The best own-label suppliers in Britain

Excellent service and the ability to meet ever-tougher pricing demands are the key attributes of this year's own-label supply industry stars. Noli Dinkovski reports


There has never been a more rewarding - or challenging - time to be an own-label supplier. On the one hand, the big four are ramping up their own-label ranges in a bid to stop cash-strapped shoppers defecting to the discounters - so there's a lot more business to be had. On the other, the focus on value means manufacturers must be more competitive on price to secure or retain supply contracts - and may have to endure a blind bidding process to do so [The Grocer, 11 April, p12].

Buyers' expectations have never been higher - which is what makes this year's Own-label Suppliers of the Year all the more impressive. Judged by leading buyers from the nation's supermarkets, wholesalers and buying groups according to their quality of produce, reliability of supply, category management and NPD, this margin-squeezed, credit-crunched bunch has met increasingly tough price negotiations while offering great service.

The 16 category winners will now go head-to-head for the title of Own-label Supplier of the Year at The Grocer Gold Awards at London's Dorchester Hotel on 17 June.

While that is the ultimate accolade, the record number of responses from the retail and wholesale buyers polled means just making the shortlist was an achievement. And, given the highly competitive nature of the market, it is perhaps no surprise

that suppliers in only three categories managed to hold on to their 2008 crowns, with Premier Foods accounting for two of those.

Premier, which was singled out by one buyer for "understanding our needs", reaffirmed its position as top own-label supplier in canned foods and bread & morning goods.

The other returning victor was Tangerine, which was voted best own-label confectioner for the seventh year in a row.

"Confectionery is seen as an everyday luxury, but our proud tradition of focusing on quality is helping us during these challenging times," says Tangerine Confectionery managing director Chris Marshall.

Another former winner (from 2007) was Arla Foods, which last year lost out in the dairy & yellow fats category to Robert Wiseman. It was praised by one buyer for being "very customer-focused and proactive, approaching us with new ideas that will develop the category, as well as working with us to develop our own ideas".

Arla says the onus has been on it to identify consumer trends in the recession, which has led to it simplifying its own-label offer.

"In a volatile economic environment, where consumer behaviour is less easy to predict, our retail customers are looking to us to recognise shopping patterns and adapt our supply chain to respond to these fluctuations," says Arla milk and cream trading director Ash Amirahmadi. "We've dedicated more resources to category management."

In the current economic climate, the consumer is not necessarily looking for lots of NPD in own-label dairy produce, he adds. "They are looking for simple ways to cut the cost of shopping without compromising on quality. This is a great opportunity for dairy products, which are an essential ingredient in home cooking," Amirahmadi says. "We have seen increased sales of some dairy products as more consumers eat in and become more adventurous in the kitchen."

While buyers admit there is a focus on lowering prices, many say NPD still plays an important role in their categories.

"Price matters, but if we don't bring innovation to the customers they are going to get bored and go somewhere else," says Waitrose central buyer Stephanie Chafor. "We've got to keep challenging ourselves and put forward the best products possible to the customer."

Greencore, winner of the chilled foods and ambient meals categories, has encouraged NPD in the sandwich category. This has been welcomed by buyers and has led to the launch of limited-edition products.

"We have seen the creation of exciting and original bread variants such as raisin & pecan, carrot & cumin and honey & oat," says one buyer. "Greencore is excellent at category management, account management and NPD. It has also been working hard to improve the quality of bread, and direct results from this work have been recognised."

Greencore has consistently achieved a service level of 99.8% into store on a short shelf-life product range, according to the buyer.

It's not unreasonable to suggest that a company the size of Greencore, which was able to refinance its bank debt facilities earlier this month, is better equipped to maintain high levels of service and product development in the recession than some smaller manufacturers.

"Smaller companies are suffering on many levels - particularly when it comes to cashflow. As a result, service levels can be affected," suggests Beege Bourne-Whittaker, commercial director at Glennans, winner of the crisps, nuts & snacks category. The Staffordshire-based family producer is lauded by buyers for its "consistently good quality" in one of the most competitive categories.

Price and quality are "two values firmly locked hand in hand", says Bourne-Whittaker, who claims multiple retailers are now demanding more behind-the-scene commitment in terms of overriders, marketing and new store opening support. "This is further compounded by significant demands on promotional activity," she adds.

Bourne-Whittaker urges retailers to give smaller suppliers a fair chance to not only promote reasonably but showcase their products. She flagged up Waitrose in particular for the way it deals with smaller suppliers.

It's a point Waitrose is understandably keen to expand on.

"In our Market Town stores, in Buckingham and Brackley, we have gondola ends dedicated to local and regional products," says Chafor, adding that they are all from very small suppliers.

"We believe in longevity and good supplier relationships," she adds. "We will always try to work with our suppliers to get a mutually beneficial end result. Because of that I think suppliers are keen and willing to work with us."

Support works both ways, of course, and some category winners came out on top thanks to their ability to be flexible to the needs of retailers and wholesalers.

"Because of the environment we are in and because of the inflation we're seeing, we need as much support from suppliers as possible to pass on to our members and hopefully the consumer," says Nisa-Today's trading controller David Lunn. "Fredericks Diaries is one company that helps us achieve this. With ice cream, it is the ability to be flexible with supply - no matter what the weather may bring - that's important," he adds.

"We have a very focused range but offer flexibility with our recipes and case size," explains Fredericks Dairies marketing manager Jacqueline Walters.

"It is something we find retailers are taking advantage of more as their needs change. The biggest opportunity over the next 12 months for own label will continue to be value propositions. As we have pioneered and dominated the choc ice market, value in this sector is very much our strength."

Other suppliers agree that most opportunities for growth lie at the value end of the own-label market.

"At the moment there's a lot of value-engineering going into product lines. It's less about actual NPD and more about manufacturing products at the right cost," explains one.

The supplier, however, foresees a move by retailers back to more premium lines over the next year.

"Retailers will eventually want to start adding market value back into their businesses. Consumers will also start to get suspicious and sceptical about the quality of the products if the price of some value lines gets any lower," he claims. "At this point it will become our responsibility as a supplier to drive innovation and the growth of premium products."

Another thing that separates the cream from the rest of the crop in this year's survey is a supplier's ability to understand the needs of the wider retail market and adapt accordingly. To really get this to work in these difficult times for the benefit of both parties - and ultimately the consumer - Deloitte head of retail Tarlok Teji says a spirit of collaboration must exist between buyers and suppliers.

"Supply pressures and the issue of credit insurance have brought into sharp focus the need to work together much harder to ensure the consumer is getting value," he explains. "Retailers and suppliers should be collaborating on everything they do.

"Retailers need to have some degree of comfort around the fact that suppliers are working hard and innovating - producing things that retailers and consumers can benefit from," Teji adds.

"And on the other side of the equation, suppliers need to have the assurance that retailers aren't going to de-list them, and that they are genuinely interested in taking NPD to market."

Collaboration is the watchword for 2009, and those suppliers that are aiming to be the best in their respective categories 12 months from now will do well to remember that.