TreeHouse Foods profiles the private label consumer

by Keith Nunes
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Comparing two food brands
As the private label segment has evolved, some consumers cannot differentiate between store brands and national brands.

CHICAGO — The perception many consumers have about private label products as an alternative to name brands has shifted to being less about budget and more about quality. Consumer research conducted by TreeHouse Foods, Inc., Oak Brook, Ill., has identified different segments of retail shoppers and the company is using it to unlock greater opportunity in the category for private label products.

Rachel Bishop, TreeHouse Foods
Rachel Bishop, chief strategy officer for TreeHouse Foods

“ … if you look at the millennial shopper who is just now coming of age managing their own checkbook or more likely debit card and shopping in their stores, they actually don’t have a real preference between a brand and a private label,” said Rachel Bishop, chief strategy officer for TreeHouse Foods, on June 14 during a presentation at the William Blair Growth Stock Conference. “So whereas before buying the brand meant that you had achieved, you were able to go out and make selections for yourself. Now it is much more about what is right for me, what is the right combination of benefits and value?”

Ms. Bishop went on to note the millennial consumer’s search for that balance between value and quality makes them very willing to try new things and change brands frequently to find the product most suitable.

“And this is incredibly common amongst millennials who are becoming over the course of the next 5 to 10 years the largest spending power in the overall market,” she said.

To better understand what drives consumer attitudes toward eating, toward brands and what drives their choices when they are in the retail store standing in front of a shelf making a decision, TreeHouse Foods commissioned research to profile consumers. From the research the company said it identified five segments of consumers.

Store brand vs. private brand
"Brand loyalists" always choose the brand name and don't look at the private label option.

“The first, representing about 9% of total private label spend, are the brand loyalists,” Ms. Bishop said. “So, these are the people who pick the brand, they don’t look at the private label; they buy private label if the price gap is very, very large or if their brand is out of stock.”

She called the second segment the “detached habitualist.”

“This person buys out of habit,” Ms. Bishop said. “They buy the same thing every time, they go to the same store; they have the same shopping list. They are not engaged, you can’t interrupt them during their shopping trip because they have already decided what they are going to get and they are not trying to look and see what the different choices are out there.

“Those also make up about 9% of total private label, which leaves us over 80% now that are much more engaged and in the private label sweet spot.”

Checking and comparing food prices
The “value optimizer” is a very traditional private label shopper who compares prices and has a budget.

The “value optimizer” is a very traditional private label shopper, Ms. Bishop said. These consumers are comparing prices and looking at the national brand equivalent. They most likely shop with a list and are likely to use coupons.

“ … They have a budget,” she said. “They are trying to spend under a certain amount of money and they are choosing private label in order to feed their family for less. This makes up about 30% of the population.”

Rounding out the final two segments were consumers Ms. Bishop categorized as “premium shoppers.”

Squeeze pouch applesauce vs. spoonable cup of applesauce
A "solution seeker" may choose apple sauce squeeze pouches over a spoonable apple sauce for the convenience factor.

“One we called the ‘solution seeker,’” she said. “And so the solution seeker tends to be a millennial mom who is very open to try new things as we saw before, very brand agnostic but she is looking to save money. And if she can save time as well, she is quite happy to do so.

“So, she is looking for the apple sauce squeezers instead of a spoon apple sauce. She is looking for something that she can throw in the kids' lunch be it a granola bar or a fruit snack, something like that and she is incredibly open to private label. She makes up almost 25% of total private label spend.”

The second premium shopper identified by the TreeHouse research is what the company dubbed the “quality purist.”

Store brands - Simple Truth, Simply Balanced, Wild Harvest
TreeHouse is working with its retail customers to develop product lines that are attractive to the different groups, such as Kroger's Simple Truth, Target's Simply Balanced and SuperValu's Wild Harvest brand.

“This is a person that knows what they want, they are reading the literature,” Ms. Bishop said. “They understand what types of products they believe have the best health benefits for their family and when they pick up a product, they read the label first on the back and then they look at the label on the front. They tend to be affluent, they tend to be pretty price insensitive but they take great pride in knowing more than the brand or the retailer in knowing what they want. And they make up about 30% of total private label spend.”

With the consumer segment profiles, TreeHouse is working with its retail customers to develop product lines that are attractive to the different groups.

“… Simple Truth obviously is the hot topic right now with over $1 billion in sales and better for you exclusive brand positioning for Kroger,” Ms. Bishop said. “But we also see Wild Harvest and Simply Balanced and a number of brands that if you ask consumers, they might not even know it was a store brand. They know that it has the attributes they are looking for at a price their happy to pay and that is where we are seeing a lot of the growth from the market today."

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