France’s market for private label has been greatly affected by an aggressive price war between major retailers which has driven prices down, meaning private label brands have lost their price competitive edge.
Despite retailers using category management strategies to counter this, the share of assortment has dropped from 26.2% in 2012 to 25.2% in 2015.
The figures speak for themselves - from 2010 to 2015 national brands grew 12.8% in value while private label only saw a value increase of 1.5% while there was a volume growth of 7.7% for national brands and a volume decline of 7.1% for private label, according to IRI figures.
"It seems to be usual these days for price wars to be largely (but not exclusively) spearheaded by branded lines and branded promotions so private label may find it hard whilst this situation continues in France," director of strategic insight at IRI and report author, Tim Eales told FoodNavigator.
“It is a critical time for private label manufacturers in France. As retailers have focused on the price war among national brands, private label has been downgraded in terms of assortment, innovation, promotion and price competitiveness. In addition local brands are emerging and providing a point of differentiation for consumers and smart shoppers are also taking advantage of national brands’ price deflation to select higher value products.”
Nevertheless there are glimmers of hope: by channeling long-term trends, such as the preference for regional products and organic, manufacturers could find success.
"Private label is growing in the premium ranges which is what we have seen in many countries. This seems to be the best chance for growing value as the economy tier shrinks and the premium one grows," Eales added.