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Private label on increase in France, and seafood packs are in the Vanguard.

Private Label on Increase in France, And Seafood Packs are in the Vanguard

One by one, the chains are embracing store brands. Ranges are diverse and profit margins are handsome. From Carrefour's Hake Croquettes with Breton Seaweed to Monoprix's health foods, recipes for success are bon! And this is `only the beginning.'

Today private label products account for one fourth to one third of frozen food sales in France. "In one to three years half of frozen products may be private label," predicts Claud Govare, president of Gorcy. Laurent Desreux, head of frozen foods for France Glaces Findus, elaborates: "The level of distributor products will be a function of the industrial capacity of producers. If they can't individualize their products, the level could be 100%."

At present the vast majority of own label frozens belong to a few food families. Private label accounts for the biggest part of sales of fish fillets and of chopped meat, and a very large slice of pizza sales. Store after store also sells private label crepes, ice cream sticks and cones, potato nuggets and hashed potatoes, and ready-to-cook raw vegetables and mixtures of plain vegetables (private label accounted for 11% of sales to households of these vegetables in 1987). In freezer centers that carry a wide range of seafood in addition to fish, this seafood tends to be private label.

By absorbing a substantial percentage of the sales in specific families, the chains help to push producers of name brands into innovation. The appearance in 1988 of numerous prepared vegetable dishes was in part the response of producers to the fact that distributors were selling under their own labels an increasing percentage of plain vegetables. The chains are, however, beginning to move toward developing elaborate products themselves.

M. De La Fouchardiere, in charge of frozen foods for Monoprix, commented during a roundtable discussion that the magazine Surgelation organized at last fall's SIAL: "The 1986-88 period has seen the explosion of increasingly sophisticated distributor products. And we are only at the beginning. In the next two years we can expect a considerable expansion of distributor products and their presence in more and more specialized sectors."

The FF retailer explained for Quick Frozen Foods International the status of private label frozens at Monoprix, a chain of 220 variety stores located within cities. Although frozens account for only 5% of turnover, the stores devote 8-9% of their floor space to such fare because they think that the market will grow. They sell 364 frozen items, only 31 of which (8.5%) are store brands. These 31 own labels account for 30% of the tonnage sold and 16.7% of sales in terms of francs. They do so because they are basic products that rotate rapidly -- crepes with mushrooms and with ham and cheese, fish croquettes, a mixture of ready-to-cook vegetables.

Now that the chain has achieved a strong base it is ready to diversify. To do so Monoprix needs to increase its FF staff. M. De La Fourchardiere heads up the buying not only of frozens, but also of fish and baked goods, and he is assisted only by a buyer and a secretary.

Up until now the chain has copied products already on the market rather than developed new items. The staff draws up a technical description of what it wants and requests samples from potential suppliers. As a general rule it seeks companies that specialize in the product in question.

An external laboratory analyzes the samples for safety, and a panel of consumers tests them for taste and general appeal. The staff then makes a choice. To develop new products, which M. De La Fourchardiere would like to do now, "a structure is needed at the levels of choice, quality, and design," he says.

Early in 1989 Monoprix introduced four top quality sherbets packaged in cartons equivalent to those used by pastry shops (black cubes with stylized, two-colored fruit -- bright green and shocking pink for strawberry, for example -- and the words "Monoprix Gourmet" in gold). The sherbets belong to Monoprix's new Gourmet line. The frozen products previously introduced carry Monoprix's standard name, "Beaumont."

M. De La Fourchardiere would like to add original frozens to the Gourmet line and also to a new Monoprix health food line, La Forme. He hopes that two years from now he will be selling a total of 60 private label frozen foods.

Carrefour already has the structure for developing original own label products. Staffers study the leading products on the market in order to find ways of improving them. They then draw up a tentative list of specifications that they submit to producers. Working closely with the company whose bid they accept, the final product can be said to be a joint effort of the distributor and producer, France Miremont, director of clientele, told QFFI.

A special, small category of Carrefour products are what the chain calls "innovations." They are conceived by a "Cellulue d'Innovations" directed by a university professor. With his students, he identifies products in gestation, or only at the idea stage, evaluates them on the basis of technical considerations and commercial possibilities, and proposes those he finds suitable to the people at Carrefour responsible for developing new items. The products chosen must be compatible with one another and with Carrefour products in general, as well as correspond to the major tendencies in consumption.

The chain introduced Carrefour products in 1985, when it began phasing out generics. Already it sells more than 500 store brands, of which 50 are frozen. The frozens represent the usual assortment of basic products, with an emphasis on quality. A ham and cheese pizza that sells better than any other pizza in Carrefour outlets is 60% topping of which 20% is ham and 20% cheese; and a seafood pizza is 70% topping with 45% of the seafood. The ham and cheese pizza sells for 9.70 francs/330 grams; the seafood for 22.30 francs /400 grams. Having the most favorable relationship of quality to price is important to Carrefour and to most other retailers of private label products, as well as to their customers.

