In 2012, the savory snacks market was pegged at €17bn in retail sales across Europe with Russia and Turkey included, according to Euromonitor data.
In the same year PepsiCo Frito-Lay, with its Lay’s, Doritos and Cheetos brands, held a 13% global retail value market share. In Europe, private label snacks only represent around 21%.
“There is a perfect storm for private label overall in Europe because disposable incomes are stagnating, retail modernization is continuing and grocery retailers are going to continue to prioritize private label,” said Lamine Lahouasnia, head of packaged food research at Euromonitor International.
“However, the perfect storm applies less so for snacks because of the amount of consolidation the larger players have,” Lahouasnia told BakeryandSnacks.com.
“They’re inherently more sheltered than some of the other food categories, like dairy for example… They’ve managed to reach that level of consolidation which puts them in their stronger place.”
Snack cravings: Good for brands
Lahouasnia said that snack players also have other strong-points when up against private label.
“A large degree of it is – if you’ve got that pang for a snack, you already have that image in your head of what you want, and nothing can match that,” he said.
“I would be surprised if someone was hooked to a retailer private label snack,” he added.
Snack items are predominantly purchased on impulse, he said, and so there is not a ‘retailer loyalty’ – consumers are shopping in convenience stores and smaller chains.
‘Brands take risks – they know how to innovate to survive’
There are actions branded snack manufacturers can take to differentiate further from private label and face the competition, Lahouasnia said.
Health and wellness is an area that brands have the ability to tap into well, he said. “I haven’t seen much in terms of really innovative health and wellness from private label. Taste for them is really a problem,” he said.
Flavor development is another area where brands can differentiate from private label. Private label manufacturers don't tend to take as many flavor development risks, he said.
“Brands take the risks – they know how to innovate to survive. That’s all they do too. When all you do is potato chips, you have time to focus on research and development,” he said.