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Private Label Shopping Trends in Alcoholic Beverages

Datamonitor
January 20, 2009
287 Pages - SKU: DFMN2104620

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Introduction

When Datamonitor surveyed consumers across 15 countries about to what extent they agreed they had been making an effort to save more money, there was an overwhelming degree of agreement across geographies. In times of economic uncertainly, consumers become even more interested in obtaining value-for-money in their everyday shopping and private label is an important way of achieving this.

Scope

Insightful analysis into consumer's attitudes, beliefs and motivations behind private label versus famous brand purchases
Consumer survey insight covering 15 countries. Examines attitudes to brand image, price/value and alcoholic beverage products more generally
Detailed action points offering practical strategies for private label and famous brands based on the trends and insights analyzed in the report
Covers alcoholic beverages. Geographic coverage includes Europe, the US, Asia Pacific and the BRIC markets

Highlights

The adoption of a 'recessionary mindset' is already changing consumer attitudes and behaviors with regards to overall spending and their actual product choices. Any worries that consumers have about the economy only serve to strengthen private label spend because store brands are seen as an important way of achieving value for money

Private label is accounting for an increasing amount of alcoholic beverage spending across most countries but is less developed than other FMCG sectors. This is because product/category characteristics significantly influence own label purchases, in addition to consumer characteristics such as demographics, value consciousness and risk aversion

Marketing fatigue potentially enhances the appeal and relevance of private label brands, especially as advertising is a key defense tactic for famous brands. Across the 15 countries surveyed by Datamonitor, 47% of respondents 'strongly agreed' with the statement, there is too much advertising todayReasons to Purchase

Improve your decision making: use this report to help understand what you should be doing to embrace private label growth or defend yourself from
Market sizing: understand the scale and growth of the private label alcoholic beverage opportunity/threat by sector and country
Access insightful market and consumer opinion data aggregating the most compelling research in this timely and important opportunity/threat

