Monday, September 26, 2011

Tesco moves beyond private label with venture brand Chocablok

I read something today that I found really fascinating. And this is why I want to share these news with you. Earlier this year Tesco unveiled their plans to develop global product brands, that are different to traditional retailer private label. For a start, these Tesco brands are no longer talked of as private label, but instead they are seen as brands in their own right, and there is no mention of the Tesco parent brand on the packaging.

The first of these brands to hit the shelves was a luxury ice-cream brand called Chocablok. Chocablok is claimed to be made by an “expert team of master cremeliers’ with more than 100 years experience between them. It is a luxury ice cream made from what is said to be a blend of the finest ingredients including real chocolate, whole milk, double cream and free- range eggs. Sounds all good to me! I can't wait to try this one...

But, it doesn't come cheap... Each pack retails at £3.99 per 500ml, a pricing that clearly emphasises its premium positioning amongst the likes of Ben & Jerry’s, Haägen Dazs, and Mövenpick.

What does Tesco say about this then? “Our venture brands are very different to own-label,” said Tesco brand developer, Sidonie Kingsmill to Marketing Magazine, “they will never be "me-too" products. We look at where the customer opportunities are, where brands are not succeeding and what we can do in addition to brands. We’re in a unique position as the biggest retailer, with access to the best suppliers worldwide.”

This development made me reflect on the limitations of private label. Private label has developed a lot since its early days as a discount and often rather boring offer. Today we can find PL goods across the whole range of categories and the British retailers are phenomenal at this. However, this Tesco example might also demonstrate some of the limitations of PL. Clearly Tesco isn't just doing this for fun. No, instead they've carefully analysed the situation and realised that they can make even more money if they also develop brands that are 'freed' from the motherbrand, and thus able to compete against other brands with no danger of being held back by the mother brand associations i.e. in this case Tesco.
Well, that is just one reflection, I guess there must be more reasons why Tesco is venturing into this arena. And maybe some of the other simple reasons are: plenty of cash, retailer power and distribution network. They simply can!

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