'Home-brands' set to grow

'Home-brands' set to grow

22-Nov-2013
When money is tight, private-label brands, also known as ‘own brands’ or ‘store brands’, have a potential advantage over other brands as shoppers seek value and become more receptive to lower-price alternatives.
 
Currently, private-label products account for roughly 16 per cent of global Fast-Moving Consumer Goods (FMCG) dollar share, according to a new report from global market research organisation Nielsen.
 
Private label dollar share varies globally
 
According to Nielsen, private-label dollar share varies dramatically around the world, as the availability of private-label brands are typically found across larger retail formats. These formats are referred to globally as modern trade outlets, and they dominate the retail landscape in the developed world.
 
For example, private-label makes up 46 per cent of FMCG dollar share in Switzerland, but only 1 per cent in China. In Australia, private-label has a 14 per cent dollar share, while in New Zealand that figure is 18 per cent. Private-label dollar share is 43 per cent in the UK, 17 per cent in the US and 32 per cent in Germany.
 
Private-label set to grow
 
But conditions are ripe for private-label growth within the heavily urban settings of developing countries, according to Nielsen, as the spread of modern retail is poised to usher in a host of private-label brands and new opportunities.
 
Urban India’s rapid expansion is a case in point, according to Nielsen. It estimates that FMCG sales will more than double through modern trade channels from the current $1.8 billion to $5 billion in 2015. While modern trade channels account for only about 5 per cent of the Indian retail landscape today — and 6 per cent of sales nationally (9 per cent in urban India) — sales growth is already twice that of traditional trade. And sales of private label are reaping the rewards, as sales grew 22 per cent in 2012 from 2011, according to Nielsen.
 
“Indian shoppers who are more sensitive to price typically toggle between packaged and loose alternatives for commodities like wheat, rice and sugar during inflationary times,” said Adrian Terron, Vice President of Nielsen India. “Private-label offers consumers a tolerable down-trade origin,” he said.
 
“Private-label brands’ lower price and quality characteristics can prove a useful combination for shoppers who do not want to revert to unbranded and unpackaged alternatives even during tougher times,” Mr Terron said.
 
Private-label potential
 
In regions where private-label is well established, results from the Nielsen Global Survey of Inflation Impacts showed the potential power of private-label brands during inflationary times.
 
In North America, almost half (46 per cent) of respondents said they would shop more for private-label brands when food prices rose, compared with only 7 per cent that would increase shopping frequency for national brands. Similarly, in developed European countries, 35 per cent would shop more for private-label brands, compared with only 8 per cent who said they would buy more national brands.
 
The price must be right and marketing must be effective for private-label brands to be successful, according to Nielsen. It said packaging affects trust and quality perceptions, especially when private labels extend beyond commodity or low-risk product categories.

For the original article from Australian Food News click here.