The strategy for successfully selling specialty food products in the U.S. market

American supermarket chains are expanding their private label product lines, aiming to capitalize on reduced disposable income caused by rising inflation. For international producers of specialty food products, following this strategy would be a mistake.

Private label expansion in U.S. supermarket chains

Large supermarket chains like Kroger Co. in the United States are investing heavily in expanding their private label brands. In the third quarter of 2021, Kroger introduced 147 new private label products, and private label sales increased by 10%. Walmart’s supermarket chain is also following a similar strategy. A recent survey of grocery chains conducted by FMI, a food industry trade group, revealed that over 80% of respondents plan to moderately or significantly increase their investments in private label products over the next two years.

Building or strengthening your brand to sell in the U.S. market

In this context, it might be tempting to produce private label goods for one of the major U.S. supermarket chains, such as those mentioned above. However, this would be a losing strategy in the medium term. The winning strategy for producers is to create or strengthen the identity of their own brand in the American market. Chasing the mirage of private label production is a losing strategy because we can never align with the price points demanded by large U.S. supermarket chains. The nature of our specialty food products does not allow it.

Selecting the right U.S. supermarket chains to sell to

At the outset, it is essential to carefully select the U.S. supermarket chains to target. Chains like Kroger, Walmart, Target, Trader Joe’s, and others are too large, have too much negotiating power, and tend to sell mass-market products. They are structurally incapable of understanding and appreciating the variety and quality offered by specialty food producers. To establish a successful sales strategy in the U.S. market, it is necessary to focus on small and medium-sized supermarket chains across America. These chains have a local focus and maintain close contact with the communities they serve.

These are the first and most essential steps for developing a successful strategy for the American market. However, more operational steps, highly specific to the U.S. market, are required. We will discuss these in another article.