Digital Labels Give Precision Foods
Edge in Manufacturing, Marketing
By Dan Alaimo
Digital labels for food and beverage packages are gaining traction for product innovation and brand management. That is a bonus for CPG companies initially realizing measurable benefits from the flexibility and speed these labels bring to the manufacturing process.
For example, Precision Foods in St. Louis appreciates digital labels’ high print quality, low startup cost for new items and the ability to “gang run” low-volume labels, said Charles Pombert, senior purchasing manager. But when three items from the company’s Mrs. Wages product line doubled in sales last year after new labels were deployed, the impact of the technology hit home.
“In the retail sales space, you want high quality, high impact graphics so your product jumps off the shelf. Digital labeling has offered that to us,” he said.
The 7-oz. jars of Mrs. Wages canning and preserving products include Citric Acid, Fresh Fruit Preserver and Mixed Pickling Spice. While not high-volume items, they are in demand. More retailers are stocking the items after the redesign. Precision relies on Innovative Labeling Solutions in Hamilton, Ohio, using equipment from HP, Atlanta, for its digital labels.
“We redesigned our retail line last year to reposition it as a premium product. Digital label printing allowed us to get a ‘Cadillac’ print at a ‘Chevy’ price in the smaller amounts we needed,” Pombert said.
“Digital labels have made it easier for me to do my ordering and combine runs. The quality of the product is one less aspect that I have to worry about. The quality is there from run to run,” he added.
Precision is currently using digital labels for tray labels, cut-and-stack jar labels, and pressure sensitive labels on a roll for its retail canning mix jars, like Mrs. Wages, Pombert noted.
“Digital labels have reduced start-up costs, and allow us to gang-run multiple labels to take advantage of economy of scale. It also allows us to meet specific customer requests for level changes or promotions.” For example, the manufacturer can add a starburst or banner to a label for special pricing “at a nominal cost,” he said.
The brand portfolio includes Mrs. Wages, Land O Lakes, Milani Gourmet, Orrington Farms, Southern Gourmet and Thick-It. Some products, like Land O Lakes, are licensing agreements where Precision does the manufacturing and marketing; others, like Mrs. Wages, are owned entirely by the company. Precision also makes products for food service, and industrial and contract manufacturing. Private label is another part of the company’s repertoire.
Digital labels make economic sense for store brands, where relatively short label runs can be combined with different labels of the same product with no break to change colors or plates.
“I can go from a brown label to a blue label to a pink label to a green label, and it still
counts as one gang run,” without the extra charges that would be incurred with other label printing methods.
Private label also benefits from the quality of digital printing. “I don’t have to worry about off registration. I don’t have to worry about off colors. From run to run, it is very consistent,” Pombert said. “We get a lot of requests for private label versions of our products, and digital label printing will allow us to produce these products economically.”
Pombert sees a bright future for digital labels. “When you have a huge variety of products, and none are very big buy-ins, it enables us to combine those runs, which is great for us,” he said.
“Digital printing is at a tipping point,” said Jay Dollries, president of Innovative Labeling Solutions. “Getting a seat at the table is difficult because printing in general falls under purchasing. But digital is revolutionary and really should be viewed from a marketing perspective if sales volume, market share and building loyalty are among the brand’s goals.”
Marketing is changing in the way consumers interact with brands, according to Dollries. “The ability to be responsive, target by region and speak to individual customers by leveraging demographic data is of the utmost importance. It is what consumers are beginning to expect from their brands. As marketing becomes more and more fragmented, the opportunity to engage lands squarely at the shelf.”
Digital labeling has ushered in a new era for packaging, completely changing how it can be designed, purchased, and how it works as a marketing tool for the brand. It also enables printing on nearly any substrate, he added. “Brand owners, package designers and marketers need to view digital printing as a marketing opportunity rather than a printing method.”
The efficiencies of digital labels is a supply chain advantage, said Jeff O’Reilly, HP’s sales manager, North American Label and Package Group
“Digital printing encourages brand managers to manage their supply chains more efficiently and more effectively. It allows them to introduce new products at will, and it allows them to introduce products that may not have the same wide distribution than some of their mainstream products, while enabling them to effectively retire certain products that may be at the end of their product lives,” O’Reilly said.
“So at its core, digital printing is a supply chain management tool that allows a vendor or a print service provider to support the supply chain and new product entry requirements of consumer products companies, technology companies, and essentially anybody that needs to have product identification and product decoration,” he concluded.
Market Watch
Global Beauty Trends for 2010
Focus on Innovation, Resilience
By Lynne Cooke
Though manufacturer and consumer attitudes towards the beauty industry were changed by the recession, innovation and resilience have paved the way for a new landscape in 2010, according to Mintel Beauty Innovation.
Nica Lewis, director of Mintel Beauty Innovation, lists trends as follows:
Mood Beauty Make-up has long been associated with making the wearer feel better, but recent product evolution has seen actual ingredients enabling this. In 2010, consumers will be able to enhance their mood through make-up and skincare, going beyond aromatherapy and simple use of scent.
