by: John Winsor

When you think of house brands at most supermarkets you tend to think of low cost, low quality and only available at the store which owns the brand. Safeway is taking a decidedly different approach with O Organics and Eating Well.

But two of Safeway’s newer private-label lines, O Organics and Eating Right, are moving in a different direction. Both were built much more like name brands than like store brands — in fact, both were supported by national television and print advertising. And more recently, Safeway has initiated the Better Living Brands Alliance, with the highly unusual goal of selling these two store-brand lines in places other than the chain that created them — school cafeterias, foreign markets and, ultimately, other U.S. grocers. In the judgment of the trade publication Refrigerated and Frozen Foods Retailer, which recently named Safeway as its retailer of the year, the experiment is “breaking the mold on what we all thought we knew about private label.”

The strategy, which is the culmination of several years of effort on Safeway’s part, seems to defeat the whole purpose of the store brand. O Organics, which now includes about 350 products, like milk and frozen edamame, was rolled out in 2006, in response to increased consumer interest in more-healthful and less-processed food. Of course many players, large and small, have seen this trend as an opportunity. It has fueled the growth of the Whole Foods Market chain, and many mainstream grocery stores have added a section filled with organic, natural or otherwise virtuous-sounding products from a variety of niche brands.

But rather than becoming the alternative to established brands, Safeway wanted O Organics to be the established brand. The company brought in executives from consumer-product giants like Procter & Gamble and Nestlé, gave the line a look that stands on its own (although the color choices may look familiar to anyone who knows the Whole Foods house brand) and hired the ad agency DDB in Chicago to create print and television advertising to help build the image of a full line of healthful, organic products in a wide range of categories. The company says the line is on track to hit sales of $400 million in 2008. In 2007, Safeway followed a similar strategy with Eating Right, which is positioned as balancing taste and nutrition, with a package design that highlights the most impressive aspect (“low fat,” for example) of the 250 products in the line, including frozen dinners and cereal.

Pretty cool stuff.

via Consumed

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