The outcome of this year's Own Label Suppliers Survey confirms that private label manufacturing has never been so tough. Factors such as the shifting retail landscape, high utility costs, increasing competition, price deflation and the growth of global e-auctions all test the strength and stability of own label suppliers, as in branded manufacturing.
Devoid of brand muscle, own label producers also find themselves more dispensable and, in the past 12 months, re-negotiation of own label contracts has been widespread across the food and drink sector. Against this harsh industry backdrop, the star performers named here deserve extra praise and congratulation. They have capably weathered the storm and, judging by the heartfelt comments of buyers from leading supermarkets, wholesalers and symbol groups, have proved themselves outstanding champions of quality, reliability, innovation and value for money.
ACNielsen data shows UK purchasing of own label food and drink is 41.5% of the total market by volume and 38% by value. "So private label's significance is enormous," says Brian Sharoff, president of the Private Label Manufacturers Association. "The best suppliers in the eyes of retailers are the flexible players who put everything into the partnership and relentlessly pursue the retailers' private label plans. It's not just about costs and product concepts. There are great expectations around category management, logistics services and technology."
Martyn Jones, trading director at Morrisons, says his buying teams prefer to work with suppliers that are genuinely proactive in the management of the product, its packaging and production. "We expect them to work closely with the retailer to ensure that the quality and value of the product are best in the marketplace," says Jones. "They should also work closely with us on demand and promotional forecasting to ensure good continuity of supply. This is especially important with seasonal own label suppliers."
Finally, the best own label suppliers are those that work collaboratively on product and packaging development "to ensure that products remain relevant and convenient for consumer and market", says Jones.
Sharoff agrees, saying that as long as British retailers strive to be leaders in food and drink innovation they will naturally seek production partners who share their drive for newness and creativity. It's not always easy, though. "In any marriage there is conflict. The supplier's challenge is to overcome that and keep working at the relationship."
This year we have increased the number of categories to 15 to better reflect the breadth of the industry. However, voting in the sixth annual Own Label Suppliers Survey has been particularly fragmented and did not uncover obvious gold, silver and bronze winners as has been the case in previous years. So rather than honour three finalists in each category, this year The Grocer has awarded sole gold champions, all of whom will go on to the final of The Grocer Gold Awards, to be held on June 14 at London's Dorchester Hotel. Only in the meat/fish/poultry category was there no clear winner.
What is particularly encouraging is that several of the 2006 champions have been appearing as finalists for as long as the survey has existed, proving conclusively that stability and long-term success can be achieved if true product excellence and superlative levels of service are forthcoming.
Household winner Robert McBride has now brushed off the competition for six consecutive years. Buyers marvel at McBride's ability to communicate clearly at every point of planning, production and supply, and appreciate the slick account management, unrivalled knowledge of detergent manufacturing and obsession with developing and delivering new products at the same pace as the big brands.
Colin Stevens, McBride's commercial director, says: "Private label bleach accounts for about 65% of the market, so our clients take these products very seriously. The expectancy of private label product quality is now as high as that for world-leading brands. We compete head-to-head with the likes of Procter & Gamble, Unilever and Reckitt Benckiser, which drives us to innovate and continually improve our offering."
Retailers demand outstanding levels of customer service, says Stevens, and perhaps most importantly, product availability. "Keeping shelves stocked is vital. Working collaboratively, we know how sales are going throughout the day and can virtually tell our clients what they need to order," he says.
Equally impressive is Toms, best in class in confectionery for the fourth year running. Toms bases its new product development, particularly in the area of sugar-free sweets and natural flavourings, on trends spotted in Continental markets and guarantees that costs are kept at a minimum, while always allowing room for flexibility.
Another recurring star is European dairy giant Arla, having now taken the dairy prize three times in a row. Strong account management, a good mix of lines and NPD are qualities that buyers admire.
In soft drinks, Silver Spring overshadowed last year's gold winner, Cott Beverages, seeing itself elevated from silver last year to gold in 2006. Meanwhile, in hot beverages, which was not contested last year, Fine Food International and Finlays share the gold cup.
Supplying frozen products to supermarkets and c-stores poses unique logistical challenges. But this year's master of the freezer, north-east based Fredericks Dairies, has ably ensured buyers keep their cool in a tough, tight market.
Congratulations go to Weetabix for impressing buyers the most in the cereals category, Princes for being the star of canned and Allied Bakeries for making toast of the competition in own label bread supply, despite a particularly challenging year.
In the fast-consolidating crisps market, Northern Irish producer Tayto and its newly acquired business Golden Wonder gained the same number of votes to share the own label crisp supplier crown.
