Quebeconomic Watch: Economic overview and opportunities for Quebec companies
When store brands give a boost to the economy
A key indicator of a sustained economic recovery is the retail sector. Why? Because when times are tough, consumers look closer at how much they spend each week on groceries and other necessities. While retail store sales were growing by about 5% from year to year leading up to 2011, interesting developments were occurring in the “private label” sector.
What is the private label sector?
Do you know that Jewel-Osco’s “Everyday Essentials”, Walmart’s “Equate” or “Great Value”, and Walgreen’s “Nice!” are all private label brands? Private label is a concept where a store chain establishes an agreement with a manufacturer to buy their goods and sell them under the store’s name or brand, essentially contracting with the manufacturer to have the right to rebrand their product in exchange for allowing the product to be on the shelves. Therefore, the store that is selling the private label product is not necessarily responsible for manufacturing it.
The private label market has been booming the last 10 years, with more than 10% sales growth on an annual basis. As of 2012, one out of of every four products purchased in the supermarket was a store brand. This represents a unit increase of more than 10% in 4 years! It was once believed that store brands were the result of the economic recession but the persistent and growing trend leads to a different conclusion. The dollar amount of sales of store brands grew twice as fast as that of national brands in 2011 (+5.1% vs. +2%).
Leading sectors like meat, produce and dairy already have strong market shares in the private label sector (above 30% of market share), but other sectors like beer, wine (90%+ are national brands) and frozen foods are showing strong growth and potential. As increasing sales becomes more and more challenging in the US market, particularly under one’s own brand name (more than 65% of retailers consider expanding their own store brands in the future), developing competitive private label options is essential.
Where do Quebec companies stand in the private label sector?
For more than 20 years, Quebec companies have expanded sales in the private label sector. One good way to illustrate this is by tracking the participation of Quebec companies at the Private Label Manufacturer Association (PLMA) Trade Show in Chicago. After more than three decades since its inception, the PLMA Trade Show has now become the most important trade show of private label market players. There were 12 Quebec exhibitors in 2002, 14 in 2007 and this year, 30 Quebec companies (including 2 in the non-food sector) will be exhibiting at this event! Representing more than 15 different food categories, Quebec companies export to major store brands such as Costco, Meijer, Safeway and Trader Joes. From maple and chocolate products to fresh and frozen food or organic and gluten-free products, there is little Quebec companies cannot do to accommodate their American buyers.
Come meet Quebec companies at the PLMA 2012, November 11-13!
Canada has long been one of the most important participants in the foreign country pavilion’s category. With 22 out of 30 Quebec exhibitors in the same pavilion, Quebec will be by far the number one Canadian province represented at the show. The Quebec Government Office in Chicago promotes Quebec companies and gives them support to maximize their participation at the show. A detailed booklet of the 2012 participating Quebec companies will be released soon.
It certainly looks like the Quebec exporters are well-equipped to provide fuel to the private label boom. Come meet them at the upcoming PLMA Trade Show November 11-13 and judge for yourself!
Cyril GAUCHET – Business Development Officer – Food and Beverage - Québec Government Office in Chicago
For more information about participants: Cyril.Gauchet@mri.gouv.qc.ca or call us at 312-645-0395 #59717
Sources: PLMA 2012 / Nielsen 2012 / Progressive Grocer 2012