Supermarkets and symbol groups don't christen their own-label ranges The Best, Finest or Healthy Choice without good reason. But they need to be confident that their ready meals, premium snacks and ham live up to expectations. And they wouldn't be able to do that without the total commitment, knowledge and expertise of their suppliers.
Now in its seventh year, The Grocer's Own-Label Suppliers Survey gives buyers across the multiples, wholesaler and symbol groups the chance to applaud the best own-label suppliers.
In a rigorous and lengthy voting process they assessed product quality, account management skills, supply chain reliability and flair, value for money, collaboration on range development, innovation and crisis management. And they identified 12 that have risen to the challenges and delivered own-label excellence.
The winner of each category now goes through to the final stage of The Grocer Gold Awards on 13 June, where one will win Best Own-Label Supplier.
But all 12 are winners. Own-label grocery across UK multiples and c-stores accounts for 44% of sales by value, according to Nielsen Scantrack, and recent growth has been achieved by smartly planned and deftly executed lines encompassing everything from children's ranges to fair trade.
It is testament to the fast-changing, fragmented nature of own-label supply that there were no clear winners in some categories this year - notably chilled ready meals and bread.
Yet the names of several previous champions have returned, suggesting that in some divisions key suppliers are enjoying rare instances of stability, and are highly valued by the market they serve.
Household goods supplier McBride outshines its competitors in the household category and is the category winner for an amazing seventh consecutive year as a result of its excellent customer service and collaborative work on supply chain efficiency.
"McBride has always been closely involved with us but has stepped up a gear in the past couple of years with excellent results," says Stewart Waldie, category controller for household, laundry and paperware at Nisa-Today's.
"McBride works with us. That's what makes it great."
Waldie says McBride has been instrumental in reworking specifications for case sizes and product pack sizes on goods such as Nisa-Today's Heritage dishwasher tablets so that store fixtures carry the optimum range for Nisa-Today's member stores.
"It has also worked on promotions such as bogofs to help us increase sales volumes," he adds. "And there are always product innovations coming through, such as our improved Heritage trigger cleaners. What stands out is that McBride is aware of what our members need as well as the end consumers."
Congratulations also go to Tangerine, formerly Toms UK, which underwent a management buy-in last spring. The company is victorious for the fifth year running in confectionery. Buyers say Tangerine excels in the supply of traditional sweets such as jelly beans, fruit drops and marshmallows. Further innovation is expected as the company embarks on an ambitious expansion plan to double sales within five years.
"In confectionery there's a parallel trend alongside health for making products more permissible and Tangerine has pursued this to great effect," says one impressed buyer. "Sweets may not be low sugar but they can be made with real fruit juice and natural flavours so the shopper's decision to buy the product is easier to make."
Tangerine is also good at providing market data and advising competently on it. "Tangerine is our only own-label confectionery supplier to invest time and resources in market intelligence, and we really welcome that," adds the buyer.
Another returning star is Arla Foods UK - a category winner for the fourth consecutive year. Simon Stevens, MD for commercial at Arla, says the company is aware that unless own-label suppliers perform at their peak, retailers will move their business. "For this reason Arla has built in criteria to ensure we always outperform the competition when supplying own-label milk, cream, butter, cheese and yoghurt," he says.
Arla is also rated highly for its service levels, which have never been far from 99.5% in the past 12 months, says Stevens. "When four of the top 10 bestselling SKUs in supermarkets involve milk, you can't afford to have holes in supply. You must have the full range of pack sizes, organic and semi-skimmed or sales will be lost."
Stevens says collaborative work to ensure Arla delivers according to each retail client's strategic needs has bolstered business relations. "Own-label suppliers can build meaningful relationships where branded suppliers can't through product development. Brands have to pitch up with a shelf-ready product, whereas we work in partnership with retailers to build whole ranges from scratch."
About 40% of Tesco's standard own-label milk is supplied by Arla. Alain Guilpain, Tesco's category manager for dairy, praises the relationship it has with the company. "Arla is a proactive, customer-focused and commercially aware organisation," he says. "Its commercial, technical and development teams are knowledgeable and professional. Its involvement in British dairy is crucial and the relationship it has with its farmers is important to us, particularly as consumer interest in the provenance of food grows."
