Saturday, April 3, 2010

Fighting private label

Desipite a global rise in private label sales, Heinz is still defending its market share with great effectiveness. By using an arsenal of five different weapons Heinz still manages to prosper where others fail.

Tighten the portfolio

Heinz was once famous for its 57 varieties. But that was long ago. On one of the toughest and most private label-saturated markets (UK), 15 brands stands for 70% of sales. By cutting slack it is possible to focus marketing budgets instead of spreading to thin and not beeing able to push through.

Build brand equity

Needless to say. Heinz has focused on a few extremely well known products to work as heroes for the brand as a whole and the advertising seem to work. Heinz Tomato Ketchup appears as the brand that British consumers least want to give up, followed by Heinz Beanz and Heinz Ketchup still maintains a 75 % market share in the category. What other brand can come close to that figure?

Focus on innovation

Private Label is a volume game. The more innovations that is built into packaging, recipe, the harder it is to copy it - simply as niches are to small to build volume in. Standing-on-its-head-bottle, spicy flavours, kids mystery colours, a 'trap cap' that eliminates watery ooze etc, makes it easy to differentiate as the definite market leader of the category.

Expand into new markets

Within a few years, Heinz will have 20% of its sales coming from emerging countries like Poland and India, where private label have a much longer way to go before reaching levels of Western Europe.

Manufacture for the supermarkets

Heinz has been producing private labels for supermarkets for years, thereby:

- Profiting from the growth of private labels. Someone is going to produce it if supermarkets want it. It could as well be you.
- By producing private labels and beeing a partner to the retailers, bonds with the customers will be further strengthen.
- Private label production makes it possible to use production line capacity to the limit, thereby getting a better overall economy.o