Bird's Eye exits private label business
five US factories that make non-branded products, and instead
concentrate on its more profitable trademarked range.
More than 1,200 jobs are to be axed and five processing units will either close or be sold.
Bird's Eye claims to have received unsolicited interest in the facilities, but said any unit not sold after its current production season will face closure between October 2006 and June 2007.
Branded goods provide greater returns for companies with high-profile labels and the firm said it is the only branded frozen vegetable company still with a significant private-label presence. The Penfield-based firm will now throw all its weight behind its household name status.
"We believe there is tremendous potential and trust in the Birds Eye brand and our other brands that we have yet to tap fully," said CEO Neil Harrison.
"Our non-branded frozen business, with its lower margins, utilised resources which now can be freed up to drive brand growth and to compete more aggressively with competitors who are not producing non-branded lines," he added.
The firm plans to spend more on research and innovation, in a bid to keep up with changing consumer demand and the private-label threat. Harrison cited the new Bird's Eye Steamfresh range as an example of the firm's future direction in value-added meal solutions.
"It is a new product that provides value and convenience to consumers, takes advantage of our brand strength, and drives category growth and sales for our retailers," he explained.
Famous brands as a collective are starting to realise they should concentrate on lifestyle benefits, packaging and marketing to sell their goods, as retailers plough information gleaned from reward schemes to hone private-label products better suited to consumer demands.
In the meantime the growing private label market share continues to hasten brand erosion - and this trend is only just starting to be addressed by big-brand producers such as Bird's Eye and Kraft.
In the UK private label purchases make up a whopping 35 per cent of total consumer packaged goods (CPG) spending, according to Datamonitor.
European sales of private label goods has now reached €207 billion - accounting for 23 per cent of total CPG consumption - as supermarkets supply premium, mainstream and economy ranges to capture the full consumer spectrum.
Datamonitor consumer analyst Matthew Adams told FoodandDrinkEurope.com: "Many marketers say that those brands in the middle, not premium or economy, will suffer as they are neither cheap nor groovy. And for those manufacturers brand erosion is something very real."
Bird's Eye has made significant changes to its business structure over the past three years. In 2003 it sold the Veg-All canned vegetables business and its sauerkraut meat operation. Then in 2004 Bird's Eye acquired C&W, the largest branded frozen vegetables company on America's West Coast, strengthening its branded business output.
