The steady growth of private label fast moving consumer goods continues worldwide, and while Europe is still the leader in terms of overall share, other regions are catching up fast, according to the latest figures from ACNielsen.
Private Label fast-moving consumer goods (fmcg) continue to steadily increase their share of the global marketplace, according to 'The Power of Private Label 2005 Executive News Report' from ACNielsen. Based on the company's data (collected from 14 product areas containing 80 categories in 38 markets), Private Label goods comprise 17% of total value sales for the 12 months ending Q1 2005 (up from the 15% level found in a similar ACNielsen report published in 2003).
In terms of growth, Private Label more than doubled the growth rate of manufacturer brands, at 5% compared to 2%. In fact, in more than two-thirds of the markets studied, Private Label value sales grew faster than manufacturer brand counterparts.
Europe continued its traditional dominance in terms of market share of Private Label value sales, with a 23% share across 17 markets and a growth rate of 4%. In fact, as in the corresponding 2003 report, the top five markets for share of value sales all hailed from Europe:
- Switzerland (45%)
- Germany (30%)
- Great Britain (28%)
- Spain (26%)
- Belgium (25%)
But for how long?
However, the emerging markets (Croatia, Czech Republic, Hungary, Slovakia and South Africa) collectively saw the fastest Private Label growth rate of 11% overall, although achieved from a much smaller base.
As found in previous studies, Latin America and Asia Pacific also have small Private Label markets in terms of share but did not achieve the same double-digit growth rates seen in the emerging markets. North America maintained a high share (16%) and also achieved a significant growth rate of 7%.
The product area of Paper, Plastic & Wraps (containing such commodity-perceived categories as Aluminium Foil, Paper Towels and Plastic Wraps) has long been the dominant Private Label market share and sales leader when pitted against manufacturer brands. But in the 2005 study, Refrigerated Foods (containing such categories as Milk, Cheese and Complete Ready Meals) moved to the top of the list alongside Paper, Plastic & Wraps. In terms of growth, Refrigerated Foods more than tripled that of Paper, Plastic & Wraps (9% compared to 2%).
According to ACNielsen, this rise of Refrigerated Food confirms a steady trend in the Private Label strategy of retailers worldwide: pushing these products into premium segments that go beyond the "low price, high volume" commodity-driven practices of the past. When the company compared the average price differential between branded and Private Label products within the 14 product areas examined, Refrigerated Foods had the smallest price differential at 16%, compared to a global average of 31% across all categories.
Furthermore, the Refrigerated Complete Ready Meals category (found within Refrigerated Foods), where retailers provide consumers with all the ingredients for a complete meal in a variety of packaging, styles and recipes, now commands 49% of overall category value sales.
This nearly-equal share with branded products - in a category that emphasizes quality, freshness, and often "healthy choice" - suggests that retailers can effectively use Private Label to build loyalty and store equity.
"Strategically, retailers worldwide seem to be placing more and more of an emphasis on branding and marketing their Private Label wares to match the lifestyles and values of their shoppers," said Jane Perrin, managing director for ACNielsen Global Services. "From the Tesco Healthy Living range of products to Loblaw's President's Choice expansion into organics and health-oriented lines, retailers are expanding their brands far beyond a singular focus on low price points. We are even seeing retailers leverage the equity of their Private Label brands outside of fast-moving consumer goods into areas such as personal finance, insurance and telecommunications."
Private label buyers
Apart from the Private Label analysis itself, ACNielsen also looked at who is buying Private Label goods, via consumer panel information gathered from 14 markets worldwide. These household-focused insights revealed that nearly everyone buys Private Label goods.
In fact, 100% of households in two-thirds of the markets reviewed had purchased Private Label goods during the past year, and even the lowest penetration level was a still strong 77% (in Singapore). With the growth of premium Private Label products, share of purchases skewed only slightly more toward lower income and larger families.
The full report can be obtained directly from ACNielsen.