There are lots of different names for private brands. They are sometimes called private label, own brands, corporate brands, retailer brands or store brands. For the established national brands, they might be called trouble, while retailers perhaps see them as equity.
Hugh O’Brian
Daymon Worldwide is a full-service global retail branding andsourcing company and leader in developing private brands across all categories. Privately owned and based in Connecticut, just outside New York City, it has been in business for 42 years. Perini Journal recently spoke with Kit Vale, the Global Director of Category Strategy for Paper at Daymon.
WHAT IS DAYMON'S BUSINESS? Our roots are in the development and growth of Private Brands, where many decades ago we acted as a pioneer. Previously we would be described as a broker but the company has evolved to become a fullservice global retail branding and sourcing partner. Our full array of retail services now includes Private Brand Development, Strategy & Branding, Sourcing & Logistics, Retail Services and Consumer Experience Marketing. Today, our expertise spans across all major retail categories with a large emphasis on food, but also including a vast array of non-food segments like paper, health and beauty, baby, pet and automotive. As head of category strategy for paper, my role is to leverage category expertise pertaining to all major paper products. This includes leading ongoing research to increase our knowledge base and fine-tune predictions regarding national brands performance.
To build business and global reach for our retailer partners, we also anticipate and apply future trends, monitor and support private label growth opportunities and maintain a healthy portfolio of top-level suppliers.
Today we have numerous accounts in-house at retailers, with the Daymon team sitting across from the buyer inside many of our retailer customers’ offices. In other cases, we’re located nearby to ensure close coordination. They work with buyers in all the categories that they carry and help to create category solutions. If a retailer wants to develop a private brand tissue product, we can help them decide what tier they want to target, such as value, premium, etc., so we can align a supplier with the category solution that we have designed together.
Simply put, we build brands with our partners. But as you can see, this is a very precise and detailed process that requires total immersion and trust. This type of relationship has been crucial to the evolution of private labels into widely accepted, higher quality private brands. As quality has gone up and retailers have invested in their own private brands, they have acquired equity in the brand.On a global scale, Daymon works with more than 100 retailers and 5,900 manufacturers in more than 25 countries. In the North American tissue paper market, we are working with 40 retailers, including some of the largest, most reputable organizations.
One of the reasons we’vebeen able to establish such trusting relationships with our retail and supplier customer partners is our strict policy of not sharing proprietary information across teams under any circumstances.
In fact, we have firewalls to keep information contained within teams and to prevent accidental leaks. We are absolutely neutral in our relationships with our suppliers and retailers and we have a responsibility to satisfy and protect both parties.
WHAT IS HAPPENING IN THE US TISSUE MARKET THESE DAYS? There are many interesting trends that we are seeing, with product quality generally increasing, pack sizes growing larger, national brands trying to compete with the value segment, new functionality being added, and many other shifts in the paradigm.
An even more significant trend is the growing consumer acceptance of private brands as quality, affordable alternatives to national brands, instead of just less expensive options (Diagram 1). In fact, we once referred to private brands as NBE, meaning national brand equivalent. As private brands continue to evolve so remarkably, however, we now use the term NBB, which means national brand better. Consumers are trained to understand they are getting better quality in the private brands, and the retailers obviously have an equity stake in maintaining the quality of their store brands.
GROWTH OF PRIVATE BRANDS CONTINUES. As illustrated in Diagram 2 covering the trending of each category in dollar sales by sub-segment, the private brands (on the right) are growing significantlyfaster than the national brands (on the left) year-over-year for every category except napkins.
TAD BATH TISSUE. Clearly the most evident trend in the US is the huge growth in supply of TAD Bath tissue. Recent capital investments in modern machinery mean new ultra TAD Bath tonnage coming from companies such as First Quality, Clearwater, Kruger, and Irving. Some converters are getting into this sector as well. This will allow consumers to buy a premium bath tissue product at a lower price than the established national brands.
Obviously the new supply puts pressure on the national brands, where Charmin Strong and Soft are seen as the benchmarks. All the private brand players are now moving into that space and retailers across the country all want private brands that are equal to or better than Charmin Strong and Soft. Clearly, the private label producers are entering the highest quality levels.
PACK SIZES GETTING BIGGER. Pack sizes are clearly getting larger. For instance, 12-count Bath Tissue packs grew 5.4 percent over the last year and represent 44 percent of the category. The new-to-category 24-count packs have grown at 12.2 percent and account for 8 percent of sales. We see a similar trend in paper towel,where the larger 6-count pack is growing at 15.7 percent and counts for 23 percent of sales. Conversely, single packs, two-packs and threepacks are all declining at double-digit rates over the last year.
In recent years, the Club channels with huge pack sizes have been growing at a healthy rate, mainly at the expense of grocery and mass (Diagram 3). Grocery still has the lion’s share of the market and most people still go to grocery stores to buy their paper products, although this is declining.
Additionally, Grocery channels are reacting by developing “Club-sized” sections in their paper sets to make it easier for shoppers to pantry load and to prevent leakage to club stores.
LEVERAGING THE BRAND - P&G BRAND EXTENSION TO 'BASICS'. Procter and Gamble has introduced an everyday ‘Basic’ line for Bath Tissue, Facial and Towels under their top three brands in the category: Charmin, Puffs and Bounty. The brand positioning for Basic is to target the value consumer and offer better price and performance than the leading brands in the value tier. P&G is also adding a home décor element to Puffs Basic to differentiate this brand from its competitors.
HISPANIC BRANDS. Hispanics are the second largest, and the fastest growing, ethnic group in the US. This trend is driving new brand and product introduction that has found acceptance with this growing consumer segment. As an example, Cascades Paper Co. is launching Acolada, which will compete with Fiora (formerly Paseo) and other Hispanic brands already established in the US market.
NEW FORMATS AND INNOVATION. Cascades Paper Company has also developed a water-activated antibacterial towel called Defensia to address the growing consumer need for functional products. The green-colored towels, with an anti-bacterial agent that is released from the substrate upon contact with water, are claimed to eliminate residual bacteria almost instantly and provide 30 minutes of additional protection. In addition, the product is recyclable, biodegradable and compostable, meeting sustainability demands as well. This newproduct has seen considerable interest from retailers. •