Northern Ireland's Tayto, enlarged and energised since last year's acquisition of part of Golden Wonder, has embraced the healthy-eating trend. Buyers voted Tayto the gold winner in crisps, nuts and snacks for the second consecutive year, in appreciation of its market knowledge, manufacturing excellence and commitment to the category.
John McQuaid, sales director, says Tayto has invested in new technologies in factories, worked hard to adapt environmentally friendly packaging and continued to deliver healthier standard own-label crisps as well as premium lines such as Tesco Finest crisps.
"Bringing own-label crisps in line with healthy-eating initiatives is about understanding the type of oil used in production," says McQuaid. "Our crisps are made with high oleic sunflower oil, which is much lower in saturated fat. We've also reduced salt levels and introduced more natural flavours."
This shift to premium lines is high on the agenda for most retailers looking to maximise own-label sales. "Consumers are looking for something different and better," says Shaun Quinton, MBL trading manager for staple grocery. "This translates to smaller volumes but higher value sales as retailers and suppliers see opportunities for greater profitability."
Attractive premium products can only appear on supermarket shelves if genuine research and development comes into play. Cranswick, for instance, which shares top spot in meat and fish with Grampian Country Food Group this year, is capable of turning great ideas into commercial reality. The award-winning Sainsbury's pancetta and parmesan sausage, and Sainsbury's Taste the Difference sweetcure dry cure back bacon are examples of radical production techniques, high-quality ingredients and clever packaging.
"We aren't afraid to bring real innovation to the category," says Jim Brisby, sales and marketing director at Cranswick. "We take ownership of these ranges and treat the brands as our own."
Cranswick focuses on emerging market trends and, through purchased market data, analyses market share position, market value and volume trends by sub-category, spend per visit and household penetration. "This helps us manage the product and promotional strategy," says Brisby.
When consumer trends take off, the best own-label suppliers swing into action, meaning retailers net sales as quickly as possible. Fairtade coffee would not have landed so swiftly in the multiples had FFI The Coffee People (Fine Foods International) not been such a force in the market. The company was a winner in the hot beverages category this year, having shared the top spot in 2006.
"Our business is structured to ensure we make the switchover to Fairtrade in record time," says Ray Conway, head of marketing at FFI. "We understand how own-label works just as well as we believe in the Fairtrade concept."
Conway says his account management team helps smaller chains exploit fair trade and enjoy the higher margins. He would like to see more action from the retailer end, though. "They don't always respond to our suggestions and can't always see that just competing on price is losing them margin. If premium coffees and Fairtrade lines were given more space, rewards would be greater."
FFI has also worked with retailers to improve packaging. Changes in glass production for an Asda 300g coffee jar means that 300 tonnes of glass annually have been taken out of the supply chain.
Sometimes external forces create surges in demand, and own-label suppliers' crisis management skills come under the spotlight. Richmond Foods, supplier of lollies and ice cream to multiples and c-store groups, kept its cool despite last year's hot summer.
"We did well on lollies last year," says Neil Jones, sales and marketing director, "which shows our obsession with supply chain operations paid off.
"It's at times like that when you prove your worth. We have outstanding people with great capabilities across the operation, so successfully maintained customer service levels - 98% across all our clients last year."
There is no room for complacency for any of the winners, however. Own-label suppliers face many uncertainties. There is an expectation of investment and long-term commitment yet also the constant risk of retailers re-tendering.
MBL, for example, has started to use the e-tender process more often when buying own-label and makes changes to its suppliers quite frequently, says Quinton.
"Previously, you would call sales people and they came in for a face-to-face meeting," he says. "Now the market is open to far more companies and deals can be done very quickly, perhaps with an outside company running the e-tender process for you, as is the case for us."
Where contracts may have been re-tendered every three or four years a decade ago, that can now happen annually. "This means we can buy at the most advantageous price and flex to what's happening in the market," says Quinton. "My advice is to get more switched on to the e-tender process. It's a more efficient, smarter way of doing business."
However, Guilpain argues that longer-term relationships will be essential if retailers expect supplier investment in infrastructure and product development. "Now and again we give innovative newcomers an opportunity to put proposals forward," he says. "But in certain categories, you have to give suppliers assurance that they have the job for a while so they can recoup their investment."
Tesco buyers are trained to assess suppliers' individual situations and will only re-tender when appropriate, he adds. "It shouldn't be just because it's the first anniversary of a deal."
