With sustained increases in the cost of gas, groceries, housing and utilities in 2022, the threat of consumers shifting their purchasing habits by “trading down” in food and beverage options is not only real, it’s upon us.
The Food Industry Association, in a spring survey, reported that 41% of shoppers said they bought more store brands than they did before the pandemic. Compound that with data reported by Food Business News, that the nation’s largest grocery chain, Kroger’s, saw a 13.3% growth in its private label brands year-over-year, it is safe to assume that consumers are not just talking about switching to store brands, they are actively doing it.
While the common response for manufacturers trying to avoid price hikes is to reformulate for cost savings, evaluate pack size and pause the innovation channel to focus on reformulations, that may no longer be the right solution for today’s consumer.
One of the most the interesting findings from the Food Industry Associations survey was that when consumers were asked why they were buying more private brands the top answer wasn’t price (55%), it was value (63%). That begs the question: what is value? If you take a historical look at the evolution of private label over the past decade, you can begin to get an idea of what value represents. Private label is no longer just “me too” products, they have become a source for innovation, offering unique and trend forward offerings to consumers. Private label groceries like Trader Joe’s and Aldi, are constantly in the news for their unique flavor offerings and it is common to see mainstream brands release “me too” products that mimic these successful private label offerings (example: Trader Joe’s Everything But The Bagel Seasoning). The truth is, switching to private label is no longer just about “trading down”. It is about offering value, whether that be through flavor, functionality, or even sustainability.
5 keys to creating value
Never stop innovating
With the continued growth in private label, it is safe to assume that their innovation channel is alive and active, so don’t let your brand fall behind by pausing yours.
Create a difference
Stand out on the shelf by giving consumers a reason to pick you.
Maintain your ethos
While sustainable options may be more expensive, consumers value them. Don’t compromise your ethos for cost savings.
Look for ways to make your product fall into the better-for-you category offering a superior health or environmental rational for your product.
Make no mistake, taste is still king. Your product can offer all the value in the world but if it doesn’t taste great, you won’t get repeat customers.
At Flavor Producers, our number one goal is to provide value for your brands. By partnering with us on your innovation, reformulation, matching projects, or line extensions we can help you stand out from the competition with amazing flavor profiles, Transparent and Tasteful Technologies™ and sustainable flavor options. When you work directly with us, we can help you streamline your product base, to find hidden cost reduction and taste improvement opportunities while giving your product a signature flavor profile that will keep customers coming back for more. Beyond taste and technology, we also offer industry leading fulfillment and lead times that provide stability to your supply chain, ensuring costly delays don’t stress your bottom line. To learn more about how Flavor Producers can help you create value, visit flavorproducers.com.