As part of ESM's annual Private Label Issue, we spoke to Elina Suuriniemi, planning manager at Finnish retailer Kesko, about how the prolonged closure of the HoReCa channel has presented opportunities for private label. This article first appeared in ESM Issue 1 2021.
In April, Finnish operator Kesko reported the strongest first quarter in its history, with grocery sales rising by 6.1%, and close to half of this growth (48%) coming from its online channel.
As with many retailers across Europe, while its foodservice business has taken a hit as a result of the prolonged closure of the HoReCa channel, Kesko has sought to double down on the increased at-home presence of its shoppers, with private-label innovation playing a key part therein.
“At the beginning of the pandemic, sales of own-brands had a noticeable pickup,” says Elina Suuriniemi, planning manager, Kesko. “While the effect of hoarding resulted in an overall increase in demand for own-brands, during the year, some product groups developed better than others – for example, vegetables, processed meats, seasonings, soups, sauces and ambient foods, as well as beverages. Also, the premium segment has grown. The inability to visit restaurants has shifted customer focus to enjoying good food at home.”
The appreciation of home-grown/Finnish production has grown, Suuriniemi says, with shoppers turning to familiar, time-honoured products, such as Kesko’s Pirkka Amppari ice-ream range, which was originally launched at the beginning of the nineties, but has resonated with the lockdown shopper.
“Even today, it is the best-selling SKU in our total ice-cream segment,” she says. “The popsicles traditionally consist of two flavours, and our customers have actively sent their suggestions for a new combination of flavours, while the series has now been extended to soft drinks and candies made with the same two-flavour variations. Sales of these new products, together with the interest in social media, have exceeded our expectations.”
Home Life
With restaurants remaining closed for much of the year and consumers seeking to recreate the dining-out experience at home, Kesko has seen strong growth in its Pirkka wine selection – something that Suuriniemi believes will continue after the pandemic.
“Restaurant restrictions during the pandemic have led people to cook and invest in gastronomic experiences at home,” she says. “Pirkka wines have certainly benefitted from this trend, and we saw a large increase in sales, especially during Christmas 2020, when we also undertook a large influencer marketing campaign for these products, for the first time.
“With the end of pandemic looming, hopefully, we do not envisage that the opening of restaurants will have an impact on the sales of Pirkka wines, to a large extent.”
Sustainable Thinking
Kesko has been actively seeking to establish a point of difference with private label in a number of categories over the past year – a new vegan food offering and tapas series are among its recent launches – but, at a group level, the retailer is eager to ensure that its store brand offering is as sustainable as possible. Its Ecocert-certified Pirkka home-cleaning range, produced by Nopa Nordic, recently won the Non-Food (Household) category in this year’s European Private Label Awards.
“Sustainability and climate issues are very important values for Kesko and are key focus areas in our strategy,” says Suuriniemi. “Sustainability, naturally, plays a very important role in the development of our own brands, and it manifests itself in many different ways. Domesticity and locality, in particular, are important values. We want to ensure that as much of our selection as possible is domestically sourced and supports the Finnish food business.
“In addition, we have actively developed our organic selection by offering even more options in different categories. In certain categories, we have outlined that all products must be responsibility certified, such as Pirkka coffees and teas – organic, UTZ/RFA – and cocoa and chocolate products – UTZ/RFA. In the future, all fresh and frozen fish will be either domestic or certified organic, ASC or MSC.”
Future Development
These values tie in with consumer demand for products that meet sustainability, environmental and health expectations.
“Consumers want to make economically and environmentally responsible choices and support local production,” says Suuriniemi. “We respond to these trends by developing our offering of Finnish, vegan, ecological and healthy products.”
The group is also in the process of upgrading the visual identity and marketing approach for its premium private-label brand, Pirkka Parhaat.
“Sales of premium products have been very positive over the past few years, and we see that it will continue that way, as consumers are more and more appreciative of good ingredients and a taste experience.”
© 2021 European Supermarket Magazine – your source for the latest Private Label news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
