Loblaw’s targets gourmet tastes

Can a high-end ‘black label’ (and some well-aged cheese) rescue President’s Choice?
MACLEANS-LOBLAWS-09.22.11-TORONTO, ONTARIO: Loblaws "Black Label" launch party at the Neubacher Art Gallery in the neighbourhood of Parkdale, in Toronto, Ontario. Cole Garside/Maclean’s Magazine
Gourmet groceries
Cole Garside/Maclean's

Last week, Loblaw Companies invited some 60 guests from media, fashion and food circles to “The Dinner Party” at a Toronto art gallery in a gritty west end neighbourhood. The stylish, if incongruous, soiree represented stealth marketing at its most overt—as the country’s largest supermarket chain bestowed “gourmet” imprimatur on its new line of 213 President’s Choice “black label” products slated for mid-October rollout at 140 Loblaws, Zehrs and Fortinos stores in Ontario, Quebec and Nova Scotia—with broader national distribution potentially to follow.

As waiters passed trays of appetizers—mini Waldorf salads, baby scallop ceviche, beef sliders with “umami aioli” alongside signs indicating which black label oils and condiments were used in preparation—marquee Toronto chefs plated a superb four-course dinner using items from the line, including Soy and Ginger Marinade, Sea Salt With Fresh Herbs, trendy Argan Oil, and Bacon Marmalade and Dark Chocolate Couverture.

The scene bristled with the sort of over-the-top exuberance Loblaw was known for in the 1980s when President’s Choice (PC) pioneered the upscale private label in Canada and master marketer Dave Nichol brought extra virgin olive oil, balsamic vinegar and “Memories of” sauces to the masses.

Over the decades, however, PC’s expansion to more than 1,000 products diluted its premium image, says Keith Howlett, a retail stock analyst at Desjardins Securities in Montreal. The company also fell behind as competitors developed high-end “third-tier” private labels, Howlett says — Wal-Mart’s “Our Finest,” Metro’s “Irresistibles” and Sobey’s “Sensations by Compliments.” But over the past two years Loblaw has rigorously reviewed its private-label program, he says. “Black label is the extension of that.”

Loblaw executives agree the brand lost some of its gustatory mojo. “It’s been a long time since PC has brought big news to the marketplace,” says Ian Gordon, senior vice-president of Loblaw Brands. Black label’s inspiration comes from the success of similar lines at British supermarkets Tesco and Waitrose as well as the influx of specialty food stores, says Gordon, who speaks of “polarization” of shoppers at the high and low ends: “We saw opportunity in finer foods—higher quality, more unique products.” Kathleen Wong, a retail analyst at Veritas Investment Research in Toronto, sees the focus on high-end house brands echoing the growing divide between rich and poor. “What we’re hearing from the Conference Board, we’re seeing in the supermarket,” she says.

Black label, priced from $1.99 for a tin of tomatoes to $21.99 for olive oil, has been sourced internationally—and strategically. Company insiders say some PC products have been reclassified; then there’s the “8-year-old” black label cheddar that they hope will capture shoppers’ imaginations in a way that the PC six-year-old cheddar did not. They’ve also co-branded with British food writer Laura Santtini, whose “Taste No. 5 Umami paste,” 21st-century MSG, launched in Britain last year. Not all products are facsimiles: a $19.95 “bacon spread” in specialty stores, for instance, lists “smoked bacon” as its first ingredient; PC’s $4.99 bacon marmalade lists “sugar” first, “bacon” seventh.

The company can’t legally spell out “black label” on its products (Johnny Walker Black Label owns the trademark), but they’re banking on the colour’s prestige in packaging, with typography reminiscent of Waitrose’s popular “Cooks’ Ingredients” line. Black-and-white photography on some harks to the products’ origins. A box of “Cheese & Black Pepper” biscuits from Scotland, for example, boasts a doleful looking cow standing in a field.

Howlett sees the line sending an important signal that the company is trying to reconnect with customers. “When you’re talking about a $10-billion company, it doesn’t move the needle in a financial way,” he says, noting the line will also offer strategic benefits via data scanning: “The number of people who buy these products may not be that huge but that sort of targeting [of affluent customers] is very helpful.”

Private-label consultant Tom Stephens, a former Loblaw Brands executive who heads Brand Strategy Consultants Inc. in Toronto, lauds the line as “a great step in the right direction” but expresses concern it may be too limited in mainstream appeal and availability. He questions whether bacon marmalade and avocado oil will become staples. “It’s not enough to turn the ship around,” he says. “If they want to get back their reputation as the ‘foodie’ company, they need the biggest store audience to show that to.”

But even before it hits stores, black label is creating buzz. The line has its own thread on food blog Chowhound, where one poster jokingly called it “Memories of Pusateri’s,” referring to the upscale Toronto food purveyor. Just how prescient the remark actually is remains to be seen.