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Marketing Your Products
 
Private label: battle of the brands
October, 2009
 

Private label is continuing to steal market share despite a more stable economy, but brands are fighting back on the battleground of health and convenience.

According to the latest report from IRI Times & Trends, private label unit share has grown 12 points to 22.8 percent over the past 12 months, while dollar share has grown 0.7 points to 17.6 percent. Growth was highest in the grocery sector, driven by at-home food rituals and continued consumer focus on low-cost products.

"Last year I noted that during the 2008 economic freefall, shoppers were flocking to private brands for relief from rapidly escalating food prices," said IRI Consulting and Innovation president Thom Blischok.

"Today, the economy has stabilized, food prices are increasing at a much slower rate, but the growth of private brands continues, creating strong opportunities for retailers and serving as a cautionary tale for manufacturers."

Mainstream magnetism

The report found that private labels are increasingly being embraced as familiar, mainstream products which can compete with national brands on quality.

"Many private label brands are now viewed as similar, perhaps even superior, to brand named products," states the report.

They also continue to deliver on price - with the average private label discount versus national brand about 30 percent.

It is not all bad news for brands, however. Despite recent growth, private sales are still concentrated in the hands of a relatively small number of consumers, with heavy buyers of private label accounting for 62 percent of private label sales.

In addition, private labels are losing ground in 26 percent of the top 100 consumer packaged goods (CPG) categories, with brands gaining ground in key categories such as frozen vegetables.

Brand growth in this area is attributed to innovations in health and convenience, although the report points out that "store brand innovation is heating up."

Future growth

The report predicts that the popularity of private label brands will continue to grow this year as a result of their strong value proposition and a continuation of frugal shopping patterns.

It adds that "products centered around healthy and at-home living are likely to be a key battleground for retailers and manufacturers in the coming year."

The report recommends that manufacturers seeking to develop effective private label mitigation strategies should:

  • Measure and monitor actual versus planned impact of private label-related initiatives
  • Continually refine competitive strategies vis-a-vis private label
  • Measure and monitor actual versus planned impact of private label-related initiatives

Source: foodnavigator-usa 


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