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Auckland, November 5 th, 2009 Private Label CPG Export Opportunities.

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Presentation on theme: "Auckland, November 5 th, 2009 Private Label CPG Export Opportunities."— Presentation transcript:

1 Auckland, November 5 th, 2009 Private Label CPG Export Opportunities

2 1. Private Label CPG Export Opportunities North America and Europe Auckland, November 5 th, 2009

3 Private Label Export Opportunities Key Retailer Trends Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations

4 1. Key Retailer Trends

5 1. Key Retailer Trends....Europe

6 1. Key Retailer Trends....North America

7 Key Challenges & Opportunities 1. Key Retailer Trends...common ground in Europe and North America

8 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Private Label is a tool to improve and develop Customer Loyalty Profitability What’s the basic issue here?

9 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Many Retailers believe that National Brands are tools to improve and develop Customer Loyalty Profitability

10 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America They are so wrong…………… Everyone sells the National Brands i.e. No Loyalty Their Profitability is way lower than Store Brand Profitability

11 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America No matter what the product, the manufacturer’s message is the same…….

12 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America We don’t care where you buy it.

13 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America We do care what you buy and where you buy it. Many retailers think differently

14 Building Sustainable, Profitable Growth for Retailer Brands 14 Changing Retail Landscape: Same Brand Choice Across Channels Encourages Cherry Pickers & Retail Over-Investment Widespread Brand Distribution Without A Strongly Differentiated Retail Proposition Does Not Enhance Store Loyalty

15 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Where’s the loyalty and to what?

16 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Where’s the Profit$?

17 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America private label nat. brand competitive Retail Price Cost GM 71.6% GM 14.5% Store Profit how does it actually work?

18 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America private label nat. brand competitive Retail Price Cost GM 62.8% GM 14.5% Store Profit how does it actually work? Shielding price reductions

19 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America ValueEquivalencyPremium “Less for less” “same for less” “more for same” The “Retail Pricing Model” Discount to equivalent brand 20-40% Less10-20% Less= or 10-20% More

20 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Retail price Profit Cost Price Retail price Profit Cost Price -12% -22% +84% PL GM 18% The relationship between Nat. Brands Profit Margin and PL N. Brands GM 9%

21 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Retail price Profit Cost Price Retail price Profit Cost Price -12% -22% +84% PL GM 18% Retail price Cost Price Profit Marketing PL GM ??% The importance of budgeting for marketing expenses N. Brands GM 9% Danger!!!!

22 22 A W.A.W. A word or two about

23 Building Sustainable, Profitable Growth for Retailer Brands 23 Why Pay “Brand Tax”? Pay Yourself First, While Delivering More Value And Affordability To Your Customers Gross Margin – Average Center Store Category +8.3 pts. Source: Profitability Analysis of Leading US Retailers, 2007 Retailer Brand profitability allows you to control where you invest strategically

24 Building Sustainable, Profitable Growth for Retailer Brands Retailer Controlled Brand Share At Wal-Mart Represents A Tremendous Growth Opportunity Relative To The Market, And It’s Potential Source: Nielsen’s Strategic Planner, FDM (including Wal-Mart) W*M FDM+WM Competitive Momentum Gaining Pace as Retailers Build Store Loyalty

25 25 Project Impact: Includes the re-birth of PL at Walmart

26 26

27 27 From Coke to Clorox

28 International Private Label Trends September 2009

29 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Key Findings Growing customer acceptance of private label (PL) means it is more critical for grocery retailers to develop a successful and comprehensive PL strategy. Showing affordability and value remains the imperative. However, PL has matured into a strategic lever driving multiple aspects. A weapon against the fast-changing discount sector, PL also needs to demonstrate a mainstream retailer’s core values. Value (economy) ranges have been re-developed to better display their value/quality credentials with improved packaging and reformulation. Whilst the recession has clearly boosted volume growth at the value end of the market, premium and ethical ranges are still faring well… …And a number of retailers are launching new umbrella structures and ranges. September 2009

30 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Key Findings (cont’d) Private label is increasingly central to marketing strategies and is leveraged in innovative ways to build brand equity. Retailers have also been promoting PL to drive penetration and to build basket size. Bundle deals are now more important in private label, with a special focus on chilled meals. Bold promotions and in-store displays are now prominent in many international markets. One of the next frontiers for PL will be sustainability and, specifically, carbon label footprint, which requires PL suppliers to innovate apace with branded manufacturers. September 2009

31 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America What does all this mean at retail? Best Better Good

32 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America What does all this mean at retail?

