Why is this marketing news? Here's the background:
- Tesco introduced its own label "New York Soup Company" fresh soups range last year, part of the grocery giant's strategy to increase sales of its own products. It also stocks its Tesco Finest soups. (How many chilled soups can or should one supermarket stock?
- Before launching New York Soup, Tesco had delisted NCG in 2011 but reinstated it after resolving "pricing issues." In fact, NCG's shelf slots were expanded once the brand returned to Tesco's distribution. Reportedly, Tesco has sold 20,000 units of NCG soup every day for the past decade.
- NCG has had four owners in 25 years. Currently, it's owned by Hain Celestial, a US-based food company that also owns Linda McCartney's food brand, and is headed for expansion into European markets. Will this take some of the sting out of being delisted by Tesco?
- Note that Tesco's New York Soup uses tub packaging, whereas NCG does not. With some buying trends suggesting consumer preferences for tub packaging, this may be a factor in NCG's future sales until the company plans a redesign.
- UK purchasing of private-label foods is on the rise. Tesco's own labels are doing well (and may well be more profitable than selling someone else's food brands). Still, will consumers be unhappy that NCG is no longer available through Tesco?
- Before the delisting, nearly 20% of NCG's sales were through Tesco stores. NCG clearly faces a major challenge in making up those sales through other retailers.
