Private label trend reduces the power of brands

By Jess Halliday

- Last updated on GMT

Related tags: Private label, Ciaa

The switch to private label over branded food is gathering pace in the recession, according to an index compiled by a UK newspaper, which may tighten the squeeze on branded goods manufacturers.

Private label or own-brand products, which carry the label of the retailer rather than a big, well-known brand, tend to attract price conscious consumers. They may also target specific consumer segments – for instance, Tesco has three tiers of private label brands, with quality appeal to serve different budgets.

In its latest Data & Trends report, published this month, the Confederation of the Food and Drink Industries of the EU (CIAA) also noted the shift in consumer spending towards private label goods. It said that the share of private label markets has reaches as high as 48 per cent in traditional retailers, and 94 per cent in discounters.

Between 2006 and 2007, almost every top 30 retailer in saw an increase in private label share.

“The bargaining power of the food and drink industry declines when the share of private labels of a retailer increases,”​ says the report.

The CIAA’s data is drawn from a variety of recent sources which may predate the entry of the economy into recession.

However this month’s Daily Mail Cost of Living Index indicates that the already established trend is only gathering pace in the grim economic climate. It claims that two in five UK shoppers have switched to own-brand options in the last six months.

The newspaper attributes this to hollow boasts by the retailers, saying that price cuts “are failing to deliver meaningful savings”.

The Daily Mail index is compiled in cooperation with price comparison websites MySupermarker.co.uk and USwitch.com. Jonny Steel of the former is quoted as saying that consumers can save up to 20 per cent of their weekly grocery bill by opting for private label foods.

Related topics: Market Trends

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