Nu Natural A new vision of natural that is less focused on certification and more focused on results, efficiency and safety. In 2010, beauty products will evolve from today’s trend towards organic ingredients, revisiting attributes like authenticity, provenance and local production.
Pro-Tech’d Throughout 2009, there was a renewed emphasis on protection, one of the basic functions of skincare, hair care and color cosmetics. Beauty products offered increasingly powerful shields against not just UV rays, but also physiological and man-made factors.
Turbo Beauty 4G Developing 2009’s “Turbo Beauty”’ trend, “Turbo Beauty 4G” continues to capitalize on advances in biochemistry for higher-tech beauty products. Expect more quasi-medical results and “mix-it-yourself” solutions: at-home kits and cures that offer alternatives to cosmetic surgery and non-invasive procedures.
General Mills Reduces Sugar
General Mills has committed to reducing sugar in cereals advertised to children to single-digit grams of sugar per serving. The initiative includes increasing key nutrients, such as calcium and vitamin D, and providing whole grain.
The company’s first target was to reduce sugar in cereals advertised to children to 12 grams of sugar or less. General Mills has already reduced sugar in many cereals, some by as much as 20%. By spring, cereals advertised to children will all have 11 grams of sugar per serving or less.
Reynolds American Acquires Niconovum AB
Reynolds American has acquired Niconovum AB, a Swedish-based nicotine replacement therapy company by buying all outstanding shares of the company for about $44 million. The latter will be a separate operating company of Reynolds American.
Niconovum markets innovative nicotine replacement therapy (NRT) products under the Zonnic brand name in Denmark and Sweden. Its mouth spray and nicotine gum rely on proprietary technology for nicotine delivery.
DECEMBER 2009
Economic Uncertainty Prompts
Consumers to Reach for Candy
By James Tull
Today’s economic uncertainty is providing stress for most consumers, and the effect is not surprising to anyone who knows about comfort foods. Candy makers report that their sales have increased dramatically during the last year.
“Candy is one of the few little luxuries that almost anyone could still afford to indulge in,” says Joe Calloway, author of the newly revised edition of “Becoming a Category of One,” and partner in the Engage Consulting Group. “The comfort food factor plays a part. Even if you've lost your job, you can feel better for a few moments with some chocolate.”
Mirroring the national trend towards frugality, consumers are seeking entry-level products rather than the more exotic varieties.
“Consumers are defaulting to lower-priced items,” says Paul Pruett, CEO of the Praim Group. “People aren’t going out as much so they are bringing their treats at home. Also, more people are going to mass retailers like Walmart, where products such as Hershey’s and Reese’s
are available.”
Callaway agrees, saying the candy brands that have increased are not necessarily premium brands, which are currently straining for growth. The American Customer Satisfaction Index (ACSI) confirms this move towards lower-priced confections. Two popular chocolate companies, Hershey and Mars, rank near the top of all food makers in terms of satisfaction.
A similar trend occurred in 2001 during previous recession, as well as in 2004 when the country was in the midst of a war and inflated fuel prices.
For candy manufacturers, especially those with a niche, there are certainly some special merchandising and promotions that can be executed to combat the presence of the better-known giants. Pruett cites Temporary Price Reductions (TPR), in store promotions (BOGOs – Buy One Get One), special online promotions, more email blasts, and new products as just some of the tactics his company uses to grab more market share.
“For example, we launched our Bubble Chocolate product during the recession to build on
the success of the confection aisle,” says Pruitt. “We added new SKUs to Oral Fixation
mints to help build some interest in the category. With all our brands, we’re looking for new
channels of distribution that tend to be more alternative, rather than traditional supermarket
and mass merchandiser. These alternatives include hotels, coffee houses, book stores and stationery stores.”
According to Pruitt, there are several products his company offers that are doing well in this recession. Some examples include Bloomsberry, a one ounce “emergency bar” that serves as “more of a personal consumption bar or impulse purchase, rather than a gift,” he says. Oral Fixation Mints with such new flavors as Mimosa and Jasmine and Bubble Chocolate, a new product are getting a lot of attention. “Bubble Chocolate is the only aerated bar in the U.S. and is bringing some excitement to the chocolate aisle. It’s also has value,” adds Pruitt.
Once the recession ends, the question is whether or not sales will continue to increase or stagnate. What can companies do to remain successful?
Pruett is matter-of-fact in his company’s objectives: “For us, it’s about continuing to increase distributions with new SKUs, counter and floor displays and new channels of distribution.”
Calloway maintains that where candy will go is largely unknown. “It's hard to predict which way sales will go because there are some ‘wild card’ emotional and even physical factors that are hard to predict. I'm thinking of the decreased need for ‘comfort’ once things get better balanced against the possibly physical desire for candy if you've become accustomed to having it,” he says. “The great thing in the favor of candy companies is that they’ve quite likely gained some new customers during the downturn and can hopefully hold on to their business in the future.”