As this year's category winners show, those prepared to forge close relationships with their buyers often reap the rewards. n
Now in its seventh year, The Grocer's Own-Label Suppliers Survey gives buyers across the multiples, wholesaler and symbol groups the chance to applaud the best own-label suppliers.
In a rigorous and lengthy voting process they assessed product quality, account management skills, supply chain reliability and flair, value for money, collaboration on range development, innovation and crisis management. And they identified 12 that have risen to the challenges and delivered own-label excellence.
The winner of each category now goes through to the final stage of The Grocer Gold Awards on 13 June, where one will win Best Own-Label Supplier.
But all 12 are winners. Own-label grocery across UK multiples and c-stores accounts for 44% of sales by value, according to Nielsen Scantrack, and recent growth has been achieved by smartly planned and deftly executed lines encompassing everything from children's ranges to fair trade.
It is testament to the fast-changing, fragmented nature of own-label supply that there were no clear winners in some categories this year - notably chilled ready meals and bread.
Yet the names of several previous champions have returned, suggesting that in some divisions key suppliers are enjoying rare instances of stability, and are highly valued by the market they serve.
Household goods supplier McBride outshines its competitors in the household category and is the category winner for an amazing seventh consecutive year as a result of its excellent customer service and collaborative work on supply chain efficiency.
"McBride has always been closely involved with us but has stepped up a gear in the past couple of years with excellent results," says Stewart Waldie, category controller for household, laundry and paperware at Nisa-Today's.
"McBride works with us. That's what makes it great."
Waldie says McBride has been instrumental in reworking specifications for case sizes and product pack sizes on goods such as Nisa-Today's Heritage dishwasher tablets so that store fixtures carry the optimum range for Nisa-Today's member stores.
"It has also worked on promotions such as bogofs to help us increase sales volumes," he adds. "And there are always product innovations coming through, such as our improved Heritage trigger cleaners. What stands out is that McBride is aware of what our members need as well as the end consumers."
Congratulations also go to Tangerine, formerly Toms UK, which underwent a management buy-in last spring. The company is victorious for the fifth year running in confectionery. Buyers say Tangerine excels in the supply of traditional sweets such as jelly beans, fruit drops and marshmallows. Further innovation is expected as the company embarks on an ambitious expansion plan to double sales within five years.
"In confectionery there's a parallel trend alongside health for making products more permissible and Tangerine has pursued this to great effect," says one impressed buyer. "Sweets may not be low sugar but they can be made with real fruit juice and natural flavours so the shopper's decision to buy the product is easier to make."
Tangerine is also good at providing market data and advising competently on it. "Tangerine is our only own-label confectionery supplier to invest time and resources in market intelligence, and we really welcome that," adds the buyer.
Another returning star is Arla Foods UK - a category winner for the fourth consecutive year. Simon Stevens, MD for commercial at Arla, says the company is aware that unless own-label suppliers perform at their peak, retailers will move their business. "For this reason Arla has built in criteria to ensure we always outperform the competition when supplying own-label milk, cream, butter, cheese and yoghurt," he says.
Arla is also rated highly for its service levels, which have never been far from 99.5% in the past 12 months, says Stevens. "When four of the top 10 bestselling SKUs in supermarkets involve milk, you can't afford to have holes in supply. You must have the full range of pack sizes, organic and semi-skimmed or sales will be lost."
Stevens says collaborative work to ensure Arla delivers according to each retail client's strategic needs has bolstered business relations. "Own-label suppliers can build meaningful relationships where branded suppliers can't through product development. Brands have to pitch up with a shelf-ready product, whereas we work in partnership with retailers to build whole ranges from scratch."
About 40% of Tesco's standard own-label milk is supplied by Arla. Alain Guilpain, Tesco's category manager for dairy, praises the relationship it has with the company. "Arla is a proactive, customer-focused and commercially aware organisation," he says. "Its commercial, technical and development teams are knowledgeable and professional. Its involvement in British dairy is crucial and the relationship it has with its farmers is important to us, particularly as consumer interest in the provenance of food grows."
Northern Ireland's Tayto, enlarged and energised since last year's acquisition of part of Golden Wonder, has embraced the healthy-eating trend. Buyers voted Tayto the gold winner in crisps, nuts and snacks for the second consecutive year, in appreciation of its market knowledge, manufacturing excellence and commitment to the category.
