in stock before 2023 to list sesame as an allergen on the label,” the FDA noted. “Therefore, these food products do not need to be removed from the marketplace or relabeled to declare sesame as an allergen.”

Sesame became the ninth major food allergen addressed by the Food Allergy Safety, Treatment, Education and Research Act passed in 2021. The other eight were defined through a federal law passed in 2004. They include milk, shellfish, fish, wheat, peanuts, tree nuts, eggs, and soy.

The FDA also alerted consumers that because some food products have a long shelf life, “it’s hard to say when pre-2023 stock will be replaced with food products carrying the required labels. So, proceed with caution during this transition period.”

 

SpartanNash acquires Great Lakes Foods

SpartanNash has announced it has acquired the independent grocery wholesaler Great Lakes Foods, along with its 300,000-square-foot distribution center in Menominee, Michigan.

The Great Lakes Foods distribution center serves approximately 100 independent grocery customers across the Midwest. SpartanNash said it plans to continue to employ the workers at the distribution center while also investing in IT upgrades to expand its services. The integration of the businesses will happen throughout 2023, SpartanNash said. 

“This acquisition represents SpartanNash’s ongoing commitment to optimize our supply chain network, drive growth through geographic expansion and serve our customers more efficiently,” Masiar Tayebi, SpartanNash VP and chief strategy and information officer, said in a statement.

"I am incredibly proud that SpartanNash purchased our distribution center,” Tom Kuber, owner of Great Lakes Foods, said in a statement. “We value our Associates and long-standing customers and know SpartanNash is well-equipped to elevate the level of service and amplify its People First culture based on their strong track record.”

Great Lakes Foods has been in business for more than 100 years. And is a supplier of private label, wholesale meat, dairy, produce, frozen, bakery and deli products for supermarkets and convenience stores.

 

Walmart to Provide GoLocal Services to Salesforce Clients

Walmart has announced it has entered a partnership with software giant Salesforce to provide its retail customers with store pickup and delivery services using Walmart's supply chain network.

Retailers and other businesses which use Salesforce's e-commerce platforms to host and manage their websites, will be able to use Walmart's GoLocal and Store Assist services to have order pickup done faster and provide same or next-day deliveries to online customers, the companies said.

GoLocal was launched in 2021 and is Walmart's delivery-as-a-service business fulfilling last-mile shipping needs for businesses at a lower cost than building out their own network, which can be a major expense.

Walmart's Spark Driver platform, the company's local delivery service that uses independent contractors, has drivers pick up orders from local stores and deliver them to shoppers' doorsteps the same day. On a conference call, the company said since its launch GoLocal has completed more than 3 million deliveries so far.

Adding more retail clients would help Walmart operate its fleet more efficiently and additional clients mean higher order volumes, pickup locations and increased route density that would lower costs per order.

 

Amazon Expanding Its Prime Delivery Service

Amazon is expanding its ‘Buy With Prime’ delivery service which allows Prime subscribers to use the company’s speedy delivery service when shopping on other websites. 

Introduced in April by invitation only, Amazon said “Buy With Prime” will be generally available in the US by the end of January. The company said the number of customers who bought a product after clicking on it has increased 25% on sites using the service.

The move is part of Amazon’s exploration of new ways to help leverage its immense logistics operation. The “Buy With Prime” service adds value for Prime members by bringing fast delivery to other sites and helps merchants boost sales with minimal investment. In an interview with Bloomberg, Amazon Vice President Peter Larsen said, “If you offer ‘Buy With Prime,’ the increase in shopper conversion will more than offset the fees we are charging.”

This is the latest move for Amazon to expand its e-commerce platform beyond its own webstore, which it has done with various services for several years. In 2013 the company relaunched its payments service Amazon Pay allowing customers to shop on other sites using payment information stored with Amazon and in 2015 Amazon began closing its Amazon Web Store business.

 

CVS Exploring Acquisition of Oak Street Health

CVS Health Corp. is exploring an acquisition of Oak Street Health Inc., a company that runs primary care centers for Medicare recipients, according to reports. Talks between the companies are reportedly ongoing and could end without an agreement, according to sources. If a deal is reached, it could value Oak Street at more than $10 billion to be purchased.

This comes on the heels of CVS’s continued expansion into the health care industry. In 2022, the drug chain acquired Signify Health Inc., a deal that should close in the first half of 2023. CVS also held talks last year to buy health-care provider Cano Health Inc., and in 2018 it purchased the insurer Aetna.

The company has stated it wants to make health care more convenient and affordable for consumers and has plans to partner with doctors or even potentially acquire primary care practices.

Oak Street, which went public in 2020, aims to reinvent care for Medicare patients with low incomes and chronic health problems. Oak Street has 169 centers across the US which provide care for almost 160,000 patients according to the company.

In the stores

Costco is expanding its Kirkland range of golf products with the introduction of golf clubs. The company presently has Kirkland golf balls, gloves, and putters but this is the first time Costco has actual iron golf clubs under its brand. While no release date for the clubs has been announced, some believe they will be introduced in the spring as the 2023 golf season begins.

Target is launching its third collection from Tabitha Brown which includes both vegan foods and cookware. The new Tabitha Brown for Target collection includes low-lift delicious vegan food options, like dips/spreads, soups/sauces, and snacks including dill pickle popcorn, pickled okra, plant-based barbecue burger, and mango-basil sausages. The collection also includes tableware and cookware essentials such as drinkware, bowls, plates, pitchers, napkins, serving sets, and skillets.

