Could Power Brands Be the Future of Packaged Food ?

Power brands are leading revenue generators for the top manufacturers

Power brands are essential to a number of food’s leading competitors. For example, sales of Heinz’s tomato ketchup account for 15% of the company’s total sales. Such brands remain too important to ignore.

Retail consolidation could revolutionise brand visibility

In Western Europe and North America, grocery retailers are highly consolidated. Wal-Mart in the US, for example, has a 26% share of retail sales, while in Germany, the top three grocery retailers account for 53% of total sales. Simultaneously, retailers are looking to rationalise their store space, which includes delisting SKUs. Manufacturers cannot afford not to be stocked by the leading retailers. This gives retailers leverage in negotiations on pricing and in-store advertising.

Private label products may make staples a no-go area for brands

Private label ranges are becoming more popular, and their market share is growing in a number of sectors, such as ready meals, chilled processed meat and other staples. This sales growth is coming at the expense of branded products.

Acquiring category leaders could be the way forward

As a result of retail consolidation, more mergers, such as that of Kraft and Heinz, could occur in the future, as manufacturers look to leverage the reputation of their brands to influence retailers.

Divesting mature brands should also be considered

At the same time, brands that are not associated with category leadership may be sold off by leading companies, as they offer low growth prospects and more recognisable products present better opportunities.