FRED BEAR SHOWS TEETH IN PRIVATE LABEL

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Look out Tony the Tiger, Snap, Crackle & Pop and Bugs Bunny.

Private label has entered the kingdom of kids food at Fred Meyer Inc. under the Fred Bear name and is making inroads against name brand competitors in almost every category.

"There has been 10% to 40% penetration into every category where Fred Bear is," said Curt Lerew III, senior VP and director of the company's food division. "I tell people if you don't have a corporate mascot, create one. You need to touch that market of consumers who are affected by kids."

Portland, Ore.-based Fred Meyer operates 128 stores in six states in the Pacific Northwest. Stores are typically 165,000 square feet of general merchandise, from hardware to apparel to jewelry, all under one roof. Groceries take up about 30% of a store's total space.

The Fred Bear label was launched in 1992, shortly after Mr. Lerew began a massive change affecting all of the food division's store brands in 1991. Before taking the post, he was senior VP-corporate merchandising at Albertson's, a Boise, Idaho, grocery chain where he worked for 27 years.

As part of the private-label overhaul, Mr. Lerew initiated a redesign by Daymon & Associates, New York, of all Fred Meyer private-label products. He eliminated the plain wrappers on generic lines and introduced FMV, or Fred Meyer Value brand. Although priced the same as generics, Mr. Lerew said, FMV labels include line art that "looks good and appeals to consumers who are all fashion conscious."

Two additional private-label categories are the Fred Meyer Brand, priced higher than FMV but less than national brands, and President's Choice, a licensed upscale line that competes with premium national brands.

The store brand business has grown more than 60% since its launch two years ago and now accounts for 20% of total food sales. The private-label kids products have grown more than 90% in that period, due largely to the increase in the Fred Bear line from one to 25 items. Fred Bear products account for 4% of all sales at the chain.

"We were expecting the response we got based on kid power over family purchases," Mr. Lerew said. "I think it's really the connection with the kids that makes this happen."

Although the corporate mascot has been a part of the Fred Meyer stores for years, Mr. Lerew said, Fred Bear was expanded to include frozen food lines like ice cream bars, juices and snack foods including chocolate chip cookies and graham crackers. All products are priced 25% below national brand-name competitors.

"We took his image and said let's expand it into areas where children make a lot of decisions," Mr. Lerew explained. "I think it's really the connection with the kids" that has caused the label to grow.

Although the growth of private labels has been a dominant force in the food industry for several years, industry observers say few, if any, food marketers have created a niche in the children's market.

"It's safe to say they're one of the few that have targeted their private-label product line to the kids niche," said Jerry Pinney, a food industry consultant and president of Jerry Pinney & Associates, Prospect Heights, Ill. Mr. Pinney has worked in the industry for more than 25 years.

Fred Bear is seen in the company's newspaper inserts and standard advertising, created and placed in-house. The bear also makes personal appearances.

To give an idea of its success, Mr. Lerew said Fred Bear teddy bear graham crackers outsell Nabisco Foods Group's Teddy Grahams Graham Snacks 8 to 1. In the next year, Mr. Lerew said, the company will expand Fred Bear into areas like pizza, yogurt and small lunch packs similar to the Lunchable product sold by Oscar Mayer Inc.

"It's been very successful," Mr. Lerew said. "We feel there's a big targeted market out there for kids."

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