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Evolving Private Label Strategies, Consumer Choices, and the future impact on Food Brands and Private Labels

Global private label food market: Spain & UK led penetration during 2012


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2014-03-28 23:54:04 - Evolving Private Label Strategies, Consumer Choices, and the future impact on Food Brands and Private Labels - a new market research report on companiesandmarkets.com

Within the grocery channel, private label is reaching nearly 50% by value in some markets: Spain and the UK lead private label penetration. At the other end of the scale, Indonesia, Egypt, and China all have private label penetration at less than 5%. However, across all channels, private label in food remains low: The highest penetration region is Western Europe, where private label accounts for a 14.7% market share by value

The introduction of value products to drive price-based switching, the creation of a price architecture to drive trading up, diversification of the product offering, consolidation & reorganization of the offer, and brand building. In more developed markets, ´value´ is giving way to ´quality´ and retailers are adjusting the portfolio to

 

 

enlarge and rebrand standard private labels.

Even at 5-10% penetration levels, grocery retailers have introduced "value", "good", and "best" ranges as well as a line of healthy products. In the most mature markets retailers are operating up to 10 different ranges and sub ranges. In total there are more than 20 options available to retailers.

New brand identities for core ranges, standalone brand identities for premium private label, more focus on credibility, exclusivity and external endorsement, and venture brands to compete with A brands. While private label penetration in the main grocery channels is growing, the graph to the right indicates that across all channels, brands still hold sway globally.

This is partly a function of low levels of private label penetration outside much of Europe. However, it is also a function of the diverse channels of distribution for food products, even allowing for countries where supermarkets, hypermarkets and discounters dominate the retailing and distribution landscape.

Meat, fish and seafood has the highest level of private label penetration, indicative both of where grocery retailers can leverage scale with suppliers and where consumers see less differentiation. An additional factor is price/value sensitivity – these are typically planned purchases where consumers are more invested in getting value.

Food private label penetration is much higher among Western European countries, where retail consolidation, the presence of discounters, and the length of time private label has been available in the market are typically higher.

However, the prevalence of European multinational retailers such as Carrefour, Tesco, Metro Group, Schwarz/Lidl, and Rewe, as well as US giant Walmart, are rapidly accelerating the growth of private label in lower penetration markets. This is more prominent in Eastern Europe, but notable also in more developed Asia-Pacific countries and now in Latin America.

Achieving that penetration is a hard fought battle – exporting winning strategies from home markets directly has met with mixed success and while the downturn has made lower priced brands more attractive, often middle class consumers are still seeking status brands when they shop.

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