John McQuaid, national sales manager for Tayto, says this puts the stamp of approval on the union. He believes that Golden Wonder's expertise in producing private label crisp ranges for the big supermarkets can now be developed on sound foundations. "We want to bring some stability to those clients who had previously seen their crisp production in the hands of a company heading into administration," says McQuaid. "The combined business is financially secure and we have big plans."
Tayto's sterling work with Tesco this year to produce the premium Tesco Temptations hand-cooked crisps range should be considered a taste of things to come, says McQuaid. "A great deal of NPD was carried out by our team in Northern Ireland, working closely with the flavour houses to create the ultimate premium range, and it has paid off," he says. "Premium is important to retailers looking to recoup on the price deflation that has affected other parts of this category."
The enlarged Tayto group will keep digging for innovation, with more than an eye on the healthy, low-fat end of the market. "There are plenty of opportunities there and the teams at both Tayto and Golden Wonder will be looking at how to bring out the best of both companies when taking on new projects," says McQuaid.
Echoing McQuaid, Jones at Morrisons says trends driving the market today are "the healthy eating agenda, the premium agenda, and provenance of the products".
He says: "In premium the focus going forward will be on better quality and more indulgent products. Within Morrisons this is demonstrated by increasing sales on our The Best range. Meanwhile, there is a much greater interest in provenance. Are products organic, free range or sustainable? Consumers want to know."
Retailers certainly gravitate towards suppliers that consider the bigger business picture. Neville McMullan, commercial director of Oscar Mayer, this year's chilled food champion, says "working holistically" with key clients, including Sainsbury, Morrisons and Somerfield, has been crucial.
"We have representatives working across their teams, from logistics to forecasting to sales," says McMullan. "The more collaborative and integrated we are - from sharing sales data to planning promotions, to getting involved in supply chain pilots - the better the all-round performance. It's got to be a hand-in-glove operation."
Producing very short runs of chilled ready meals - often 100 different dishes a day at each plant - can be complicated. "If we can help them plan and be ahead in terms of demand, we're all winners," says McMullan.
The importance of collaboration is echoed by the management of Fox's Biscuits, which impressed most in the biscuits and cakes category. James Langan, divisional sales director for Northern Foods' bakery division, says: "As relationships with retailers have been developed, we have prided ourselves on working more closely with buyers to add value to their category with innovative new product development."
Of course, price is never off the agenda. But Veetee Rice sales and marketing director Tony O'Connor believes quality of product, consistently reliable service levels and the quality of the people must also underpin these business partnerships. "I think we have hit the button on all four counts," says O'Connor. "Ultimately this means buyers have that essential degree of confidence that the product will always be top quality, with fulfilment closely matching demand."
Veetee Rice leads the ambient field this year, as a commodity rice supplier to the likes of Asda, Waitrose and Morrisons.
While last year's alcohol own label favourite was Scottish Courage, PLB is toasted heartily this time round. The 25-year-old company was conceived specifically to supply own label wines to the supermarkets, says PLB sales director Peter Bisley, which ensured a focus on the needs of clients from day one. Today almost six million cases of wine and beer are distributed from all over the world to British grocery outlets, and thanks to dedicated business development managers working in the field, PLB never loses sight of the myriad issues that need to be dealt with quickly and efficiently right at the heart of production and onwards through the supply chain.
"Our specialist managers are handling obscure wine-producing laws, issues around labelling and shipping and watching production trends," says Bisley. "In the meantime, we can concentrate our attentions on the needs of the client at the sales end and spend time analysing the market to offer them ongoing solutions to upcoming challenges."
Quality assurance is taken care of. A great deal of independent market research into consumer trends and what the competition are doing is carried out. Even additional logistics services to shorten lead times are part of the PLB service. "Own label production is a very involved, complicated process, so it's vital clients have trust and confidence in us at every stage," says Bisley.
Martin Swadling, category manager for licensed at Musgrave Budgens Londis, says that while the multiples may have teams of employees involved in sourcing own label product across the globe, smaller grocery groups don't have that corporate reach.
"So companies like PLB act as a conduit to find our wines. They are effectively an extension of us, so their commitment and flexibility are important."
Swadling believes the best own label suppliers are often those that give the most support, and this comes down to the size of the team. "It's a lot about having enough people. Their expertise is also invaluable."
Gold winners clearly respect the fact that they carry responsibility for the retailer's good name when supplying private label food and drink. "A large retailer can't afford to have problems and risk their reputation, so we've got to get it right at every stage of the process," says Bisley.
Gold winners - Own label
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