The New Face of Private Label: Global Market Trends to 2018

EXECUTIVE SUMMARY

Demand factors

Attitudes to private label

The private label market

Chart 1 Private Label Shares by Fmcg Market 2012

Private label strategy

Outlook

Summary 1 Opportunities and Challenges in Private Label Fmcgs

INTRODUCTION

Advantages of private label

An evolving concept

Types of private label

Importance of private label within the product mix

Summary 2 Types of Private Label 2013

MARKET DRIVERS

Economic uncertainty

Private label boosted by recession
Australians become the highest earners
Chart 2 Per Household Annual Gross Income by Country 2007/2012
Chart 3 Per Household Annual Gross Income by Country: % Growth 2007/2012
China drives growth in retail sales
Table 1 Store-based Retail Sales by Market 2007/2012

The modernisation of the grocery network

Chart 4 Grocery Retailer Sales by Type 2008/2013

Supermarkets/hypermarkets

Focus on growth in emerging markets
Channel reaches maturity in Western Europe
Chinese market remains highly fragmented
Russia dominated by domestic players
Penetration still low throughout rest of Asia
Turkey sees rapid modernisation
Table 2 Penetration of Supermarkets/Hypermarkets by Country 2008/2013

The rise of the discounters

Still strongest in Northern Europe
Poland sees most rapid growth
Discounter concept takes off in Turkey...
...And spreads to the US and Australia
Table 3 Penetration of Discounters by Country 2008/2013

Convenience stores

Penetration still highest in Japan
“Big four” take over convenience channel in the UK
Convenience store concept remains undeveloped in China
Table 4 Penetration of Convenience Stores by Country 2008/2013

Leading grocery retailers

Scale needed for private label development
Wal-Mart rules the roost
Carrefour exits discounters, while Tesco creates smaller formats
Seven & I sees rapid international expansion
Kroger remains firmly in the US
Chart 5 Top 20 Grocery Retailers by Market Share 2013

Retailer consolidation

US sees surge of activity
European retailers turn attention to emerging markets
Asia grocery network remains highly fragmented
Summary 3 Mergers and Acquisitions Among Grocery Retailers 2012-2013

International expansion

Creating a wider distribution base for private labels
Differing levels of internationalisation
French retailers have broadest reach
Discounters go further afield
Summary 4 International Grocery Retailers 2013

THE PRIVATE LABEL CONSUMER

Purchasing habits

Private labels purchased by most shoppers
Urban Indians most likely to have increased private label purchase in 2013
Concept still relatively unknown in Russia
Chart 6 Purchasing of Private Label in the Last 12 Months, by Country 2013
Chart 7 Purchasing of Private Label in the Last 12 Months, by Country 2011/2013
Private labels appeal most to families
Chart 8 Purchasing of Private Label in the Last 12 Months, by Age Group 2013
Similar trends expected in 2014
Chart 9 Purchasing of Private Label in the Next 12 Months, by Country 2013

Polarisation of demand

Perception of private labels

Private label image strengthens in UK and US
Commodities seen to be of equal quality

Attitudes towards price/quality ratio

More than a third of consumers think private label can be superior
Private label perceptions weakest in Asia and the Middle East and Africa
Chart 10 Attitudes Towards Private Label by Region 2010

PRIVATE LABEL MARKET OVERVIEW

The global picture

Private label share remains steady at 10%
Consumers seek value when times are hard
Chart 11 Global GDP V Fmcg Private Label Growth 2008-2012

Broad sector trends

Price gap narrows
Private label share remains strongest in commodities
Chart 12 Global Private Label Shares by Market 2007-2012
Table 5 Global Private Label Sales by Market 2007-2012

National trends

The US leads the world by total value
Private label penetration highest in Switzerland
UK sees a fall in private label sales
Spain experiences sharp growth
A burgeoning sector in Russia
Emerging markets enjoy growth from a small base
Table 6 Leading Markets for Private Label 2007/2012
Table 7 Penetration of Private Label by Country 2007/2012

CATEGORY TRENDS

Packaged food, hot drinks and pet food

Chilled foods and ready meals offer most scope for private label
Premiumisation of private label pet food
Confectionery market remains dominated by big brands
Nescafé maintains its grip on the hot drinks market
Consumers remain cautious about baby food
Table 8 Global Packaged Food: Private Label Shares by Category 2007/2012

Soft drinks

Coca-Cola and PepsiCo leave little room for private label
Retailers experiment with more sophisticated speciality products
Price gap remains high
Table 9 Global Soft Drinks: Private Label Shares by Category 2007/2012

Beauty and personal care

Market remains largely in the hands of specialists
Most private labels positioned in the masstige segment
Celebrities add credibility to beauty offerings
Table 10 Global Beauty and Personal Care: Private Label Shares by Category 2007/2012

Home care

Private labels lack technical expertise and marketing clout
Retailers take eco-friendly angle
Table 11 Global Home Care: Private Label Shares by Category 2007/2012

Tissue and hygiene

Commodity nature of market lends itself well to private label
Private label penetration highest in kitchen towels
Retailers introduce more sophisticated features to nappies
Table 12 Global Retail Tissue and Hygiene: Private Label Shares by Category 2007/2012

