PL Brands, Organic Products Drive Gain in Prestige Among Consumers

The introduction of high-quality, store-brand organic products has changed consumer perceptions of private label grocery brands, according to results of the forthcoming J.D. Power and Associates Private Label Industry Report announced at the IRI CPG Summit in Las Vegas. In particular, consumer attitudes about many store brands have shifted -- rather than being considered low-quality with bland packaging, private label brands are being thought of as unique and as having quality commensurate with that of traditional brands.

The report, conducted by the J.D. Power and Associates Web Intelligence Division, finds that the amount of online conversation about private label products has increased steadily during the past year, with volume peaking during the fall of 2008 as the economic crisis was unfolding. While private label pricing is a strong motivator for consumers, the quality and flavor of private label organic products drive the highest levels of positive sentiment. Private label food products from Safeway, Trader Joe's and Whole Foods garner particularly high levels of recommendations, compared with other private label brands, and are perceived as being particularly healthful and flavorful.

The report also finds that, among retailers included in the report, Safeway and Whole Foods garner particularly large volumes of positive sentiment overall for their mix of private label brands and categories.

"It's clear that consumers have begun to discard the idea that private label brands are of lower quality than traditional brands, which provides an opportunity for retailers to differentiate themselves with high-quality, reasonably priced store brands," said Janet Eden-Harris, VP of J.D. Power and Associates Web Intelligence Division in Westlake Village, Calif.

Sentiment for nonfood private label products such as diapers, paper products and cleaning supplies is not as high as that of food products, indicating that these products are perceived by consumers as commodities, purchased for their lower cost rather than as a favored brand in their own right.

"While retailers continue to gain ground with their private label products, there is still enormous opportunity for consumer packaged goods manufacturers," said Eden-Harris. "Innovation is still a big growth driver, and CPG companies still lead in that regard. New and differentiated products that are priced to value will win market share."

The report analyzes nearly 50,000 spontaneous conversations that took place in the blogosphere and on message boards between March 2008 and March 2009 that discussed private label brands from various retailers. Retailers with one-half of 1 percent or more of all discussions during the year are included in the report. The report is designed to provide insight to retailers on what drives consumers to purchase their private label brands, as well as to help consumer packaged goods manufacturers develop strategies for differentiating and marketing their brands. Full study results will be available in April.

The J.D. Power and Associates Web Intelligence Division is unique in its ability to assess both what is being said and who is doing the speaking in the online world, enabling companies to understand the attitudes and behaviors of various consumer segments. Its patent-pending technology enables the classification of posts and the ability to estimate the gender and age of a poster, as well as rapid identification and elimination of spam posts. The Web Intelligence Division analyzes voices of the online community by using proprietary Natural Language Processing and machine-learning algorithms to dissect the who, what and why of online opinion, offering in-depth insights for some of the world's leading brands.
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