B & J Partners LLC Unclaimed

PLB Part 2 Recently I wrote about Private Label Brands (PLBs), their year-over-year market share increases, and overall value proposition; quality similar to national brands at a lower price point. About two years ago I had an opportunity to work with a company that produced hot-filled juice drinks for retailers like Walmart, Kroger, Target and many others. Business was great and the company installed a new line to support their growth. During this time period, I visited several retailers and discovered that their PLBs occupied a significant amount of space; 3 to 4 shelves high, 8 to 12 feet across in prime locations. The PLB price point was about $1.80 vs. $2.10 - $2.15 for 10-6 ounce pouches. This is ideal for retailers because they realize a higher gross margin and profitability for selling their own PLBs. By selling their own brand this approach increases the brand exposure and establish a relationship with their target, resulting in a higher customer loyalty across the category and others. This is especially true if the retailer is local, which magnifies the local relevance factor. This could not have been an ideal situation for Capri Sun in relation to declining market share and potential idle capacity resulting in higher cost. Capri Sun decided to match the PLB's price points and enhanced the overall marketing support for their brand. There is a price point where the consumer will purchase a PLB over a national brand, a minimum of 10%-15%. Anything higher will cause the consumer to question the overall quality. Research has shown that consumers are less likely to purchase a PLB if the price is too low. The Capri Sun strategy appeared to have worked. Today the total space allocated for Capri Sun in major retailers like Walmart and Kroger range from 4 to 5 shelves high and 8 to 12 feet across, and there is little to no space allocated for the store PLB. They have also successfully increased their price point from the $1.80 price point for 10 ounces pouches to $2.25 - $2.48. So what does this mean for a strong brand? A strong brand can fight off competition and win: Simplifies choices Reduces risks Provides emotional benefits Offers a sense of community Builds loyalty and trust Consumers will stay loyal to strong national brands when a PLB's price point is similar This is an excellent illustration of how a national brand successfully fought off PLBs in an attractive and profitable category during a slow economy. BJPartnersllc.com ShareShare Private Label Brands: Part 2