33 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America What does all this mean at retail?

34 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America What does all this mean at retail?

35 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America What does all this mean at retail?

36 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America Price Promotions getting Crazier

37 1. Key Retailer Trends...common ground in Europe and North America Key Retailer Trends...common ground in Europe and North America In Summary Focus on value and premium tiers Cost reduction Inventory Turn Retailer Consolidation means more power in less hands Product Development Organic, Fair Trade, Carbon Footprint Hard Discounters driving strategic change Supply Chain getting major attention Global Sourcing vs Local Sourcing

38 2. Key Challenges & Opportunities for NZ Manufacturers

39 2. Key Challenges & Opportunities for NZ Manufacturers Why Private Label and not Branded? CPG focus

40 2. Key Challenges & Opportunities for NZ Manufacturers Why Private Label and not Branded? Having some control labels in your offering is often a good idea

41 2. Key Challenges & Opportunities for NZ Manufacturers The Challenges Distance to Market Capacity Do we have Brands/Products that can sell? Are we in categories that can accommodate uniqueness in PL Perception of Retailers about New Zealand Cost and complexity of Freight Distribution and Supply Chain in the Market Maintaining a Sales & Administrative Presence Knowledge of the Market

42 Key Challenges & Opportunities for NZ Manufacturers Key Challenges & Opportunities for NZ Manufacturers 1. Key Retailer Trends...common ground in Europe and North America 2. Focus on Knowledge of the Market as related to Private Label 1.Retail Players and their market share 2.What is their PL strategy and how do your products fit into their tiers? 3.Do we understand the category we are trying to enter? 4.What are their quality audit practices? 5.Do they self distribute or use distributors? 6.Are there brokers involved either in-house or out and if so, what is their role and cost? 7.What role does PLMA and the Trade Shows play? 8.What help is available to you?

43 2. Key Challenges & Opportunities for NZ Manufacturers The Challenges Distance to Market Capacity Knowledge of the Market Do we have Brands/Products that can sell? Are we in categories that can accommodate uniqueness in PL Perception of Retailers about New Zealand Cost and complexity of Freight Distribution and Supply Chain in the Market Maintaining a Sales & Administrative Presence The Opportunities Unique Source of Product Different Style of Products New Zealand’s overall Consumer and Retailer Perception PLMA locally and Internationally: Education, Seminars and Trade Shows Other NZ Trailblazer Manufacturers Supply Chain experience from other NZ Manufacturers Canada and the UK may be “Commonwealth Friends” NZTE support through Beachheads™

44 Key Challenges & Opportunities for NZ Manufacturers Key Challenges & Opportunities for NZ Manufacturers 1. Key Retailer Trends...common ground in Europe and North America 2. IMPORTANCE OF LOCAL KNOWLEDGE

45 Key Challenges & Opportunities for NZ Manufacturers Key Challenges & Opportunities for NZ Manufacturers 1. Key Retailer Trends...common ground in Europe and North America 2. “The Beachheads Programme is the single most valuable government related programme for exporters…you get access to people you’d never get access to…with deep local knowledge, a real commercial focus, and, most importantly a real commitment to help” Mark Templeton CEO - Actronic It’s who you know… what they know and… How we can help you.