The current Carrefour offering also reflects the fact that the chain began to become creative with frozens in July of 1988. At that time it introduced a crepe filled with seafood and seaweed, which has become the top seller among its private label crepes. It also brought out four seafood chiffons, among them Crab Chiffon with a crustacean sauce and Pike Chiffon with sorrel sauce, developed by a seafood specialist Jay Barbery who runs a restaurant at Sables d'Olonnes. In April of this year it introduced Hake Croquettes with Breton Seaweed, a recipe designed over a period of 18 months by the Cellule d'Innovation, in conjunction with a Breton research association.

Each croquette is 20% seaweed and 46% fish, with the two ingredients completely mixed. The price is 9 francs for six croquettes, weighing a total of 300 grams. The box in which they are packed emphasizes the nutritional value of the seaweed, as does the press packet on the croquettes. They are "rich in mineral salts and vitamins," the box says; and the dossier points out that 35% of the total calories in the croquettes comes from protein.

The seaweed is also described as a resource with immense possibilities for increased sales in France, where only 1% of its harvest is used for food. The seaweed in the croquettes is kombu, until January of this year the only type of seaweed authorized for sale as food in France. In January eleven more varieties were sanctioned.

With the croquettes the chain is transforming a food repeatedly found in private label into an experiment that is on the cutting edge of food development.

Euromarche Low Key

In 1985 Euromarche used frozen foods to announce its switch from generics to own label. Its first Euromarche brand was seen on 20 frozen foods in the orange and white wrappers that it had long used for generics, with the addition of a fresh slogan: "Euromarche, a new race of products."

Creation of the label was a major event. Today the overall strategy of Euromarche is service, and the approach to private label is distinctly low key. The Euromarche frozens in a typical hypermarket are basic products -- spinach, French fries, cut up vegetables, etc.

Ditto for Auchan

At Auchan the private label program is also low key, but for another reason. The retailer builds its national advertising campaign around the concept that it offers customers the widest possible choice of products, and it prefers that the public not know that this choice includes a goodly quantity of own label merchandise. Thus it creates a variety of names for its own brands: sacks of frozen vegetables are sold under the name Jardine; a ham, cheese, and mushroom pizza is simply Pizza; Norwegian shrimp and cod croquettes are Captain Sea; ice cream cones are Ouraline; and ice cream on sticks is Vendome.

The key to locating Auchan brands is the name and address of its customer service office on each private label package. Only a sleuth will know when Auchan begins to innovate in frozens.

Wide Casino Range

The Casino chain, which like Carrefour carries a wide range of private label products, includes in its numerous frozens, items that depart from the ordinary. Its stores range from hypermarkets to small grocery shops. Almost all of the varied assortment of frozen vegetables in a tiny neighborhood store visited by QFFI were Casino products. Among the other Casino frozens were two fish souffles, Coquilles Saint Jacques in the style of Brittany flavored with blazing Cognac (25.50 francs for 240 grams), and a pre-cut chocolate Bavarian cake imported from Austria.

Unfortunately the chain's management was unable to discuss its extensive private label program while this article was in progress, because the firm was going through a transition period.

Picard Also Mum

Also unwilling to talk to Quick Frozen Foods International was Picard, the chain that is unquestionably the private label leader among freezer centers. A review of the products in Picard stores suggests that at least 50% of its offering is own label. It sells products from the major name brands, while offering its own label a greater variety of items than any single French frozen food producer presents. The one area in which it does not have an extensive assortment is elaborate desserts, for which its stores turn to the advertised brands.

Picard's offering in vegetables includes purees, fritters, salads, soups, and "poelees" (traditional mixtures to heat in a frying pan). Also included are three vegetables in cream (spinach, leaks, and broccoli) and five vegetables au gratin (from broccoli to salsify), for Picard was the only supermarket to introduce store brand cooked vegetable dishes at approximatley the same time that the name brands did.

Among its "entrees" are taboule, leak tarts, and two types of lasagna as well as the standard pizzas and crepes. In prepared dishes it has several lines of its own: La Cuisine des Regions, cartons serving two people and containing such hearty favorites as Boeuf Bourguignon, and Coq au Vin and Tagliatelles; Cuisine Mieux Etre (Better Health), single portions of such light dishes as Trout Fillets with Lemon Sauce and Wild Rice; and Cuisine des Cinq Continents (Cooking from the Five Continents), including Chili Con Carne and Moussaka.

Picard also features boxes of herbs from which small quantities of seasonings can be removed as needed. A housewife who raved to this reporter about Picard products mentioned the seasonings as one of the products she values.

Vik 25% Own Label

In regard to private label, other freezer chains are moving in the direction taken by Picard. M. Demonchaux of Vik says that the chain now has 25% of its items in private label and hopes to have 50% in three years. Most of Vik's private labels are high-rotation products, but the offering includes concentrated bouillon, Gratin of Crab and Gratin of Cod, frozen mushrooms, and a wide assortment of ice cream. FRIO planned to introduce basic private label products like ice cream sticks in May of this year.

