The own-label corks are popping at Sainsbury's Holborn headquarters. This week, it revealed that sales of its Taste the Difference range surpassed the £1bn mark at the end of 2007, making the brand bigger in value than Coca-Cola in the UK. Considering Tesco, whose 31.4% grocery market share is nearly double that of Sainsbury's, only reached the same milestone with its premium Finest label a year ago, and Taste the Difference was launched two years after Finest, it's a pretty remarkable achievement.
But it's just one chapter in the even more remarkable story of Sainsbury's own-label business. With sales now worth £8bn annually, it accounts for more than half the retailer's overall turnover. And it's all testimony to the work of one woman and her team.
Judith Batchelar joined Sainsbury's as director of Sainsbury's brand at the end of 2004, shortly after Justin King revealed his recovery strategy. As one of the industry's most experienced developers of own label, having worked at Morrisons, Safeway and Marks & Spencer, Batchelar was drafted in to restructure the own label team and help restore Sainsbury's reputation for quality and innovation. She hasn't disappointed.
Batchelar and her team have played a key role in King's sales-led Making Sainsbury's Great Again recovery programme. They have not only turned Sainsbury's own-label ranges into brands in their own right, but also brands that can more than hold their own against heavyweight branded competition.
"People don't beat a path to our door to buy Kellogg's Corn Flakes, but they will do for our special ranges," says Batchelar. "We've got a unique set-up for own label. The secret of our success is that we have pulled everything together into one team to push towards one vision."
This 'one vision' has added roughly £200m to Taste the Difference sales in just 16 months to reach the £1bn sales target more than a year ahead of schedule. Sainsbury's says it is also very happy with the performance of the value Basics range, as it works towards achieving 52% growth over two years to £403m by March 2009.
Sales of the range were give a major boost last year when Sainsbury's removed hydrogenated fat and artificial flavour enhancers from the 500-plus products in the range. "Since the overhaul, we have seen a huge sales lift of more than 20%, and now more than half of all our customers buy Basics," says Batchelar.
The size of the team has clearly played a major part. Batchelar has 200 people at her disposal, which, she says, enables Sainsbury's to adopt a more strategic, all-encompassing approach to own label new product development.
Unlike other supermarkets, Sainsbury's new product developers now work alongside dedicated brand policy makers, quality assurance and food safety and packaging specialists as a unified team, she adds.
"It means that in a very competitive market place, we can move quickly to react to new trends. Corporate social responsibility initiatives, such as changing all our bananas to Fairtrade and additive removal across a range of products, don't just happen by themselves," she says.
"The move to incorporate policy makers into the team has been fundamental to our ability to react quickly."
Even so, progress has not always been straightforward. The policy to remove all artificial colours, sweeteners and preservatives from own-label soft drinks has been one of the biggest tests so far, she says.
The goal was accomplished last June, which Sainsbury's claims was a grocery retail industry first. This was followed by a chunk of other policy initiatives, also centred around health, including the reduction of saturated fats in fried crisps and snacks by 70% over the past year.
"Going forward, our greatest challenge will remain making all the products healthier, while keeping the taste," says Batchelar. "Our focus is on cleaning up ingredients - we can't do that with other people's brands. It is through own label that we can emphasise our difference."
As new product development is now being planned three to five years in advance, good long-term relationships with the 1,451 suppliers producing Sainsbury's range of 14,5000 own-label products are vital, says Batchelar. But it's a mighty task to ensure so many suppliers, with millions of employees, are all working towards the same goals as Sainsbury's, she admits.
So, just over a year ago Sainsbury's set up an academy to help train suppliers' employees involved in technical management. Since the launch at the end of 2006, Sainsbury's has run more than 30 workshops for 267 suppliers.
It is also on a constant learning curve to keep up with trends and developments, says Batchelar, adding that the ability to acquire new skills is a must for anyone working for her.
"Fifteen years ago, the main priorities in new product development were a product's taste and quality. But when Fairtrade was launched in 1994, we began to ask whether a product was ethically sourced," she says.
"At the time, we didn't have people geared up to deal with that shift and it has taken time to acquire these skills. Now we all have to gain environmental skills and knowledge to ensure our products are in line with Sainsbury's corporate responsibility policies."
Batchelar may be doing all she can to up-skill her own team, but there is a dearth of new people coming through.
"Up-skilling is an issue facing the whole industry and we're not attracting the calibre of people," says Batchelar. "But we have managed to take on 15 graduates this year, which is promising as it is the largest number in a long time."
The graduates will be able to boast that their new supermarket job puts them in regular touch with the world of celebrity. Batchelar employs Sainsbury's brand ambassador Jamie Oliver to run inspirational sessions for her NPD team at Holborn HQ. Oliver visits Holborn roughly six times a year to talk about a variety of topics such as blending seasonal flavours and making the best use of fresh produce in recipes. He also holds cookery masterclasses for the own label development team and in-store advisers.
With so many people so closely involved in the development of own label, Sainsbury's must be confident of achieving sales targets as King attempts to move the company from recovery to growth over the next three years.n