As published in Global Retail Brands, June 2013
Around the world, retailers’ private brands have proven that they are part of shoppers’ everyday routine, lexicon and share of wallet, and they literally own some of the biggest categories. Milk, bread, eggs and cheese are private brand dominant, and they are all in the highest volume and most frequently purchased categories globally. However, these four categories are perceived commodities, where the advertising investment is minimal, and existing brand equities are low.
So, one of the biggest strategic Private Brand marketing questions we face in the future is how to attack the most advertised, fragmented and frequently purchased categories? We don’t want to be prominent in just the big, commodity-oriented categories, we want to be impactful in categories which are more brand and image driven, or have real segmentation issues that lead to fragmented shares. When you consider all three of these characteristics together, (size, advertising and fragmentation), it makes for an incredible challenge for retailer owned brands.
One category that has all three characteristics is beer, and it is one of the largest categories in the world. Heineken by itself produces over 170 different brands of beer, and InBev over 200, so there is no shortage of choice. And there is no shortage of consumer interest too, especially if you’re Czech, where per capita consumption is 132 liters per year (tops in the world).
Beer is universally loved, with over 35 countries having every person drinking at least one liter a week, and China and the U.S. leading total national consumption. Yes, we all love the “suds”, but beer is also one of the most highly advertised and fragmented categories, and this is why many retailers have avoided it from a Private Brand point of view. In the U.S., retailers’ own brands amount to less than 1% share within the category, however there is a recent shift in desire to improve upon this penetration, but how do you best do it? Which segment do you target? How do you brand and name it? How do you market Private Brands in a category where every leading brand is heavily advertised? How do you as a retailer stand behind your brands?
These are all basic questions that we have encountered before in private branding, but for some reason, with beer it creates a sense of marketing amnesia. Many retailers try to “Hide The Obvious”. They try to fake it, instead of “fessing up” (telling the truth), and this doesn’t feel like the most effective marketing strategy.
Standing Behind The Brand
Retailers outside North America have, for the most part, stood behind their brands in the beer category. They utilize their existing private brand architecture and go after very distinct segments within the category based upon country of origin or type. In the United Kingdom, whether it is Waitrose brand Bavarian Weissbier or Czech Pilsner, or Tesco’s Best Bitter and Everyday Bitter, or Sainsbury’s Super Strength Belgian Lager, they each target very diverse flavor profiles, and they are unafraid to put their names behind it. Japan’s Aeon launched beer in 2011 within their well-established Topvalu brand, called Barreal Lager, with 100% malt and German hops.
In the U.S., Costco has “fessed up” too, staying true to their Kirkland Signature brand and introducing beer targeted at the higher quality “craft” niche in the category. It is credible, honest and effective branding.
Going For The “Swill”
Other key retailers, especially in North America, have been more prone to masking their beer offerings, with faux brands they have created, and more importantly are bottom feeders in the category going for the “swill” tier – brands like Keystone and Busch Light, where price is the primary reason for being.
7-11 launched their version of Private Brand beer called Game Day, to which one blogger says, “It reminds me of high school, where you got what you got. Here’s 10 bucks. Get me whatever you can.”
And the headline from the blog The Week said about Duane Reade’s new beer, Big Flats Brewing Co., “The drugstore chain has begun selling its own brew at rock-bottom prices. Reviewers are claiming it gave them headaches, but will the beer-swilling masses respond?”
The world of social media can certainly bring on negativity, but is this what you really want people saying about your new launches in a challenging category? Swill is swill, no matter whose name is on it.
The Learning
There are many challenging categories for retailers’ own brands, but probably none bigger than when you have both huge advertising investment and highly fragmented brand shares. I think there are three key learnings that you can take from the beer category.
1. Regardless of what segment you are targeting, you have to offer a quality product, which doesn’t seem to be the case in the examples above according to social media.
2. If you are going to create a new brand, like many retailers have done in beer, don’t think that it provides a “safety net” in case it fails – the consumer still knows where it came from.
3. Challenge yourself to reach for the higher ground and the higher segment, rather than the category’s lowest common denominator.
After all, there is no real differentiating purpose to winning versus Keystone Light, except maybe winning over the brand agnostic college age drinker, who cares only about price. From a marketing point of view in this new age of transparency and particularly within this category, it is never better to hide the obvious.