46 Key Challenges & Opportunities for NZ Manufacturers Key Challenges & Opportunities for NZ Manufacturers 1. Key Retailer Trends...common ground in Europe and North America 2. “The Beachheads Programme is the single most valuable government related programme for exporters…you get access to people you’d never get access to…with deep local knowledge, a real commercial focus, and, most importantly a real commitment to help” Mark Templeton CEO - Actronic It’s who you know… what they know and… How we can help you. Ms. Kelly Duffy Trade Commissioner for NZTE in Los Angeles

47 Key Challenges & Opportunities for NZ Manufacturers Key Challenges & Opportunities for NZ Manufacturers 1. Key Retailer Trends...common ground in Europe and North America 2. Ongoing conferences, seminars and important information tailored to Australia and New Zealand 2 Trade Shows, Management Education courses for Manufacturers and Retailers at Universities and Institutions in Philadelphia, Chicago, Holland and the UK, International Meetings, PL Data and International Research

48 3. Retailer Manufacturer Partnership Expectations

49

50 Yes, it’s a myth!!!

51 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners

52 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high

53 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high At the end of the day, retailers are looking for people who will pay to do business with them

54 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high At the end of the day, retailers are looking for people who will pay to do business with them A cost price is never the lowest price you have quoted

55 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high At the end of the day, retailers are looking for people who will pay to do business with them A cost price is never the lowest price you have quoted Dead net refers to fish at the bottom of the catch

56 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high At the end of the day, retailers are looking for people who will pay to do business with them A cost price is never the lowest price you have quoted Dead net refers to fish at the bottom of the catch Promotional “opportunities” are always lurking

57 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high At the end of the day, retailers are looking for people who will pay to do business with them A cost price is never the lowest price you have quoted Dead net refers to fish at the bottom of the catch Promotional “opportunities” are always lurking Off Invoice “Discrepancy” Deductions are standard

58 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high At the end of the day, retailers are looking for people who will pay to do business with them A cost price is never the lowest price you have quoted Dead net refers to fish at the bottom of the catch Promotional “opportunities” are always lurking Off Invoice “Discrepancy” Deductions are standard Extended Payment Terms are always “just around the corner”

59 3. Retailer Manufacturer Partnership Expectations Is it really a Myth? Some retailers seek partners just like most people seek partners But divorce rates are pretty high At the end of the day, retailers are looking for people who will pay to do business with them A cost price is never the lowest price you have quoted Dead net refers to fish at the bottom of the catch Promotional “opportunities” are always lurking Off Invoice “Discrepancy” Deductions are standard Extended Payment Terms are always “just around the corner” If they can get “sale or return from your competitor, why not from you?”

60 3. Retailer Manufacturer Partnership Expectations Bottom Line The longevity of your partnership is in direct relation to your uniqueness in product value quality standards service level and the depth of your pockets

61 Private Label Export Opportunities Key Retailer Trends Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations An enormous amount of info available

62 Private Label Export Opportunities Key Retailer Trends Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations An enormous amount of info available

63 Private Label Export Opportunities Key Retailer Trends Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations An enormous amount of info available Reality Check but...significant help available

64 Private Label Export Opportunities Key Retailer Trends Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations An enormous amount of info available Reality Check but...significant help available Go in with eyes wide open!!!

65 4. 2. Private Label Export Opportunities Summary Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations Major Challenge to understand the marketplace fund, procure and place resources long distance to ship and control supply chain local representation understanding the buyer mentality and reading between the lines it takes a long time

66 4. 2. Private Label Export Opportunities Summary Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations Major Challenge to understand the marketplace fund, procure and place resources long distance to ship and control supply chain local representation understanding the buyer mentality and reading between the lines it takes a long time Major Opportunity volume markets strong trailblazing Kiwi manufacturers succeeding already in market plant development key PL retailers already sourcing from NZ significant advice and assistance available in market

67 4. 2. Private Label Export Opportunities Summary Key Challenges & Opportunities for NZ Manufacturers Retailer Manufacturer Partnership Expectations However, very few people will dispute that once you get there, it was worth the journey.

68 Thank You!

69 ?Question Time?


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