Lidl has released a new Peak Harvest product brand where sales of which will benefit a major charitable initiative. One percent of all retail sales of the brand will be donated to Children’s Miracle Network Hospitals. Up to $250,000 will be donated and the funds will be designated to the 18 children’s hospitals who are members in the network.

Fisher-Price is teaming with PetSmart for the debut of a new puppy toy line exclusively to the pet retailer.  The collection of toys for puppies was designed to provide “mental stimulation and physical activity throughout dogs’ developmental stages.” The toys will be available in all 1,660 PetSmart stores as well as online.

Foxtrot has announced a collaboration with Chicago Bulls All-Star Zach LaVine on a new range of limited-edition gummies. Zach LaVine Slam Dunk Gummy Mix includes products like Strawberry Rolls, Gummy Sneakers, Mixed Skulls, and Raspberry Puckers. The Foxtrot Zach LaVine Slam Dunk Gummy Mix will be available in Foxtrot’s 15 Chicago locations until supplies last.

Health and wellness retailer GNC now has its popular GNC protein shakes in value twin packs. GNC’s Total Lean Lean Shake 25 Twin Packs have two 29.35 oz. jars of the protein shake formula that contains 180 calories and 25g of protein. The shakes come in French vanilla and rich chocolate flavors and are available both in-store and online.

Kroger Health, the health care services arm of The Kroger Co., has kicked off a new campaign to highlight the retailer’s supermarkets as health and wellness destinations. Titled “A World of Care Is In-Store,” the multimedia initiative aims to direct customers to Kroger Co. pharmacies, health clinics and nutrition services through streaming video, social media posts and in-store signage.

Market research
Dollar Stores Stand to Gain More Grocery Sales

A new report from Coresight Research sees dollar stores in an excellent position to increase its share of the U.S. grocery market.

The report, entitled “Dollar Stores: Flexing Muscle in U.S. Grocery,” found that since October more than one in five consumers consistently report visiting dollar stores to buy groceries.

Although dollar stores only captured an estimated 3.3% of total grocery sales in 2022, in recent years companies like Dollar General and Dollar Tree/Family Dollar have focused on expanding their grocery offerings in more stores. Grocery shopping is popular for its potential to drive traffic and visit frequency, despite the fact as a category it yields lower margins.

These efforts to expand into grocery have paid off, according to the Coresight report, as dollar stores had double-digit gains in customer visits over the past three years.

Both Dollar General and Dollar Tree/Family Dollar also rank in the top five retailers where consumers buy grocery products, often beating out Kroger-owned banners on a weekly basis.

A key advantage for dollar stores, in addition to their lower prices, is the number of stores, especially in rural areas, according to Coresight. Dollar General has added an average of 1,018 new stores each year from 2019 to 2022, while Dollar Tree has added 211 new locations and Family Dollar 104 new stores.

“We believe supermarket chains with significant store overlap with dollar stores could be at risk of serious margin pressure in the coming years,” Coresight said

However, supermarkets might not be the only ones losing sales. The dollar chains also pose a potential threat to discount grocery retailers including Aldi, Lidl and Save A Lot, according to the report.

“Grocery retailers will have to pay close attention to whether the dollar chains’ push into grocery constitutes a material threat,” the report concluded. “If the two retailers continue to improve the quality of their fresh food while maintaining the low prices associated with their brands, there is a high chance it will bolster their value proposition with their existing consumer base and also pull in new customers from higher-priced retailers.”

 

PLMA News
Private Label Hall of Fame Receives Submissions

Store Brands magazine, in conjunction with PLMA, has begun its process of finalizing nominations for the Private Label Hall of Fame. Submission of nominations will end on January 31 and you can submit a nomination by clicking here.

The Hall of Fame will feature honorees in four categories. They are Lifetime Achievement, Private Brand Champion, Private Brand Innovator, and Next Generation Private Label Leader. Each of the categories has its own unique set of criteria as PLMA and Store Brands look to honor leaders who have spent their careers developing new initiatives and helping to drive the private label industry forward.

Voting on the nominees submitted by readers will take place in early February and new inductees to the Hall of Fame for 2023 will be announced and profiled in the March issue of Store Brands Magazine. The inductees will also be recognized at the Hall of Fame reception at PLMA's 2023 Annual Meeting and Leadership Conference in Orlando, Florida on March 22.

The inductees will join the 72 members who have been inducted since the launch of the Hall of Fame in 2006. For the first time last year there was only one inductee with the induction of Brian Sharoff, who served as PLMA President from 1981 until his death in 2020.

PLMA is Open to New Membership

The Private Label Manufacturers Association is the only trade association devoted exclusively to the private label industry. Founded in 1979, PLMA currently has over 4,000 member companies. Membership is open to manufacturers, brokers, trade suppliers and other companies. PLMA members enjoy exclusive access and discounted pricing to PLMA events and services. For more information about membership, please visit www.plma.com  or contact Barbara Cruz at (212) 972-3131, EXT. 1225 or bcruz@plma.com.

 

Events

The Private Label Advantage (Ready, Set, GO!)
February 23 12:30 pm ET
Presented by Gary Stibel-New England Consulting Group
How America Eats
April 27 12:30 pm ET
Presented by Elizabeth Horvath-Kerry