‘Nimble’ local brand closing in on multinational rivals: Kantar data

By Nathan GRAY

- Last updated on GMT

'The advantages of scale afforded to the multinationals have become eroded as smaller players adapt to changing tastes faster than the giants,' Alison Martin, director at Kantar Worldpanel UK & Ireland. © iStock
'The advantages of scale afforded to the multinationals have become eroded as smaller players adapt to changing tastes faster than the giants,' Alison Martin, director at Kantar Worldpanel UK & Ireland. © iStock

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Local brands are growing at twice the pace of multinationals thanks to an ability to quickly respond to niche market demands and better cater to consumer needs, says a report from Kantar Worldpanel.

Growth of local brands continued to outpace the market average for multinationals for market averages for the third year running, according to the latest Brand Footprint​ report from Kantar Worldpanel.

Analysing data from one billion households in 44 countries and 300 billion shopper decisions, the report reveals that the total value of fast moving consumer goods (FMCG) grew by 4.7% globally in 2015; however local players grew value by 6.2%, while global brands grew by just 3.4%.

“Not only are there significantly more local brands across the world, it is generally the case that they will reach more shoppers in more remote parts of their market, working in closer concert with consumer need,” ​said Alison Martin, director at Kantar Worldpanel UK & Ireland.

“Where budgets are tight, they will adjust price points or pack size. In large emerging markets such as China, India and Indonesia, many consumers see local brands as not only familiar but also more affordable and widely available.”

According to Kantar, food and beverage are ‘particularly strong’ categories as brand choices are dominated by local players in terms of both the number of brands available as well as in the number of times they are chosen. 

Market Fragmentation

The report also notes that market fragmentation is happening all over the world as consumer attitudes towards food are changing – and that smaller local brands are able to capitalise on this fragmentation.

“In Western markets, consumers are demanding products tailored to increasingly specific needs; be that free-from products, non-traditional flavours or new formats,”​ said Martin. “The advantages of scale afforded to the multinationals have become eroded as smaller players adapt to changing tastes faster than the giants.”

In Europe, Kantar suggests that the idea of a ‘homogenous character’ in Europe is fading away. Indeed, the report data shows a highly fragmented group of shoppers, both within communities and across borders.

individual-group
The homogenous shopper may be a thing of the past. ©iStock

“An older woman in a French hypermarket is likely to choose products with larger print and smaller, easy-to-open packs. A British Millennial is a rare sight in supermarkets: they prefer prepared meals from smaller stores or a snack from a corner shop to eat on the go. A young family in Russia, under pressure from rising inflation, is taking advantage of a growing discounter share and decreasing cost of private label products seen in 2015,”​ it stated.

When it comes to developing markets, Martin added that fragmentation is often less about product than about regional dynamics: “China, for example, is growing at a faster rate than many markets but much of that growth is taking place outside big cities.”

“With Western giants structurally suited to hitting big cities with volume and less able to distribute into the regional cities, local players are flourishing.”

Exploiting growth potential

Kantar suggests that many ‘nimble local players’ are proving better at exploiting growth opportunities than counterpart global brands.

The report suggests that in large emerging markets such as China, India and Indonesia, many consumers see local brands as not only familiar but also more affordable and widely available.

Meanwhile, the growth of free-from ranges in many countries “presents a masterclass in both targeting new shoppers and expanding across categories,”​ said the report. “These products command and secure a higher price point targeting health and environmentally conscious consumers who are willing to pay more.”

lindt logo
Brands like Lindt have exportable power, says Kantar ©iStock

As a result, retailers have given the category more shelf space, which has led to further growth and “many surprising brands have jumped aboard,”​ said the report – which noted that pizza brand Goodfella’s in particular has seen rapid growth in 2015 since the introduction of its gluten-free pizza range, while gluten-free ranges mark a strategic addition to the pasta category overall.

Furthermore, many European brands are finding their own heritage to be a unique selling point to global markets, according to Kantar.

“Chocolatiers Lindt and Ferrero are masters of this game, both exporting their sweet treats to a growing number of overseas consumers.”

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