KEY MARKET TRENDS

France

Overview
Chart 13 France: Grocery Retail Structure 2012
Private label share highest in tissue and hygiene
Retailers find alternatives to aspartame
Carrefour enjoys success with new beauty line
Table 13 France: Private Label Shares by Market/Category 2007/2012

Germany

Overview
Chart 14 Germany: Grocery Retail Structure 2012
More than half of tissue and hygiene sales now private label
Three-tier offerings make an appearance in packaged food
Pet superstores drive growth in private label pet food
Table 14 Germany: Private Label Shares by Market/Category 2007/2012

Japan

Overview
Chart 15 Japan: Grocery Retail Structure 2012
Private label strongest in packaged food and hot drinks
Chart 16 Japan: Number of Private Label Packaged Food Launches by Major Retailers 2008-2012
Private label ready meals consist largely of bento
Table 15 Japan: Private Label Shares in Selected Markets/Categories 2007/2012

Poland

Overview
Chart 17 Poland: Grocery Retail Structure 2012
Penetration doubles over five years in tissue and hygiene
Private label pet food offerings mushroom
Table 16 Poland: Private Label Shares by Market/Category 2007/2012

Spain

Overview
Chart 18 Spain: Grocery Retail Structure 2012
Retailers launch basic ranges to appeal to cash-strapped customers
Private label fruit juice enjoys success
Table 17 Spain: Private Label Shares by Market/Category 2007/2012

UK

Overview
The rise of Aldi
Chart 19 UK: Grocery Retail Structure 2012
Chilled foods dominated by private label
Chart 20 UK: Ready Meals Brand Shares 2012
Retailers lead the way in premium pastas
Private label nappies capitalise on the withdrawal of Huggies Pull-Ups
Private label beauty steps up a notch
Table 18 UK: Private Label Shares by Market/Category 2007/2012

US

Overview
The drive for value
Quality tests support private label
Chart 21 US: Grocery Retail Structure 2012
Private label dairy products are popular
US lags behind Europe in terms of ready meals
Retailers gain a strong foothold in bottled water
Wal-Mart adds to Ol’Roy brand with premium pet food
Private labels battle home care giants with eco-friendly lines
Table 19 US: Private Label Shares by Market/Category 2007/2012

RETAILER STRATEGIES

Expanding private label ranges

Seeking parity with national brands
Discounters place highest importance on private labels
Leading supermarkets aim for a more even balance
Private label less of a focus for convenience stores
Summary 5 Importance of Private Labels to selected Grocery Retailers 2013

Building on the three-tier offer

Shoppers mix and match
Upscale retailers go downmarket
Discounters join the fray
Focusing on economy
Summary 6 Leading Grocery Retailers – Private Label Ranges by Tier 2013

The development of specialised lines

New lines focus on freshness and balanced eating
Food intolerance products still relevant
Summary 7 Leading Grocery Retailers: Specialised Private Label Ranges 2013

Revamping private label lines

Emphasis on quality
Asda appeal to public to help revamp Chosen By You
Upgrading basic ranges
Wal-Mart revamps Great Value

The rise of the venture brand

Reducing reliance on the master brand
Carrefour launches independent brands
Carrying brands across fascias
Summary 8 Leading Grocery Retailers: Venture/Fantasy Brands 2013

Taking private labels into new markets

The need to build trust
Good prospects in Eastern Europe
Focus on value in Asia Pacific
Barriers to entry in India
Launching brands abroad
Distributing private labels online

Advertising and promotion

Lack of big promotional budgets
Tesco Finest sponsors popular TV drama
French benefit from new regulations
Aldi’s successful “like brands only cheaper” campaign
Growing use of social media
Merchandising

Licensing and partnerships

Raising visibility and adding credibility
Celebrity endorsement
Character licensing
Co-branding

Emphasis on sustainability

Creating a greener image
Provenance becomes all-important

Packaging developments

No more plain packaging
Copycat strategy still used by some discounters
Innovative designs
Aseptic cartons enter the private label arena
Labelling developments

Pricing strategies

Price differential varies according to type of retailer
The gap narrows

Supplier selection

Maintaining a close relationship is essential
In-house production
Outsourcing
Stepping up quality control
Cooperatives and buying groups

SUPPLIER TRENDS

Key suppliers by sector

Cott remains world’s largest supplier of soft drinks
Food supply remains extremely fragmented
Pet food companies consolidate
Tissue and hygiene products produced by big brand companies
McBride stays at the top of its game
Some big brand manufacturers opt out of private label supply

Industry consolidation

Summary 9 Mergers and Acquisitions among Private Label suppliers, 2013

FUTURE OUTLOOK

Trends to watch

Economic conditions will remain depressed
Chart 22 Forecast Global Real GDP Growth 2013-2017
Still room for expansion
Supermarkets/hypermarkets to control more than half of grocery sales by 2018
Eastern Europe will see rapid progress
Chart 23 Forecast Global Modern Grocery Retailers by Type 2013/2018
Table 20 Forecast Share of Modern Grocery Retailers by Country 2013/2018
Lines between national and retailer brands will become more blurred
Improving promotional techniques
Potential in emerging markets
Reforms may lead to growth in India
Chinese market will be slow to take off

Forecasts

Minimal increases in the short term
US to see gradual growth
Table 21 Forecast Penetration of Private Label by Country 2012/2017

Recommendations

Innovate, don’t imitate
Collaborate with rivals
Make good use of big data

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