Q&A: A&P Chairman Haub Backs Better Food's Advantages, Pt. 2 Private Label

Consumers are learning important lessons in the recession, ones that will benefit supermarket operators such as A&P long term.

Yesterday, in the first part of Bnet's Q&A with Christian Haub, executive chairman of A&P, the topic of discussion was better food and how A&P had adapted its strategy of improving the quality of the edibles it offers in the economic downturn. Today, Haub discusses how A&P's private labels have provided opportunity in the recession. As consumers have become more cost conscious and, consequently, have begun reevaluating their shopping priorities, they have turned to private labels to provide alternatives to the added value products they have paid more to purchase in the past, such as organics. Bnet: Although you noted that consumers are purchasing less, or less frequently, from pricier categories such as natural food in the recession, A&P decide to launch a new organic brand, Green Way, this year, so why now?

Haub: Because we felt our own brand of organic was something where we wanted to give the consumer the opportunity to still afford to buy organic and still have the benefit of buying organic foods but at much lower price than buying an equivalent [national] branded organic product. The Green Way label I think sticks out when you go to the shelves and as soon as you make the price comparison you will say, 'Wow, I can still afford to still buy organic.' The uptake has been very positive.

So, it's not that this would be a bad time to launch an organic brand of products. I think it's a very good time. I think we can build recognition and acceptance of a brand like this probably more successfully in a more difficult environment because consumers are willing to try different products if they can save money at the same time. If the experience is good, and the repeat business looks like it's really picking up, it tells us we've come out with a great product and the consumer wants this.

Bnet: Will you continue developing new programs and labels to complement your better food strategy?

Haub: We've just this weekend launched a healthy line of kids food that we think will communicate to the consumer, and they will respond to it. [The line is called America 's Choice Kids --Ed.] Bnet: Do you feel the consumer is more willing to try new things today and looking to the stores they shop for options?

Haub: They are looking to save money and still provide great meals they can feel proud about with their families. We have a great opportunity to help them economize, and you can create a great meal for four people that only costs $10, that doesn't have to be expensive, that doesn't have to be difficult. I think people are learning to cook again. That's great for us. So many people didn't go grocery shopping anymore because they didn't know how to put a meal together. They would rather pick up prepared food from a restaurant or just go to a restaurant altogether, and they're now realizing that going to restaurants is very expensive, more expensive than preparing a meal at home.

And we have seen that trend, where people are buying more ingredients and making food again at home. This is also a trend that can be beneficial for us once the recession is over because people realize actually having a family meal that you prepare yourself is a very satisfying experience.