P&G on the Attack Again
In 2006-2007, Procter & Gamble introduced its reformulated Herbal Essences shampoo and conditioner products in “luscious” new PET bottles that emphasized a curved shape, which in some of the ad copy promises to produce “luscious hair." The largest private label personal care manufacturer in Canada, *Apollo Health and Beauty Care, Concord, ON, allegedly has copied P&G’s trademark, trade dress and design, according to a lawsuit filed in December 2008 in Canada by the $83.5 billion branded company against Apollo. P&G claims that Apollo’s look-alike private label packaging infringes on P&G’s intellectual property rights. In similar, past lawsuits filed by P&G, most often the private label manufacturer has little choice but to back down. This very likely will happen again with Apollo, a private company whose revenues, we estimate, do not exceed $100 million.
Perrigo Breaking into $2 billion+ Sales
Since 2004, *Perrigo Co., Allegan, MI, the world’s largest supplier of OTC pharmaceutical products for the store brand market, has pushed its net sales upward by more than 100% to $1.8 billion for fiscal 2008 (ending June 28). Its latest acquisitions this past October and November--Guadelajara, Mexico-based Laboratorios Diba, a provider of store brand OTC and prescription pharmaceuticals in Mexico and *Unico Holdings in Lake Worth, FL, the leading U.S. provider of store brand pediatric electrolytes, enemas and feminine hygiene products (all new categories for Perrigo) at retail—add some $75 million in new sales to Perrigo’s flourishing business. This follows its record fiscal 2009 first quarter sales and earnings report, where sales increased by 25% or up by $97 million versus the comparable quarter a year earlier. Perrigo, attributes the gain to new product sales gains. Add to that the new acquisitions and Perrigo is well on its way to topping $2 billion in sales for fiscal 2009.
ACH & ADM Form Stratas Foods
*ACH Food Companies, Inc. Cordova, TN, a subsidiary of Associated British Foods in the UK, and *Archer Daniels Midland Co. have formed a 50-50 joint venture, called Stratas Foods LLC, Memphis, to produce packaged oil products in the U.S. and Canada. Stratas will serve the foodservice, specialty food ingredient and retail private label bottled oil markets. Its product range covers: vegetable oil, shortening, margarine and pan spray.
PLMA 2008 Private Label Trade Show Notes
While it’s impossible to report on everything that happened at *PLMA’s 2008 Private Label Trade Show in Chicago (Nov. 16-18), we can choose a few notes. As keynote speaker, Larry Kudlow (host of Kudlow & Company on CNBC), respected as an economic forecaster by "The Wall Street Journal," and recognized as an “American conservative” who advocates supply-side economics, predicted an economic recovery by the spring of 2009. (That's better than some of the other predictions we've been hearing.) Kudlow disliked the “wave of massive government spending” now underway; instead, he wants to cap the so-called Tarp at $350 billion. Ignoring that warning could result in emulating the worse in Europe after the last world war, moving the United States toward a social welfare state: “I don’t want socialism; I want capitalism.” Kudlow admitted we had to bail out the banks, which are fundamental to our economy. But he draws the line on an auto industry bailout. This is not the answer, he indicated, when you consider that the average auto worker’s salary at General Motors and Ford is $72 per hour, as compared to $44 per hour average at Japanese auto companies, and $32 per hour average in the U.S. manufacturing sector.
Cut business taxes, reform the tax code, and put capital back into business, advises Kudlow.
So what does all this have to do with private label? Nothing, you might say. Then again, it might be quite relevant, especially if our government doesn’t legislate astutely and taps deeper into the taxpayers’ coffers. Recent estimates predict our national deficit could climb to between $500,000,000,000 to $1 trillion. That last figure is 13 digits long! Talk about an unlucky number.
Hispanic Drug Chain Honored
Juxtaposed among some billion-dollar-plus retail giants, Navarro Discount Pharmacies, the largest Hispanic-owned pharmacy chain in the U.S., has been recognized by the *PLMA in this year’s 2008 Salute to Excellence Awards, on November 17, at the association's private label trade show in Chicago. Three other winners, *H-E-B Grocery Co., *Costco Wholesale Corporation, and *Topco Associates, captured top honors in in the supermarket, mass merchandiser, and co-op/wholesaler categories, respectively. But Navarro, a $350 million, 32-store chain, operating in South Florida, walked away with the top prize in the drug chain category.
Navarro is Hispanic-owned and operated. In 2007, the company partnered with MBF Healthcare Partners, a private equity firm, also minority owned and operated, to expand its drug chain business. In October 2007, Navarro purchased 11 Sedano's Pharmacies in its marketing area. It's notable that a small chain like Navarro can be recognized for its "outstanding achievement in creating (a) successful private label program and (demonstrating an) overall commitment to store brand excellence."
Navarro actually started in 1940 in Havana, Cuba; but the Cuban government confiscated its stores in 1961, forcing the Navarro family to flee to Miami. There Jose Navarro Sr. cashed in an insurance policy and used the $4,000 proceeds to open his first pharmacy in what came to be called Little Havana. The success of this chain its partly attributed to its catering to the large Hispanic population in Dade and Broward counties. (Most of the customers speak Spanish.) Today, Navarro has a 17% market share in those markets and carries some 300 private label items, many of them reportedly top sellers in their respective categories. In 2004, this retailer rolled out its Premier Value range, which now covers 1,500 skus in OTC, health and beauty care, household and houseware products. The company also uses its own name and other identities within its private label stock. In its most recent financial year, sales reportedly were up by 20.5%.
As for the other three winners; well, their private label programs already are recognized as outstanding: They get press coverage most of the time.
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