7-Select[R] - Building on the Brand.

7-Eleven[R] Introduces its First Private-Label Snacks

DALLAS -- 7-Eleven, Inc., the world's largest convenience store chain, launches a new line of private-label products this month under the brand, 7-Select[R]. With the rollout of the 32 new items, 7-Eleven strengthens its presence in store-brand packaged foods, a business that has increased dramatically over the last year and promises strong future growth, especially in light of consumer budget-tightening during the decelerating U.S. economy.

New items include cookies, candy, nuts, potato chips, beef jerky, trail mix, plus chocolate-covered pretzels, coffee espresso beans, raisins and peanuts. Suggested retail prices offer a significant savings from 10 to 20 percent for customers versus the national brand equivalent.

"When we began to develop products under the 7-Select name, our first and foremost requirement was to create high-quality products that were equal to or better than the national brands," said Kevin Elliott, 7-Eleven senior vice president for merchandising and logistics. "Focus groups verified that we exceeded that goal by scoring taste, texture and flavor profiles higher than the name brand equivalent in every case."

Of course, consumers' primary reason for selecting private-label goods is to save money, and more shoppers are reaching for house brand products in this uncertain economy. According to a new survey by The Nielsen Company, nearly three out of four American consumers believe store brands are good alternatives to national brands, and more than 60 percent consider them to be just as good.

The 7-Eleven product development team set the bar high. Not only did the 7-Select snacks have to meet or beat name-brand quality, they needed to beat the price or offer a better value. According to Elliott, added value might mean a lower price versus the comparable branded item or, in some cases, more product for the same price.

In May, 7-Eleven began a pilot program to offer the new private-label products, like snacks, candy, nuts and cookies, in 1,500 stores in Florida and the Mid-Atlantic area. With in-store displays and point-of-purchase signs to communicate the benefits of the new snack line, 7-Eleven customers showed immediate interest in the new value-priced items.

Sales have continued to climb steadily, and many items are already outselling the name brand. Of the original 31 items first tested, 26 were selected for the initial launch along with several new candy additions.

"We have selected only top suppliers to develop and produce 7-Select snacks, and many also manufacture similar products for the recognized national brands and other top private-label retailers," Elliott said. "New 7-Select items are already in the pipeline, and we plan to widen our assortment in early 2009."

7-Eleven first offered private-label paper goods, batteries and stationery supplies with the 7-Select brand in 2004. Its private-label bottled water is sold under the name of Quality Classic Selection, which will soon convert to the 7-Select brand. By the end of the first quarter 2009, 7-Eleven expects to have more than 180 private-label items available for its stores to offer their customers.

"The 7-Select name builds on the strength of the 7-Eleven brand and will help define who we are as a retailer, much as our Slurpee[R] and Big Gulp[R] beverages have over the past 40 years," Elliott said. "7-Eleven is known for its unique brands and assortment of quality products. 7-Select snacks will certainly strengthen our position as the preferred convenience store for value, quality and convenience."

Elliott said that because of 7-Eleven stores' volume of snack sales and store traffic (the company serves some 6 million customers each day), the company can work with manufacturers and packaging companies that already provide product for name-brand labels to offer consumers an attractive price for popular snacks.

"Just as important, 7-Eleven can control and maintain the product quality and the amount of product in each package," Elliott said. "For example, in our 7-Select Swiss Trail Mix, we use whole cashews and real M&Ms, not cashew pieces or generic chocolate bits. Plus it's at an attractive, suggested retail price of $2.29 for 2.5 ounces compared to a well known brand that offers a similar mix in a 2-ounce-size bag for a suggested retail price of $2.69."

The private-label packaged and processed foods category is an $81 billion business across grocery, drug and mass merchandisers, up more than 10 percent in just the past year. While private-label products account for 13 percent of drug store sales and 18 percent of supermarket sales, they make up just 3 percent in convenience stores, according to the Nielsen report. Yet, perhaps because of such low volumes, sales of store-brand products are growing faster in convenience stores than at other retailers.

"Convenience stores' 'bread-and-butter' items - snacks and beverages - remain a relatively untouched category for private label and present tremendous opportunities for growth, especially in a lean economy when consumers have a heightened awareness of the cost of goods and are actively seeking out ways to stretch their dollars," Elliott said.

"I think the great prices and 7-Select name will entice customers to try these new snacks," he added, "but the quality is what will keep them coming back."

Elliot said 7-Eleven plans to expand its 7-Select-branded snacks to its Canadian stores in the first quarter of 2009.

About 7-Eleven, Inc.

7-Eleven, Inc. is the premier name and largest chain in the convenience retailing industry. Based in Dallas, Texas, 7-Eleven operates, franchises or licenses approximately 7,600 7-Eleven[R] stores in North America. Globally, 7-Eleven operates, franchises or licenses more than 35,000 stores in 17 countries. During 2007, 7-Eleven stores worldwide generated total sales of more than $46.6 billion. Named the #1 Franchise Opportunity for 2008 by Entrepreneur magazine, 7-Eleven is franchising virtually all of its stores in the U.S., and is expanding through its Business Conversion Program, acquisitions, building new and leasing existing properties. Find out more online at www.7-Eleven.com.