Premium focus pays off for UK private label

- Last updated on GMT

Related tags: Private label, Europe

Economic uncertainty in a number of European countries has given a
boost to sales of private label products over the last year, as
consumers switched from mainstream supermarkets to discount stores.
But the UK's continued dominance of private label sales reflects a
more sophisticated, added-value approach based on innovation and
new product development.

Britain, in fact, remains the biggest private label market in Europe, with more than 40.6 per cent of grocery volumes - both food and non-food - coming from retailers' own brands, according to the 2004 Private Label Yearbook from the Private Label Manufacturers' Association (PLMA).

Two other countries - Belgium and Germany - had private label shares in excess of 35 per cent (38.2 per cent and 35.1 per cent, respectively), while both Spain (29.1 per cent) and France (25.4 per cent) are rapidly approaching the 30 per cent mark.

But what is perhaps more telling is the value share of private label sales in these markets. In the UK, where many retailers often have premium, standard and value own label ranges, the share of value sales is 38 per cent. In Belgium, which is just 2.4 per cent behind the UK in volume terms, private labels account for 27.9 per cent of total grocery turnover - some 10 per cent less than in Britain.

British figures are perhaps distorted by the presence of companies such as Marks & Spencer, whose entire upmarket food range is sold under its own St Michael label, but it is precisely this precedent which has made the UK market so successful when it comes to private label. When the mainstream supermarkets began to embrace private label, the quality image of M&S' products obliged them to pitch at the same level - indeed, value own label products were developed at a later phase, despite being the usual point of entry for many continental retailers.

This persistently upmarket image is reflected in a number of product categories where the UK is well ahead of its European neighbours and where most of the new product development has taken place. For example, in high added-value sectors such as alcoholic drinks and dairy products, British retailers are well ahead of the rest of Europe: nearly 61 per cent of the value sales in dairy products come from private labels in the UK, compared to around 40 per cent for nearest rivals Germany and Belgium. For alcoholic drinks, UK private label takes a 27 per cent share, compared to 20 per cent in Germany.

The difference in focus in Continental markets such as France is clear, with the current trend towards value private label-centred discount stores reflected in the share of private label sales topping 25 per cent for the first time in 2003.

Related topics: Market Trends

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