Private label elevates its image through trade names and package designs that create the impression of a pseudo national brand.

Private label is booming. This has national brands nervous. ACNielsen, in its most recent “U.S. Trends In Private Label” report, states sales of private-label consumer packaged goods (CPG) are growing much faster than branded products.

National brands still constitute the majority of all CPG sales. But private label products—or store brands—are not only enjoying faster sales growth, they are also expanding into an increasing number of categories. And they’re becoming the share leader in more categories, and gaining an increased presence in more retail channels.

According to the Private Label Manufacturers Association, store brands now represent more than $50 billion in annual retail sales.

These store brands and their packaging that projects them are as precious to their owners as national brand images are to theirs, and share the same goal: to build recognition and loyalty, and to give consumers an identifiable image to call “their” brand.

For years, Trader Joe’s has marketed its own brand of foods and natural supplements, using names from Trader Joe’s to Trader Giotto’s and Trader Jose’s to Trader Darwin’s as appropriate to the ethnic niche of the product.

This slightly quirky image works for Trader Joe’s, which combines a reputation for quality with being the “trading post” where you can find the less-familiar food or supplement, often from faraway places.

A store brand has to receive support from the store’s image, and in turn reinforce that image—as in Trader Joe’s case. Each draws from the other’s strength and at the same time reinforces it.

But what happens when a retailer wants to introduce a new private-label brand that doesn’t mesh with its public image? The mutual support isn’t there, yet the advantages of private labeling are.

The answer: Retailers create “boutique” private-label brands that rival national brands in packaging appearance, quality and appeal, yet retain the profitability benefits of store brands.

These boutique store brands are usually category-specific and create the impression of a pseudo national brand.
Santiago Cerveza De Oro beer, developed as an import brand by 7-Eleven Stores, is a case in point.

Seeing sales of imported beers grow exponentially, the C-store chain joined with Cerveceria La Constancia of El Salvador and SABMiller, parent of Miller Brewing Co., to produce a new brand designed to capture a share of that segment. Santiago Cerveza allows 7-Eleven to create its own niche in the import beer business.

The beer comes in clear glass bottles with deep gold and navy blue labels. This color scheme—similar to packaging for Corona beer—repeats on the six-pack carrier. Package graphics feature an image of a sun face, popular in Hispanic culture. Most of the package copy is in Spanish. Santiago Cerveza appeals to young adults aged 21 to 27, who reportedly are more open to trying new products.
7-Eleven’s customers are willing to experiment with new brands, and name recognition isn’t the intent with Santiago.

What is the intent? To create a distinctive brand image designed to attract and build loyalty among a targeted market segment—the same goal of any national brand.

Wal-Mart has built and energetically reinforces the image of being the place to go to save money—“Always Low Prices. Always.” One of its largest store brands—Great Value—stretches across many product categories and conjures up the image of being a bargain or even a “steal.”

This strategy works well for many foods and beverages, but Wal-Mart also sells products where price is not the first consideration.

Take wine, for instance. It is doubtful that a Great Value wine brand would be a big seller, because even for novice wine drinkers, an upscale image with a touch of mystery is always associated with wine. And the brand name doesn’t convey that image.

So, Wal-Mart markets its own private-label wine under the Alcott Ridge brand name. The exclusive store brand’s bottle, label and presentation are similar to those of a national brand of wine, separating the product from the usual practical Wal-Mart image. Alcott Ridge sits on the shelf next to the national brands of wine Wal-Mart sells, virtually indistinguishable in appearance.

The retailer also brands its own dog food line, Ol’ Roy, and merchandises an exclusive brand of bath tissue products and diapers, White Cloud. Procter & Gamble sold White Cloud in the early ’90s and Wal-Mart resurrected the brand in 1999.

Wal-Mart is rolling out a line of low-carb snacks and soups under the Carb Focus brand name, aimed at capturing its share of the low-carb food market.

“Wal-Mart is a brand-oriented company,” says spokesperson Karen A. Burk. “We provide private-label selections to fill a void in price or value. We want to provide our customers with a variety of quality choices when they shop.”

When asked about whether the company turns to special brand identity firms for brand consultation and package design, Burk replied, “We get a variety of input so that we’re up-to-date. Then we have a team implement the package design.”

Trade names do a great deal of the heavy lifting in advancing brand appeal. A label bearing Trader Joe’s name carries with it the culture the retailer has carefully and thoroughly built up over years of marketing support activities.

But few, if any, names have universal value. The act of creating brand identity, in fact, restricts the usefulness of a name as an icon. As one designer commented about the subject of this article, “Who the heck would buy Wal-Mart wine?” Similarly, what would the 7-Eleven brand name add to the shelf appeal of a new imported beer?

Is one necessary part of the creation of a boutique brand to hide the identity of the retail owner? Bob Bischoff, Vice President of Design for Federated Design, thinks not.

“It’s a matter of branding, not necessarily of keeping a secret,” Bischoff says. “The feelings and attitudes of the experience of drinking wine—the occasion, special glasses, guests, etc.—do not match the brand-halo of Wal-Mart. Thus the need to seek out an alternative brand.

“Brands and their execution on packages need to dovetail with consumers’ expectations,” he continues. “The brand needs to stimulate recall of a positive experience they can relate to the product. It all has to start with the consumer.”

The quality of store brands has continually improved over the years as has the packaging and merchandising. Category-specific boutique brands that mimic national brands will continue to grow.

Retailers want their stores to be a unique shopping destination. Exclusive store brands give retailers an “ownable” brand that consumers can find nowhere else. BP