BRANDINEERING TM DELIVERING PACKAGING EXCELLENCE FOR BRANDS

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1 BRANDINEERING TM DELIVERING PACKAGING EXCELLENCE FOR BRANDS DECEMBER 2014 EXECUTIVE SUMMARY RETAIL PRIVATE LABEL HAS FLOURISHED OVER RECENT YEARS AS EUROPE HAS LANGUISHED IN RECESSION. THIS YEAR FOR THE FIRST TIME IN THE UK, PRIVATE LABEL SALES HAVE ACCOUNTED FOR MORE THAN 50% OF TOTAL RETAIL SALES. BUT AS THE POST-RECESSION GREEN SHOOTS EMERGE, CAN NATIONAL BRANDS FIGHT BACK? What seems to be the case is that many national brands may have been guilty of not taking private label seriously and constructing their marketing strategies based on opinion and supposition rather than analysing hard facts. When a more balanced approach is adopted some brands are winning back market share. One theme that s emerging as underpinning national brand success is the resurgence of packaging at the heart of the market messaging and proposition. Product volumes proliferate as brands develop greater varieties and products suitable for smaller market micro -segments. New forms of packaging are being developed that perform across all retail channels particularly online and mobile channels. What s clear is that the rate of developing new products is set to grow. This will involve re-thinking new ranges, new packaging, new ideas and new customer engagement. Sun Branding Solutions has a strong track record working with national brands to transform their product launches and has pioneered a new approach that can revolutionalise packaging development called Brandineering TM. Our unique way of working that extracts a brand s DNA and engineers it into every fibre of its packaging to deliver packaging excellence. page 01

2 CAN NATIONAL BRANDS WIN BACK MARKET SHARE FROM SUPERMARKET PRIVATE LABEL PRODUCTS? It s well known in the industry that far from being the poor relation, private label products are the rising stars of supermarket shopping, and in some categories they re dominating the supermarket shelves. In the last 12 months, the total sales of private label products has, for the first time, out grown that of national or household brands. Is this a phenomenon that will continue to grow and grow? Or, as we start to slowly emerge from recession, will the market conditions move back in favour of national brands? If so, how can branded products fight back? YES!... WITH BRANDINEERING TM THE INSATIABLE RISE OF PRIVATE LABEL 2014 has seen a continuing rise of private label sales and the emergence of Aldi and Lidl as serious competitors with their house of brands philosophy - great quality products at extremely affordable prices. They ve taken UK retailing back to the future with great product design, rigorous product development, incredible speed to market and transparent supplier & partner engagement all working seamlessly together. This model is proving extremely successful - with talk of Aldi opening another 1,000 stores by 2022 and creating 35,000 new jobs. There s a similar trend in the USA with major chains putting more effort into bringing private label products to market. It s been reported by TIME magazine that the growth of store-brand sales at Safeway has been outpacing national brands by a ratio of 3 to 1, while nearly one-third of the new items introduced at Kroger stores are house-brand products. Datamonitor reports that private label s rise has been nothing short of spectacular. In most of the food and drink categories they analysed, private label outperforms well-known household brands. And it's not (entirely) about the money. page 02

3 The quality of private label has definitely improved, as has the marketing. Spurred on by their success, supermarkets have widened the scope of the private label offers to include more niche categories. For instance, Tesco's Wholefoods range, aimed at the health conscious market, as well as seasonal products catering for barbecues, picnics and occasions such as Christmas. SO COULD THE SUCCESS OF PRIVATE LABEL MEAN THE END OF BRANDS ALTOGETHER? Supermarkets love private label because it often makes better margins than branded products. This is bad news for new market entrants who need to get their products on shelf to reach the mass market. Supermarkets can also let smaller food brands take risks with new product launches, then replicate those that are successful in a more cost effective way. However, an era where the only choice is the supermarket's choice, is still some time away. "Retailer private label is still slightly behind [national] brands when it comes to loyalty," says Jill Livesey from Him! Research & Consulting. "Our research shows shoppers are more than happy to switch back to national brands if the positioning and proposition is right. She adds that there re still some "no-go" areas for private label in the eyes of shoppers. We still don't trust private label soft drinks, deodorants or femcare, and would prefer to buy branded crisps and snacks than supermarket labels. A recent study by Alliance Consulting Group found fundamental flaws in the strategies of many national brands when it comes to competing with private label. It found that national brands frequently act on inadequate data to formulate their strategies. Its findings in a recent report explained: Pricing and promotion decisions are often made on the basis of gut feel, perceived necessity, and the dynamics of specific deals. Consequently, some national brand strategies are often single threaded and Alliance Group Consulting concluded that: Price reductions and aggressive promotions, used alone, will likely prove costly, but ineffective against retailer brand attacks under current market conditions. Aggressive pricing or promotional strategies may fail to address fundamental differences in competitive approach and economics between retail and national brands. Alliance Group Consulting recommends that national brands develop a comprehensive and balanced approach to their strategy which considers a combination of elements including product line extensions, intensified promotions, tailoring product lines to satisfy the needs of specific consumer segments, managing a product s benefit bundle to optimise both price realisation and value perception among consumers. These elements are driving national brands to increase product complexity and sku volumes. At the same time, it is recognised that packaging s playing an increasingly important role in developing the brand experience in the brand strategy which is vital if brands are to win back hearts and minds of the shoppers. Existing information is often incomplete, the analytical tasks are complex, and key people in the organisation may hold strong, opposing beliefs. page 03

