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is in driving ‘values’ as well as value”
Sainsbury’s Brand Director Judith Batchelar
Where does innovation in soft drinks and juices come from?
“I see more and more private label manufacturers taking
up product development and being able to introduce strong
innovations. They often have the advantage of international
presence and scale, so they can transfer products that are
successful in one country to another country, which also
increases volume.”
In which segment do you foresee
the most striking growth of private label share?
“We are planning to introduce private label products in fresh
dairy, which will contribute to a higher private label share. In
general, I expect high growth of private label products in fresh,
coming from new product innovations and the ‘international
corridor’ with international spices and groceries.”
Building brand equity
Sainsbury’s
has a history in private label
that goes back almost a hundred years.
Sainsbury’s Brand Director Judith Batchelar comments:
“The first private label product on our shelves
was Red Label Tea. Since then the range of private label
products has grown to be at about 50% of our turnover, at times
even 60%. Private label share is highest in fresh foods, traditionally
the domain of the retailer. In all cases the choice between placing
an A-brand on the shelves or developing an alternative private label is
customer-led.” Judith Batchelar foresees for the future that private label
“will be driving ‘values’ as well as value”. She sees the most striking
growth in grocery and frozen.
With the rising popularity of private label, A-brand
manufacturers have to work harder than ever to maintain and
grow their position in the market. The soft drink market is
characterized by short product life cycles, thereby requiring
a strong focus on research & development and brand
management. There was already a growing trend among A-brand
soft drink manufacturers to focus on their core competences,
which are: research & development and brand management
of their products. But since the explosive growth of private
label and increase of competition from the retailers’ side, this
focus has even intensified. Because the highly competitive soft
drink market is driven by consumer demand it is essential that
manufacturers are able to act quickly on consumer trends by
introducing new products and creating brand equity in order to
gain a preferred position. The focus of A-brand manufacturers on
building strong and trustworthy brands is necessary to closely
relate to consumers’ specific lifestyles and habits and to stay in
the mind’s eye of the consumer.
We asked two captains of industry to comment on the abovementioned
developments. First Roel van Neerbos, President of
Heinz Continental Europe, gives his view on developments in the
private label market and the impact of this trend on the brand.
What is Heinz’ strategy in competing with private label?
“It is much more a matter of gaining market share with regard to
other A-brands - something Heinz is currently very successful
at. We focus on adding value to consumers with our
brand, true value for which consumers are willing to
pay. Competing with private label is a different
game; it requires another way of thinking.
Private Labels operate on low cost, for
example, and aim to realize an extremely
short time to market. This means for
our branded operation that we need to
continuously innovate our core products
to stay ahead of the game.
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