UK leads the way in Europe's private label market
increase their penetration in most markets over the next five
years, says a new report, but lessons could be learned from the UK,
where the potential has been most extensively exploited in recent
years.
Private label brands - also known as 'store brand' and 'own label' - are exclusive to a chain of stores (although they can be carried across various stores owned by the same corporation).
For stores, they are a useful way of spreading their brand into households, as well as attracting consumers to stores with the promise of lower-price goods.
According to the new report entitled Tomorrow's Private Label Consumers , 36.7 per cent of consumer packaged goods (food, beverage and personal care) sold in the UK were private label in 2006, amounting to £42bn.
Runners up Germany, Spain and The Netherlands achieved 26 per cent, 21.7 per cent and 20.8 per cent respectively.
Although Datamonitor expects these percentages to rise over the next five years, it does not envisage the rest of Europe catching up with the UK, where 40.2 per cent market penetration and a value of £52bn at retail are forecast by 2011, anytime soon.
Rather, the report's authors say: "There are valuable lessons for European retailers and famous brands alike to be learnt from the example of the UK market."
For instance, the UK market has been established over a number of years, with participants moving away from generic-only offerings to a more hybrid approach.
In the food and drink market, there are now three distinct price strata that aim to catch a wide range of consumers based on budget and preferences: value, mid-range and premium.
Datamonitor says that the UK retail sector has rather unique structuring that has helped to foster private label.
There, the top five supermarkets dominate the grocery market more than anywhere else in Europe; and retailers have been quick to respond to consumer demand.
Moreover, grocery retailers have expanded beyond simple groceries into other kinds of private label products - most notably personal care, a market dominated by High Street Chemists Boots and Superdrug, but in which food retailers like Tesco and ASDA are also making a splash.
While in the early years private labels were seen as a vehicle for cheap staples or everyday foods, such as pasta, cornflakes or teabags, now they have moved on to encompass a broader ranges and luxury goods.
Interestingly, Italy comes at the bottom of the European private label stack, with just 13.5 per cent last year - and the market researcher does not expect this to increase at all to 2011.
A spokesperson had not responded to FoodNavigator.com's request for an explanation of this prior to publication.