In speaking of strategies, Callaway says that candy companies should focus on point of sale opportunities, as well as partner with retailers to do in-store, point of sale promotions and maximize their visibility to attract buyers and new customers.
“Candy is often an impulse buy. Since that business is up, candy companies should do everything possible to maintain sales momentum at the point of sale,” he concludes.
Market Watch
What Are Leading CPG Product Trends for 2010?
By Rose Anthony
Breakthrough new products in the coming year will most likely be a mixture of the familiar with a twist, according to the trend experts at Mintel, which released its 2010 global consumer packaged goods (CPG) predictions.
“Post-recession, we don’t expect manufacturers to reinvent the wheel. Instead, we predict 2010’s new products will give shoppers something familiar paired with something new to better satisfy their needs,” said Lynn Dornblaser, Mintel’s leading new products expert. “On retail store shelves, we expect today’s familiar megatrends – health and wellness, convenience, sustainability – to get a fresh, new makeover for 2010.”
Next year, Mintel sees seven trends that will influence new product development as manufacturers aim to spur interest in new launches while keeping shoppers comfortable with the familiar. Here are the 2010 trends:
- Symbol Overload Consumers are looking for nutrition facts more. In the U.S., nearly half of adults say having caloric information on the front of packages would help them reduce their intake. But since shoppers feel confused and skeptical about the vast array of nutrition symbols, more manufacturers will opt for clean, clear facts on front-of-pack statements.
- Sodium Reduction Poised as the next major health movement, sodium reduction is finally ready to take hold. The key difference, said Dornblaser, is that “sodium reduction is being pushed by food companies and health organizations, not by consumers.” This could mean slow adoption of the “less salt” mantra by shoppers, even as the food industry moves ahead.
- Local Gets Stretched Although buying only local goods is not possible for everyone, people still want products with recognizable origins and those that haven’t been shipped too far. The definition of “local” will expand, becoming more practical for major companies to use and for mainstream shoppers to purchase.
- Simple Made Special Staples, such as soap and juice, will go beyond the ordinary. Edgy packaging and premium positioning will make these purchases more enjoyable. The recent trend towards boutique-inspired packaging highlights how manufacturers will make the mundane a little more special.
- Color Coding for Convenience As cluttered retail store shelves make it more arduous for shoppers to locate their favorite breakfast cereal or shampoo variety, more manufacturers will color-code their products. Nearly two-thirds of Americans (64%) say they want color-coded packaging. Color coding also helps brands stand out on the shelf.
- Iconic Budget Brands Private label products are starting to look a lot more like national brands. As consumers reduce spending because of the recession, smart marketers ramped up promotions for their private label lines. Many shoppers now equate private labels with national brands and value them as such. Low cost, high quality private labels will thrive.
- Gen Y Cleans Up The generation that grew up with Swiffer, Febreze and Tide to Go is calling out for grown-up cleaning products of their own. Generation Y (born between 1977 and 1994) constitutes one-fifth (21%) of the global population. While there isn’t a wealth of Gen Y-focused cleaners on the market now, that is expected to change, with an emphasis on simplicity of use and quick, easy results.
Kelloggs Tones down Rice Krispies
Kelloggs is discontinuing the immunity statement on its Rice Krispies cereals, in the wake of its decision to add antioxidants to the formula last year.
The statement will be on packages for the next few months as product flows through distribution to store shelves. The cereal maker will continue to provide the increased amounts of vitamins A, B, C and E (25% Daily Value) that the cereal offers.
Coke’s ‘PlantBottle’
Coca-Cola has launched a recyclable plastic bottle made partially from plants. The “PlantBottle,” which will be available around the world, is made from a blend of petroleum-based materials and up to 30% plant-based materials.
The beverage giant aims to produce 2 billion of the special PET plastic bottles by the end of next year. For select markets in the western U.S. the PlantBottle will be used for sparkling brands and Dasani bottled water in several sizes starting in January.
More Microwave Meals
Americans are eating at home more and have been since the beginning of the decade, according to the 24th Annual Report on Eating Patterns in America recently released by The NPD Group, a leading market research company. But the way they cooked their food is changing.
Americans used their microwave ovens more last year and their stove tops less. About 20% of all meals prepared in U.S. homes from 1990 to 2007 involved the use of a microwave, until last year when use rose 10%. Stove tops remain the most popular cooking appliance but the percent of main meals prepared on a stove top dropped from 52% in 1985 to 33% in 2009.
More Fragrance Purchases
One of five consumers will purchase fragrance as a gift this holiday season — a two-point increase from last season, predicts The NPD Group. The fourth quarter (October to December) is the biggest time of year for prestige fragrance and this year is no different, even with the recession.
The category could use a boost. According to NPD’S BeautyTrends report, prestige
fragrances declined11% during the first nine months of 2009 compared to the same period
the previous year.