John McQuaid, sales director, says Tayto has invested in new technologies in factories, worked hard to adapt environmentally friendly packaging and continued to deliver healthier standard own-label crisps as well as premium lines such as Tesco Finest crisps.
"Bringing own-label crisps in line with healthy-eating initiatives is about understanding the type of oil used in production," says McQuaid. "Our crisps are made with high oleic sunflower oil, which is much lower in saturated fat. We've also reduced salt levels and introduced more natural flavours."
This shift to premium lines is high on the agenda for most retailers looking to maximise own-label sales. "Consumers are looking for something different and better," says Shaun Quinton, MBL trading manager for staple grocery. "This translates to smaller volumes but higher value sales as retailers and suppliers see opportunities for greater profitability."
Attractive premium products can only appear on supermarket shelves if genuine research and development comes into play. Cranswick, for instance, which shares top spot in meat and fish with Grampian Country Food Group this year, is capable of turning great ideas into commercial reality. The award-winning Sainsbury's pancetta and parmesan sausage, and Sainsbury's Taste the Difference sweetcure dry cure back bacon are examples of radical production techniques, high-quality ingredients and clever packaging.
"We aren't afraid to bring real innovation to the category," says Jim Brisby, sales and marketing director at Cranswick. "We take ownership of these ranges and treat the brands as our own."
Cranswick focuses on emerging market trends and, through purchased market data, analyses market share position, market value and volume trends by sub-category, spend per visit and household penetration. "This helps us manage the product and promotional strategy," says Brisby.
When consumer trends take off, the best own-label suppliers swing into action, meaning retailers net sales as quickly as possible. Fairtade coffee would not have landed so swiftly in the multiples had FFI The Coffee People (Fine Foods International) not been such a force in the market. The company was a winner in the hot beverages category this year, having shared the top spot in 2006.
"Our business is structured to ensure we make the switchover to Fairtrade in record time," says Ray Conway, head of marketing at FFI. "We understand how own-label works just as well as we believe in the Fairtrade concept."
Conway says his account management team helps smaller chains exploit fair trade and enjoy the higher margins. He would like to see more action from the retailer end, though. "They don't always respond to our suggestions and can't always see that just competing on price is losing them margin. If premium coffees and Fairtrade lines were given more space, rewards would be greater."
FFI has also worked with retailers to improve packaging. Changes in glass production for an Asda 300g coffee jar means that 300 tonnes of glass annually have been taken out of the supply chain.
Sometimes external forces create surges in demand, and own-label suppliers' crisis management skills come under the spotlight. Richmond Foods, supplier of lollies and ice cream to multiples and c-store groups, kept its cool despite last year's hot summer.
"We did well on lollies last year," says Neil Jones, sales and marketing director, "which shows our obsession with supply chain operations paid off.
"It's at times like that when you prove your worth. We have outstanding people with great capabilities across the operation, so successfully maintained customer service levels - 98% across all our clients last year."
There is no room for complacency for any of the winners, however. Own-label suppliers face many uncertainties. There is an expectation of investment and long-term commitment yet also the constant risk of retailers re-tendering.
MBL, for example, has started to use the e-tender process more often when buying own-label and makes changes to its suppliers quite frequently, says Quinton.
"Previously, you would call sales people and they came in for a face-to-face meeting," he says. "Now the market is open to far more companies and deals can be done very quickly, perhaps with an outside company running the e-tender process for you, as is the case for us."
Where contracts may have been re-tendered every three or four years a decade ago, that can now happen annually. "This means we can buy at the most advantageous price and flex to what's happening in the market," says Quinton. "My advice is to get more switched on to the e-tender process. It's a more efficient, smarter way of doing business."
However, Guilpain argues that longer-term relationships will be essential if retailers expect supplier investment in infrastructure and product development. "Now and again we give innovative newcomers an opportunity to put proposals forward," he says. "But in certain categories, you have to give suppliers assurance that they have the job for a while so they can recoup their investment."
Tesco buyers are trained to assess suppliers' individual situations and will only re-tender when appropriate, he adds. "It shouldn't be just because it's the first anniversary of a deal."
As this year's category winners show, those prepared to forge close relationships with their buyers often reap the rewards. n
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