4 PACKAGING PLAYS AN INCREASINGLY IMPORTANT ROLE Packaging needs to contribute in all the ways it ever did in getting a brand noticed, chosen and valued but it s doing so in new and exciting ways according to Kate Bradford managing director of Parker Williams, packaging design agency. The rapidly accelerating pace of technology in our industry is opening up so many new creative possibilities. NOTICED CHOSEN VALUED Innovative effects such as multi-sensory coatings, UV inks, conductive inks, thermochromics, are increasingly being used in main stream packaging, helping brands stand out from the crowd, getting them noticed. This could be seen with the trade bottle for Ballantine s Finest using electroluminescent technology to create not only great visibility for the brand behind the bar in a dark night club, but also to do so in the innovative and engaging way that the young male audience have come to expect from the brand. Physical packaging can bring to life a brand promise and values building great brand experience. Structure, substrate, special effects and finishes can be used to dramatise a multi-sensory experience to develop themes of authenticity, provenance, expertise and have these woven into some brand stories. A comprehensive brand strategy with products at the core enhancing the brand experience is a key component for national brands to fight back against retail private label. These strategies along with great design needs to be brought to market accurately, consistently and efficiently to enable a brand to create a great impression, win first mover advantage and to sustain sales during and beyond the initial product launch. National brands are also leading the way it comes to omni-channel retailing. Using Sun Branding Solutions augmented reality and mobile marketing technologies, brands can simply and cleverly provide an on and off line version of their packaging reflecting differing messages for each channel. page 04

5 HOW CAN BRANDINEERING TM HELP? Pioneered with the discount retailers, Sun Branding Solutions has created a product and packaging development method called Brandineering TM, being the fusion of brand and engineering. Brandineering TM has been tried and tested with many top named brands and in the last 12 months has seen over 35,000 products successfully launched explains Martin Hawkins, client services director at Sun Branding Solutions. The key to success is ensuring that the lowest total applied cost is working for our clients and we can cope with launching hundreds (sometimes thousands) of products at the same time. There re five key components that make up Brandineering TM and all five can been provided by Sun Branding Solutions. These include integrated DIGITAL technology, innovative PACK SCIENCE, CREATIVE design; consistent GRAPHICS and LEGAL accuracy. Using Brandineering TM we help brands transform a large volume of private label products at the same time, whilst... Following the most efficient and streamlined packaging launch process Achieving the lowest total applied cost Improving your speed to market Achieving global brand consistency BRANDINEERING TM AND OUR TOTAL APPLIED COST MODEL Brandineering harnesses the talents of Sun Branding Solutions individual packaging specialists to create a team of collective experts satisfying the specific needs of each of our brand clients. Here, Martin Hawkins describes the breadth and depth of how Sun Branding Solutions Brandineers work together to deliver packaging excellence We live in an omnichannel world today, we re just as likely to buy online as we are in store, and we search online, use smartphones, call helplines and browse in store, so brands and retailers need to deliver a seamless customer experience across every touch point. In this always-on world, packaging too has to be as much about the digital as it is physical. We understand the challenges of today s always on culture and our digital Brandineers bring together solutions that create a consistent product experience no matter which channel consumers use. Our clients investment in their brand and packaging design doesn t end when the artwork files go to the printer; that is just the beginning. Working closely with our creative and graphics teams, we ensure the same product data is easily accessible on-pack, in-store, online, on promotional materials and beyond, through our unique Odin platform, our augmented reality (AR) and mobile marketing tools. As Brandineers we give brands and retailers control and consistency of their brand image and message - regardless of the sales channel. page 05

6 Packaging technology is a highly complex discipline and, as market leaders in packaging development, you can trust us to produce impressive solutions which strike the perfect balance between form, function and performance. But it s all too easy to focus on innovative print solutions without taking into account the need to express the brand s personality and values. This is where Brandineering makes the difference. Brandineering gives our in-house design team a very special approach to packaging design that sets us apart. Our designers offer so much more than imaginative design concepts. That s because they are also experts in the science of pack technology and development, leaders in digital packaging and augmented reality and have the experience and know-how to blend creative excellence with optimum form, function and performance. Brandineering permeates every aspect of our packaging solutions and that includes artwork, prepress and colour management. Indeed, by drawing upon the vast experience and cutting edge innovation at Sun Chemical, we offer comprehensive mastery of the entire graphics process in addition to plate making, colour management and ink technology to enable us to deliver design visions on shelf. page 06

7 Brandineering sees our team of copywriters and regulatory advisers working in alliance to ensure our packaging exudes brand personality whilst being 100% legal. Our copywriters develop copy in conjunction with our regulatory advisers to ensure every word complies with current legislation. But since our legal eagles are Brandineers in their own right, they understand the need to express a brand s personality without imposing unnecessary legal restrictions. Whilst some regulations are black and white, much is a grey area where interpretation is required. By liaising closely with our copywriters, they help to generate bullet-proof wording that nevertheless maximises creative expression. SO CAN NATIONAL BRANDS WIN BACK MARKET SHARE FROM SUPERMARKET PRIVATE LABEL PRODUCTS? YES!... WITH BRANDINEERING TM DO YOU WANT TO Follow the most efficient and streamlined packaging launch process? Achieve the lowest total applied cost? THEN WE CAN HELP For more information on how our unique way of working can support your retail strategy, please contact info@sunbrandingsolutions.com or call +44 (0) , and we will happily put you in touch with one of our packaging specialists. Improve your speed to market? Achieve global brand consistency? page 07

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