Walgreens Playing 'Nice!' With Private Label

Walgreens, the nation's largest drug store chain, is set to unveil a new store brand called "Nice!" as part of its effort to refocus and grow its private label strategy.

The Nice! brand name, which was two years in the making, began to appear on Walgreens store shelves last month on food products from soup to nuts. The rollout of more than 400 items -- mostly grocery and paper products --- is scheduled to accelerate this month and wind up at all 7,742 Walgreens and Duane Reade drug stores nationwide by January.

Walgreen Co. has no small ambitions for its Nice! line. The Deerfield, Ill.-based chain brought in former Kraft Foods Inc. executive Maurice Alkemade in 2009 to create the program. Alkemade, a 14-year-Kraft veteran, most recently managed Kraft's business with Target. His goal at Walgreen: make Nice! a $1 billion-a-year brand, according to the Chicago Tribune.

“We want to manage it as a brand as opposed to managing it as a product,” Alkemade said. “We want to treat it like a national brand, like the Krafts of the world do with their brands.”

As part of the makeover, Walgreens is phasing out in-house brands, including Deerfield Farms, W, Cafe W, W Ultra and Chief Karlin. The Walgreens label will also disappear from food and household products, but remain on health-and-wellness items, the company said.

Walgreens has a long history of making in-house brands, starting with its namesake  line launched more than 90 years ago. But the hodgepodge of private labels has grown unwieldy over the years, currently numbering 50 brands throughout the store.

That’s one reason Alkemade favored going with a clean, no-frills, white background on the Nice! packaging, with black lettering and a simple, vibrant silhouette of the product inside. The uncomplicated label stands out when placed on the shelf next to a sea of colored packages.

"Of all the names [we considered], this was different, catchy, and the exclamation point added an emphasis," Alkemade said. And when it comes to creating advertising campaigns, “you can play with the word ‘nice’”'

So far, Walgreens has rolled out roughly 20 products, including tea, dried fruit, rice, macaroni and cheese, honey, tomato sauce, and baking soda. More items are planned to hit stores each month until the 400 target is reached in January, according to the Tribune.

Walgreen got a boost in developing the line after it acquired Duane Reade Holdings Inc., New York's biggest pharmacy chain, this year from private equity firm Oak Hill Capital Partners in a deal valued at $1.1 billion. The transaction not only marked the biggest acquisition in Walgreens history, but also gave the company access to Duane Reade's well-developed private label know-how at a time when consumers no longer look down on generic brands.

Total private brand sales in the United States have increased from $64.9 billion in 2005 to $88.5 billion in 2010, according to Nielsen data. The fastest-growing consumer segment buying store brands are households with annual incomes of more than $100,000, Nielsen said.

“We have a lot of opportunity to grow,” Alkemade told the newspaper. “We have very aspirational goals about where we want to take this.”

This ad will auto-close in 10 seconds