Food Lion 2010 Annual Report Download - page 20

16
Private Brands
Private brands are a great way to achieve value leadership. All our operating companies
have used their private brand assortments to improve their price competitiveness. In 2010, our
results have once more greatly benefited from the investments in innovation of recent years.
At Delhaize Belgium, about half of the basket consists of
private brand products. And we still continue to innovate
and grow the assortment. Besides the existing category
specific private brands like
Care , Eco and Bio , an entirely
new range of products were introduced in the summer
of 2010 called
Baby . It is a new product line of food for
babies up to age 3, ranging from milk, fruit and vegetable
varieties and the first solid food dishes from 18 months on.
Our youngest customers have reacted enthusiastically as
evidenced by the impressive sales results in this category, a
clear sign of the strength and credibility of the Delhaize brand.
In Greece, development of new products also continues. Alfa Beta
introduced the
AB Terra Leaf product line with 15 new products.
Additionally, Alfa Beta launched almost 300 new items under
its different house brands. Private brand sales growth was an
impressive 18% and contribution to total revenues reached 17.5%.
At Super Indo private brand sales penetration is taking the same
direction. Last year a number of European
365 products found their
way to the Indonesian customers, with success. Growing brand
awareness and the expansion of the assortment with 129 products
to a total of almost 670, leads to an increase of the private brand
sales of more than 45%. And, consistent with trends in the Group,
Mega Image introduced the only private brand on the Romanian
market dedicated to traditional products:”
Gusturi Romanesti .” This
new product range covers food products, focused solely on local
sourcing.
Our assortments range from value lines such as the European
brand
365 which offers a lower priced alternative for almost all
the basic product needs, over our core house brands, to the more
sophisticated gourmet products of
Taste of Inspirations . Next to
these, our operating companies have developed category specific
assortments such as
Home 360, Healthy Accents or Nature’s
Place
. Private brands have proven to be a great way to improve
customer loyalty and a valuable tool to strengthen the brand
equity of our stores. Indeed, the stronger the store brand, the
more likely customers are willing to try the private brand products.
Inversely, private brands that surprise customers will support those
customers’ appreciation for the store brand.
In the U.S., private brands continue to increase in importance as
more customers discover our attractively priced brand ranges as
great alternatives to national brands. Private brands now account
for 26.7% of sales at Food Lion. Also at Hannaford, private brand
sales accounted for 27.4% of total revenues compared to 26.7%
in 2009. In 2011, we will further streamline and develop our
assortment. An entirely new assortment of value line products
called
MyEssentials will be rolled out across our U.S. operations in
the second quarter and will replace our
Smart Option assortment.
We strongly believe that private brand in the U.S. has a lot of growth
potential. The recession undoubtedly led customers to discover
private brands, and coming out of the worst part of the economic
downturn, the positive experience surely will secure a large part of
this newly conquered public. Research by Mintel, an independent
provider of market intelligence in the U.S., showed that 44% of
Americans believe that private brand products are high quality and
already about 40% would buy them.