CPG Promotions Slow Delhaize Store Brand Growth

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November 10, 2009

Belgian retailer Delhaize, which also operates more than 2,650 grocery stores in six countries, said increased national brand promotional activity is cutting into store brand sales in its U.S. stores, according to a report in just-food.com

Deep discounts and couponing from consumer packaged goods companies are getting attention from cash-strapped consumers in this protracted recession, which also has shoppers buying the lowest price tier of store brands, according to Pierre-Olivier Beckers, CEO of Delhaize.

"When national brands fight for the growth of their top line with some very interesting promotions, consumers are interested,” he said. “We have seen a lesser increase in private label than in 2008 and early 2009."

Delhaize America, which operates more than 1,500 stores in 16 states under the banners Food Lion, Bloom, Bottom Dollar, Harveys, Hannaford Bros. and Sweetbay, has a three-tiered store brand offering 'good, better, best.' "As consumers are pressed on both sides of the Atlantic, we have seen higher growth in the lower tier of private label," Becker said.

In the U.S., for example, the economy tier of store brands grew 16 percent over the past year. This past quarter, Delhaize posted a 5.7 percent increase in pre-tax profits, despite a decline in same-store sales in U.S. stores, which slowed due to food deflation and the "highly aggressive promotional nature" of U.S. competition, executives said.

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