Comment: From silver to gold for Tesco Finest
My personal recollection of the launch back in 1998 of the upmarket own-label range Tesco Finest involving lunch at the Natural History Museum was the abrupt move to another seat by Tesco marketing director Tim Mason when realising he was sat next to me – a mere trade journalist.
Thankfully things turned out well because celebrity chef Anton Mosimann, who had helped develop the initial recipes for Finest, spotted my surprise at the move and shifted along the table to sit next to me. I had an excellent time hearing about his chef experiences. Things have also turned out extremely well for the Finest range that last year celebrated its 25th Anniversary as it clocked up annual sales of £2 billion.
Own-label ranges have been a primary focus for the supermarkets, and a feature in the news of late, during the ongoing cost-of-living crisis as many customers have shifted to the greater value offered by own-label lines compared with the more costly branded products. However, this is not the full story because what has not been so well documented is that the greatest growth has been seen in premium own-label such as Finest rather than the budget ranges.
Spending on supermarket premium own-label ranges was up 12% in the year to June, according to Kantar, which massively outpaced the 6.9% growth achieved across all own-brand ranges (encompassing everything from premium to budget).
For Tesco the growth of Finest, which now comprises 1,000 items, highlights just how successful the grocer has been at competing with its key rivals at the premium end, notably Waitrose and Marks & Spencer.
It has also been eating into the restaurant sector with its dine-in-for-two proposition that it successfully copied from M&S. There are clearly plenty of people out there who are either treating themselves by trading up to a Tesco Finest Moroccan inspired spiced lamb pie from a basic meat pie or effectively trading down from going out to a restaurant and instead dining at home with dishes from the Finest range.
Against this backdrop Tesco is looking to build on its success and has earmarked a target for Finest of £3 billion in annual sales. This is a serious step-up from its current £2 billion level but the momentum is undoubtedly with the grocer and own-label at the premium end of the spectrum.
When even the discounters are involved in this part of the market then you know there is plenty of demand by customers. Lidl has successfully built-up its Deluxe range that in my local store is a constantly changing decent-sized range of interesting products that price-wise sit above its regular lines but still fit comfortably within its underlying value philosophy.
There is no doubt that since Finest launched there has been a gradual reappraisal of own-label ranges by shoppers and supermarkets. This has taken them from being something on the fringe, with a not particularly good reputation compared to the branded lines, into an increasingly large part of shoppers’ baskets.
This change has been most notable at the premium end where own-label is now very much part of the landscape of the mainstream grocers. This was absolutely not the case when Finest hit the shelves. Its distinctive packaging was predominantly silver in colour (and remains so today) and this has arguably turned into gold for Tesco. Launch table seat movements aside, Finest has proved to be a great move by Tesco.
