Dive Brief:
- Ahold Delhaize USA has unveiled plans for its services branch, Retail Business Services, to overhaul private label products to make them cleaner and more natural by 2025, according to a company release. Retail Business Services is responsible for providing private brand products to Food Lion, Giant Food, Hannaford, Giant/Martin’s, Peapod and Stop & Shop, which operate under Ahold Delhaize.
- Retail Business Services has committed to removing synthetic colors, artificial flavors, artificial preservatives, artificial sweeteners, MSG and high-fructose corn syrup from all of its brands and products, and will produce more allergen-free products and improve nutrition guidelines for its Nature’s Promise brand. Retail Business Services also plans to be more transparent about the chemistry of its packaging and aims to reduce plastic and packaging waste.
- “We’re extremely proud to make this commitment and deliver cleaner, more transparent, and more nutritious private brand products, while preserving the great value, taste and quality consumers expect and deserve on these items," Juan De Paoli, senior vice president of Private Brands for Retail Business Services, said in the release. "At our core, we are about making it easier for everyday shoppers to buy better, and this initiative does just that."
Dive Insight:
As the entire food industry witnesses growing demand for transparency and cleaner ingredients, many food brands are taking the initiative to clean up their labels. Grocers recognize the need to keep their private label products up-to-date to remain competitive with national brands on their store shelves, and ultimately, to give customers what they want. Shoppers have shown an increasing willingness, and even affinity for, private label brands, and Ahold Delhaize clearly recognizes the opportunity.
Ahold Delhaize has already had great success with its Nature’s Promise brand, which was refreshed in 2016 with a “free from” approach to indicate the absence of artificial ingredients. This has likely given the retailer the positive metrics needed to invest in further cleaning up its private brands, which include Taste of Inspirations, CareOne, Smart Living, Always My Baby, Etos, Companion, Limited Time Originals, Guaranteed Value and Cha-Ching.
When it comes to revamping private label products and impacting the bottom line, grocers have to make significant changes not just to improve upon the original, but to remain competitive with brand names. This can be an expensive and timely endeavor and requires significant commitment and smart strategy from retailers. A company the size of Ahold Delhaize has the added challenge of coordinating product rollouts under multiple banners — and if it actually takes the company more than five years to make the changes, as indicated in the announcement, that could raise some questions among its shoppers.
Ahold Delhaize is in good company in its efforts to improve the quality of private brand products. Last year, Hy-Vee announced an initiative to remove more than 200 artificial and synthetic ingredients from its store brand products. Trader Joe’s has long been known for its short ingredients list, and Whole Foods 365 brand is popular for its natural, organic offerings as well. Kroger has also expanded its private label offerings, including a wider selection of products under its natural and organic brand, Simple Truth.
Worst-case scenario, Ahold Delhaize can lose money in a product overhaul, especially a long-term one — but at best, it can pay off in a big way. And, in today’s market where shoppers are increasingly savvy about labels and want less processed food and healthier options with more transparency, major retailers who don’t respond are going to lose customers.
