Branding strategy ‘O’ so important
Creating any private label is tricky, and developing one that has to satisfy a particularly stringent set of consumer demands can be a chore. When Safeway began to develop its O Organics line, it turned to Philippe Becker Design for assistance, a firm which already aided Whole Foods in creating its 365 own brand.
Safeway executives are enthusiastic about the result.
“We’re very excited about our organics offering, particularly our O Organics line that we launched about a year ago,” Steve Burd, Safeway’s chairman and ceo, said in a conference call a few weeks ago, “and sales in the first year were about $160 million, which was a tremendous success. We initially launched about 150 SKUs in that offering. It’s been tremendously received, and because of that success, we are doing some line extensions, and we’re targeting new products that we’re launching early in 2007 and targeted at babies and kids.”
Since its launch in 2005, O Organics has rolled out to over 1,800 Safeway stores in the United States and Canada. O Organics is found in all the Safeway banners including Vons, Dominick’s, Tom Thumb and Randall’s, not to mention the company’s namesake units. Today, the O Organics line is comprised of about 200 products and is represented in categories including beverages, bakery, cereal, dairy products, snack items and canned and frozen foods.
Driving O Organics is a development sensibility that recognizes solid branding as critical, especially for private label lines such as O that have to fight for recognition in freezers and on dry grocery shelves with national brands sustained by sophisticated packaging, merchandising and marketing.
“We created O Organics as a consumer packaged goods-style brand within Safeway,” said James White, Safeway senior vp of consumer brands. “We brought the same kind of passion, research and rigor in developing this brand as you’d find among leading consumer packaged goods companies. We turned to PBD for their expertise in creating and building brands.”
With Safeway’s brand strategy and marketing objectives in mind, PBD analyzed the food retailing landscape and researched consumer perspectives to develop packaging and graphics that spoke to critical concerns. “There are three major trends in shopping today. Customers want quality products, health and wellness, and simple solutions to complex lives. Our job in working with Safeway was to create an innovative brand that capitalized on these trends, [that] fit within Safeway’s overall strategy for a healthy life and also increased Safeway’s market share,” said David Becker, president of PBD.
CATEGORY PERCENT SHARE OF ORGANIC FOOD MARKETOrganic food penetration has grown steadily, reaching $13.8 billion as of 2005, with fruits/vegetables leading the way but with smaller sub-categories like sauces/condiments making headway.
Sales by category (in millions)| Dairy | $2,140 |
| Bread & Grains | 1,360 |
| Beverages (incl. non-dairy) | 1,940 |
| Fruits & Vegetables | 5,369 |
| Snack Foods | 667 |
| Packaged/Prepared Foods | 1,758 |
| Sauces/Condiments | 341 |
| Meat/Fish/Poultry | 256 |
It was critical to establish O Organics products as authentic and ensure they lived up to accepted standards, he said. Authentic doesn’t simply mean complying with Department of Agriculture organic standards but also living up to the expectations set by the brand positioning.
PBD learned a lot about organic brand positioning during its pioneering efforts on Whole Foods’ 365 Organic brand. In developing 365 with Whole Foods, PBD looked beyond the most basic context—the natural food element—to what the consumer wanted from Whole Foods, a store that itself is designed to provide a unique experience for the shopper. With jaunty, sunny graphics, PBD sought to bring something of that better food/better store experience to bear in 365. “You need to feel and understand or you can’t communicate the entrepreneurial passion. At first, we didn’t know how to bring that into photo—to reflect it in the package photography, the tone—so it comes to life on shelf,” Becker said.
Over time, though, by immersing themselves in the stores and familiarizing themselves with the selling proposition, PBD’s staff was able to make a real contribution to developing and positioning products that spoke for Whole Foods. And the contribution doesn’t just involve private label. PBD also worked with Whole Foods suppliers to improve their presentation on the retailer’s shelves.
“The perfect scenario is where you have a product that has a lot of stuff to grab onto and for you to use for a platform. A good example is a package of Kimberly wine vinegar. They were one of those smaller companies selling at Whole Foods. They made the vinegar using an old French method using oak casks. We got an education in vinegar, and we said, ‘Let’s put oak casks on the label to show this fascinating heritage.’ People were able to look at the package and understand that this is different and why they’re paying twice as much for it.”
With the new look, Becker said, Kimberly wine vinegar doubled its share at Whole Foods, and PBD won an American Graphic Design Award for its work on the product packaging.
Still, the challenge for O Organics was formidable. In the store environment, organics are competing not only within the natural food sphere but beyond, with other upscale and gourmet products that promise consumers a superior dining experience, Becker noted.
With Safeway, part of the challenge was overcoming consumer perceptions of what a private label line from the supermarket might be. Fortunately, Safeway was working on those kinds of perceptions as O Organics was being developed. Safeway began remodeling to its Lifestyle format, one that replaced dated store designs and merchandising with a more upscale style that sports gourmet flourishes. So, O Organics got a boost from Safeway’s efforts to improve the company’s image, but it also makes a contribution.
“One of the things we always felt the line needed was to have taste appeal. With 70% of all purchasing decisions being made in-store, if you are going to have a lemon tart in the freezer case, it has to be yummy enough that consumers want to take it out of case. You need a beautiful illustration, photographs so people can feel good about buying. You have to find the balance between authenticity and making it something that is going to prompt a visceral reaction from the consumer,” Becker said.