Private Label: Not About No Frills Anymore

By Karen McIntyre, Editor | January 2, 2017

Competition in the diaper market focuses on quality, not value.

Gone are the days where store brands automatically meant sacrificing quality for value for consumers. While many of these products tend to fetch a lower price point than their branded counterparts, quality has not been sacrificed. These products often offer the same level of innovation as part of an effort to foster brand loyalty and return trips to the stores they represent.

And, in the diaper market, which has not seen significant innovation in the past 12-24 months, private label products continue to compete well with branded products, meaning many of the same bells and whistles—fit, softness, thinness, etc.—are seen in more branded stores.

“By keeping pace with the major brands, store brands have created a new role for themselves,” says diaper market consultant Pricie Hanna. “No longer are they viewed as the low cost, lower performance alternatives to major brands. Instead, consumers have come to think of these products as just brands in their own right. They have figured out wherever they shop most frequently, what their favorite (store brand) names are.”

As store brands have worked diligently to gain consumer loyalty and repeat purchasing, they are well aware that poor quality will always trump low pricing when it comes to influencing a consumer’s decision on whether or not to buy a product. Online powerhouse Amazon learned this quickly when it took a stab at the private label baby care market with its own Elements brand.
Not long after announcing it would offer its own brand of diapers exclusively to its Prime subscription members in late 2014, the retailer halted production and sales of the diapers, which were made by Canada’s Irving Personal Care, to make some design improvements following consumer feedback. To date, these diapers have not returned to Amazon. “Amazon has a lot of diapers for sale on its site and they seem to be doing well selling them,” Hanna says. “I think they will wait until they have a real point of difference before they relaunch their own brand.”

Meanwhile, Amazon Elements wipes are not only still available, according to a new online baby wipes market analysis from 1010 Market  Insights, the brand is gaining significant marketshare within the category. This new brand, which is  made by Nice-Pak, lags only market leaders Huggies, which has a 33% share, and Pampers, with a 26% marketshare.

Even though this brand is available only to Amazon Prime subscribers, this pool is large enough to allow the brand to achieve 266% growth per year, according to the analysis.

“Amazon is one of the most trafficked e-commerce sites on the web, so they are able to leverage their online shelf space to promote their own private label brands,” says Natalie Seidman, senior vice president of consumer insights at 1010 Marketing Insights. “Versus a new brand starting out, Amazon has the ability to get prime shelf space without necessarily having to ‘earn’ it through successful sales.  A vertically integrated retail strategy has this advantage on and off line.”

The New Kid
Meanwhile, German retailer Aldi is so far reporting success with its recent diaper launch, which is a part of the Little Journey baby care range of personal care and food products. The line includes diapers, training pants and wipes.

In diapers, which sell for as little as 12 cents per unit, the new line claims to offer benefits like up to 12 hours leak protection, high-strength shaped side panels, stretchable waistband, hypoallergenic liners with aloe and vitamin E and others.

The entire line of the Little Journey baby products is marketed together as a baby care regimen to take care of a child from birth and through pre-school years and is designed to save parents up to 50% on their grocery bills, according to the company.

According to reports, the initial consumer response has been positive. While most private label products are not widely advertised in traditional media, Aldi announced the launch of its new line not only on social media but also on national TV networks.

Aldi is not alone in upping promotional efforts of store brand hygiene products. In November, normally closed-mouthed First Quality launched its first ever national advertising campaign promoting its Dri-Fit ingredient brand. Said to bring a new standard of performance to its absorbent hygiene products, Dri-Fit innovations are found within Prevail incontinence, store brand feminine care and incontinence products and help promote skin health by managing consumers’ microclimates—the small layer of air between skin and whatever consumers are wearing. With an innovative blend of natural and synthetic fibers, Dri-Fit provides features that reduce pressure, moisture and temperature to ultimately help keep skin more dry, comfortable and healthy.

First Quality executives say that it is innovations like Dri-Fit, which has helped grow interest in store brand products. In fact, the developments among private label companies has helped drive innovation not just among store brands but the entire category of absorbent products. According to a recent report from market tracker Mintel, 97% of shoppers aged 18-36 say they’re likely to buy a store brand, and 42% agree store brand products are more innovative than name brand ones.

The brand’s new website provides insight into the science behind Dri-Fit innovations, featuring a detailed illustration and instructional video of Dri-Fit innovations, as well as statistics related to Dri-Fit performance. The campaign aims to educate consumers about the unique blend of natural and synthetic fibers found within products with the Dri-Fit logo and help increase knowledge related to managing consumers’ microclimates.

Feminine care and incontinence products incorporating the Dri-Fit system span protective underwear, bladder control pads/liners, ultrathin maxi pads, thick maxi pads, and panty-liners, and can be found at all major food, drug, mass, dollar, e-commerce and club chains. Consumers can look for the Dri-Fit logo to easily differentiate which products contain this technology. 

Marketing ingredient brands, like First Quality’s Dri-Fit technology, has become a common strategy among private label diaper manufacturers. Domtar, the owner of the diaper business once owned by Associated Hygienic Products, counts a number of trademarks within its diaper business, among these is the company’s EAM airlaid material.

Domtar executives have credited technology assets as a key growth driver in its diaper business, which has earned $100 million in new business between 2015 and 2016, much of which was in private label.  “Our pitch in private label is we will run our brand as if it was your brand,” CEO John Williams said. “We are now seeing a number of retailers say to us, our story on brand partnership—as opposed to (offering) national brand equivalent in a different colored bag— is very compelling and where that has been implemented for some time it has been successful.”

The inclusion of Domtar’s EAM airlaid core technology into certain hygiene products has also facilitated growth by helping customers build product innovation. “More and more we can find great technology from EAM and incorporate it into the product where we get benefits,” Williams says.

Upping quality in private label diapers has become a necessity as price wars among the major brands have driven down diaper prices across the board, meaning that private labelers are having trouble offering a significant price advantage.

“While competitive pricing has traditionally been the core proposition, in disposable hygiene quality matters and products need to work. Poor quality would not bring consumers back, despite low price,” says Svetlana Uduslivaia, head of tissue and hygiene industry research at Euromonitor International.

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