The main reason for the increase in private label frozen products is the growth in frozen food sales, which increased 57% in volume from 1983-87. Retailers wait to put out their own products until the volume of sales makes economic sense, said M. Bouitier, director of Wigan.

This point is being reached in France with an increasing number of food families, even with prepared dishes. Sales of dishes based on fish increased 38% in 1987, while sales of dishes based on meat grew 46.8%.

Another reason, M. Desreux pointed out, is the development by the chains of their own distribution systems. In the past, producers or wholesalers delivered frozen food to individual stores. Now most of the large retailers own or participate in central warehouses, which receive the deliveries and distribute to outlets. With control logistics, negotiation of production for their chains becomes a logical step. Furthermore, the growth of the private label sector is made possible by the fact that producers are not able to sell under their own names all the tonnage that they have the capacity to turn out. They are therefore willing to produce store brand products to keep their machines operating.

For the retail chains, private label offers several advantages, the most enticing of which is the possibility of making profits. Because a producer does not have to spend money on advertising own label products and also because such transactions normally involve large quantities of food, faceless items can be sold to a chain for considerably less than identical name brand items. The chain can turn around and resell them to its customers for 10-30% less than the price of the leading branded fare and still make a greater profit than it does on the brands.

An additional attractive feature to the chains is the fact that private labels prevent price comparisons. M. Claude Govare, president of Gorcy, explained this feature. He used to sell only to freezer centers and home [delivery] service firms -- and exclusively under the name Gorcy. When, five years ago, it decided to expand into hypermarkets and supermarkets, its previous customers requested that it sell in the new markets under another name. Wholesale price depends on quantity and the old customers knew that they would order fewer items than the new.

Gorcy, agreeing, created the brand Marie. It still sells to the supermarkets and hypermarkets under the name Marie; and to the smaller customers under the name Gorcy. The same logic contributes to the proliferation of private brands. If a product has two different names, a customer cannot be sure that a single item is being sold at two prices.

M. Demonchaux of Vik points out a third reason for private label, from the point of view of the retailer. Vik sells own label, not only to increase profits but also to make the name of the chain known and to encourage customers to be faithful or store loyal. After customers take their purchases home, private label products remind them of the place where the food was bought.

For producers, private label products can also bring benefits. But not all companies opt to go that route.

M. Desreux said that Findus does not make store brands, because it has deliberately acquired only enough production capacity to meet its own needs. Thus Findus, the largest producer of frozen food in France, "concentrates on creating products that are the most attractive to consumers, to sell under its own name."

Bargains with Chains

Firms with excess capacity, however, look for a bright side. M. Govare told QFFI that Gorcy accepts private label business to keep its factories busy, but that it bargains with the retail chains. The company produces a product like pizza under the name of a chain but only if the chain agrees to sell Gorcy's prepared dishes in Gorcy's name.

M. Bouitier admits that Wigan is not yet well enough known to insist on such two-way agreements. He nevertheless finds private label contracts interesting because he "can be virtually certain that the client will not change." The contract is not broken, he said, "unless there is a terrible failure in performance on the part of the producer."

The contracts are normally for 10 years, and the chains make a very serious search for the right producer before entering into them. Reliability is the quality that is of greatest importance. Wigan, which sells to Euromarche, Monoprix, and Continent among others, makes approximately 25% of its turnover from "copacking." After abstaining for many years from store brands, Bonduelle, another major vegetable packer, also now holds private label contracts.

The fact that the French chains are interested in expanding their own label lines, particularly in elaborated products, can be regarded as an opportunity. M. De La Fouchardiere of Monoprix put it thus: "The French frozen food market is now adult enough for distributor products, and adult enough to have products from areas other than France or Europe."

The Monoprix executive would like to sell regional American dishes. He said, however, that U.S. producers need to make an effort if they want to do business in France. Initiatives through telex and fax transmissions won't do. The manufacturers must print packaging in the French language, and they must go to France and establish a small office and arrange for warehousing.

It is well that there is a positive side, for producers, to private label, as the trend towards an increased number of distributor products in France appears to be unstoppable.

PHOTO : Carrefour's Innovation private label line includes Hake Croquettes with Breton Seaweed, a

PHOTO : recipe which was just launched in April.

PHOTO : Bearing the Casino chain store label is pre-cut Bavarian cake imported from Austria.

PHOTO : The Cretian blend vegetable pack (450g) is among Picard's regional offerings. Ingredients

PHOTO : include peas, raisins, corn and rice.

PHOTO : An example of a Vik high-rotation product is Fish Croquettes garnished with herbs.

PHOTO : Claude Govare heads up Gorcy, a major private label packer which also produces the Marie

PHOTO : label for French supermarkets and hyperstores.
COPYRIGHT 1989 E.W. Williams Publications, Inc.
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Author:Davis, Mary
Publication:Quick Frozen Foods International
Date:Oct 1, 1989
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