4 - Refresco.de

for retailers developing private label because
trading up consumers” Koen de Jong, IPLC
In what product category does private label have the highest share?
Grievink: “Private label serves several purposes, which makes
its influence so broad throughout all categories and segments.
But looking at single categories, private label has the highest
share in fresh.” De Jong adds: “Fresh is particularly the
domain of the retailers. They are by far in the best position
to organize and optimize the logistical process and make it
highly profitable. The fresh market is too complex for A-brands
because of the logistics. Next to fresh you also find a high
share of private label in commodity products.” Schreijen
comments: “Categories where you can find high shares of
private label are frequently in products with no emotional value
e.g. in paper (tissue, toilet paper etc.). Categories such as beer,
on the contrary, are hard to enter with private label because
of the emotional value attached to beer.” “And,” adds De Jong,
“another category where private label market share is relatively
low is personal care, like shampoo, deodorants, and skin care.
Consumers trust the brands they have been using for years and
brand loyalty is very high in this category, partly due to the
heavy promotional support of the brand owners. Apparently
people are sensitive about personal care products and it seems
tough to convince them to try alternatives. Moreover, the
category chocolate candy bars is dominated by A-brands. The
brands are offered in every store, gas station etc., so retailers
are obliged to offer this to their customers as well, and in
addition it seems difficult to produce a shelf-perishable product
for retailers.”
What are the developments of private label
in the beverages category?
De Jong: “The share of private label in the non-alcoholic
beverages category has been growing fast, which has led to
the disappearance of many B- and C-brands. Looking at the
brand share in non-alcoholic beverages, there is a difference
in non-carbonated soft drinks, like juices and carbonated
soft drinks, like cola. Whereas in non-carbonated soft drinks
there is a high share of local A-brand heroes, in carbonated
soft drinks you see more of the international A-brands. Both
show high brand loyalty. In non-carbonated soft drinks,
retailers are developing varieties in flavors under private label
though, which do not yet exist under A-brands. They have an
advantage here, because it is easy for retailers to vary and
it keeps their shelves vivid. This is a less attractive area for
A-brands because their first goal is to build consumer loyalty
to the product. They will not develop temporary flavors which
have to be removed from the shelf after a short period.”
Where do you see the most striking growth in private label?
Grievink: “Generally speaking, I expect that the total private
label category in Europe will grow in the next few years, not so
much in autonomous growth, but because of the introduction
of new varieties. The front-running countries, the UK and
Switzerland, will show stabilization in growth in private label
share now it has reached about a 50% market share (volume)
in both countries. The biggest growth of private label can
be distinguished in fresh and frozen. These are now already
categories where private label is almost overly represented.
The focus will be even more on convenience, portion packs,
and fresh-cut fruit or vegetables. Along with the growth of
private label products, this category also offers opportunities
for A-brands to enter. Looking at long-term growth over
ten years in the different private label types, I expect the
largest growth in the fourth type: hard discount. Value for
money becomes increasingly more important, and consumers
are becoming smarter. An already visible trend is the hard
discounters transforming into primary supermarkets where
people do their daily or regular shopping.” De Jong refutes this:
“I do not believe that hard discounters will be able to replace
primary supermarkets because their service level is not as high
as that of retailers. Their portfolio is simply too narrow and
shallow. Consumers want choice, and that’s what is lacking in
hard discount. For every product they offer only one variety,
while at retailers’ stores consumers can choose between
several brands, private label and value labels.” Schreijen: “Due
to brand promotions, hard discount is currently growing less
vigorously than end-2008.”
De Jong: “Another type, value (like Carrefour Discount, Tesco
Value or Delhaize 365), is currently growing very strongly, but
since this type is not very profitable for retailers I don’t expect
huge future growth here.”
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