Overview: Catalyst; Summary; Table of Contents; Table of figures; Table of tables
THE FUTURE DECODED: INTRODUCTION: Private label is entering an important era as value conscious shoppers look to maximize their discretionary spending; Private label growth can be attributed to both 'consumer pull' and 'manufacturer push'; TREND: Growth in private label penetration and sales is apparent across the globe; The propensity to opt for private label is increasing across all FMCG categories and most geographies; Private label is accounting for an increasing amount of alcoholic beverage spend across most countries but is less developed than other FMCG sectors; Key takeouts and implications: the presence of private labels is increasing,and is thus becoming a growing threat to producers' brands and manufacturers' profitability; INSIGHT: Price-led value has a significant influence on consumers' alcoholic beverage choices even if consumers are reluctant to give up their favorite brands; The search for value is increasingly dictating where consumers purchase products; Price/value is a key influencer of alcoholic beverage choices,which potentially bodes well for further private label growth going forward; Consumers are also generally highly conscious of the amount of money spent on alcohol; Promotional offers have a high influence on alcoholic beverage choice for over a third of consumers; Brand image is a secondary consideration to most alcoholic beverage decisions; Key takeouts and implications: private label potentially appeals to the many alcoholic beverage consumers looking to stretch their budgets and will further challenge brand loyalties going forward; INSIGHT: Increasing economic uncertainty enhances the appeal of private label alcoholic beverages; Private label offers consumers discernible price savings which they typically recognize; Achieving cost savings is the key driver influencing a switch towards private label alternatives because consumers instinctively recognize the superior value such products offer; Historical downturns,especially in the 1970s,have been major catalysts for private label adoption and development; As consumers adopt a 'recessionary mindset',the search for price-led value in alcoholic beverage purchases will intensify; More consumers have made alcoholic beverage purchases on the basis of value in 2008 but 'sacrificial consumption' is more apparent in other sectors; A desire and tendency to gravitate towards higher quality alcoholic beverages is still a prominent theme; The current economic downturn has contributed to consumers switching to discount stores and private label alternatives more often in 2008; Key takeouts and implications: private label appeals to the growing number of global consumers who are finding ways to stretch their budgets; INSIGHT: Private label choice is expanding and is more sophisticated than ever; Private labels are increasingly 'tiered' to accommodate all levels of consumers' budgets and the core consumer trends driving shopper behavior; Premium and indulgence trends are signifying a new direction for private label adoption and innovation; Health and wellness trends have a huge influence on consumer lifestyles,and food and beverage choices; Organic and ethical private label ranges are likely to gain prominence in private label alcoholic beverage innovation even if such benefits are currently not deemed important by global consumers; Private label saturation could however lead to time poor consumers returning to famous brands; Key takeouts and implications: private label has grown because it is increasingly 'on-trend' and industry players have been adept at aligning it with relevant consumer segments; INSIGHT: Consumers' trust in private labels is growing,which boosts propensity to trial and longer term adoption; The majority of consumers,particularly in western markets,consider private labels to be of good quality,believing that the differences between own label and famous brands are minimal; Private label preference and adoption does not necessarily translate into increased store loyalty; The quality that national brands offer is highly recognized by consumers in some product categories; In-store environment also influences private label and national brand perceptions; Marketing fatigue also enhances the appeal and relevance of private label brands; Private label still typically attracts more lower income shoppers but the consumer base is broadening which increases the relevance of psychographic rather than demographic targeting; Key takeouts and implications: private label is not a new phenomenon but consumer acceptance is growing across socio-demographic groups
ACTION POINTS: ACTION: Determine whether you want to manufacture private label brands or not; ACTION: Ensure that private label offerings are 'on-trend',deliver added value benefits for more discerning shoppers and receive additional backing during the economic downturn; Use the recessionary climate as an opportunity to grow private label share by implementing various tactics to boost private label adoption; Create and maintain a competitive advantage by reassessing strategic aims for future growth; Keep private label brands fresh with new variants that utilize more subtle and distinctive branding techniques; Be wary of creating choice proliferation through over-extended private label initiatives without rationalizing other parts of the store mix; Be sensitive to the international differences in attitudes towards private label products; Focus on building effective relationships with private label partners; Retailers must ensure that the relative mix of value and premium private label lines is consistent with store positioning; ACTION: Manufacturer brands must maintain marketing investment to minimize deflection to private label alternatives; Highlight the risk of switching to a cheaper non-branded alternative; Re-assess the need to rationalize brands and convince retail partners that those brands are in line with their broader positioning; Focus on quality to maintain differentiation and prove to consumers that quality really matters; Develop more custom/personalized solutions for consumers to offer unique,targeted benefits; Develop communications which convince consumers that national branded products still represent good value for money; Consider developing a 'flanker' value sub-brand while ensuring there is an offering for all pricing tiers
APPENDIX: Definitions; Methodology; Further reading and references; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: Consumer survey: the propensity to choose food and beverages,cosmetics and toiletries,household and laundry care and alcoholic drinks on the basis of value/cost in the previous six months,in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 2: Total private label penetration and spend ($ millions) in Europe,Asia Pacific and the US,by country,2002-2012; Table 3: Total private label alcoholic beverage penetration and spend ($ millions) in Europe and the US,by country,2002-2012; Table 4: Total private label alcoholic beverage penetration and spend ($ millions) in Asia Pacific,by country,2002-2012; Table 5: Consumer survey: the influence of price on consumers' choice of alcoholic drink products in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 6: Consumer survey: attention given towards the amount of money spent on alcohol in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 7: Consumer survey: the influence of promotional offers on consumers' choice of alcoholic drink products in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 8: Consumer survey: the importance attached to being seen with the right brand in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 9: Consumer survey: the influence of brand image on alcoholic beverage product choices in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 10: Consumer survey: the influence of habit on alcoholic beverage product choices in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 11: Consumer survey: the influence of price,habit/preferred brand,and brand image on alcoholic beverage product choices in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 12: Consumer survey: the propensity to make efforts to save more money in light of the economic downturn in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 13: Consumer survey: the propensity to choose alcoholic drinks for at-home consumption on the basis of value or cost in the previous six months in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 14: Consumer survey: the propensity to choose higher quality alcoholic drinks for at-home consumption in the previous six months,in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 15: Consumer survey: the influence of health on consumers' choice of alcoholic drink products,in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 16: Consumer survey: the influence of ethics/sustainability benefits on alcoholic beverage product choices in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 17: Consumer survey: the influence of organic/natural ingredients on alcoholic beverage product choices in 15 countries across Europe,Asia Pacific,South America and the US,by country,2008; Table 18: Consumer survey: agreement with the statement there is too much choice when doing grocery shopping,in 15 countries across Europe,Asia Pacific,South America and the US,by country; Table 19: Consumer survey: agreement with the statement there is too much choice when doing grocery shopping in 15 countries across Europe,Asia Pacific,South America and the US,by country; Table 20: Consumer survey: the influence of price on alcoholic beverage choices in 15 countries across Europe,Asia Pacific,South America and the US,by country and gender,2008; Table 21: Consumer survey: the influence of brand image on alcoholic beverage choices in 15 countries across Europe,Asia Pacific,South America and the US,by country and gender,2008
List of Figures: Figure 1: The private label market is impacted by a broad range of drivers and inhibitors; Figure 2: Overall private label penetration across FMCG categories is higher in Europe and the US than in Asia Pacific; Figure 3: Alcoholic drinks are typically under-represented in various national private label markets; Figure 4: Good value for money has become the most important influence over grocery store choice globally; Figure 5: Price is second only to sensory benefits in influencing consumers' alcoholic beverage choices; Figure 6: Price consciousness is not necessarily fully reflected in concerns about the overall amount of money spent on alcohol; Figure 7: Swedish alcoholic beverage shoppers are the least influenced by promotional offers; Figure 8: Consumers are not overly pre-occupied with brand image; Figure 9: Emerging market consumers are more pre-occupied with brand image than those from developed western markets when making alcoholic beverage choices; Figure 10: Habit or a preferred brand plays an important role in directing alcoholic beverage choices; Figure 11: Perceived and experienced value benefits leads to private label trial and long term adoption; Figure 12: Shoppers have come to recognize the 'value for money' that own label brands offer; Figure 13: Consumers are making efforts to save in light of the current downturn; Figure 14: A skew towards value conscious alcoholic beverage shopping emerged in 2008; Figure 15: Few alcoholic beverage consumers have been cutting back on premium,higher quality purchases; Figure 16: The nature of the private label offering has changed considerably; Figure 17: Private label brands are experiencing growth,with four distinct benefits/attributes; Figure 18: Alcoholic beverage private labelers are targeting more discerning drinkers with upscale offerings; Figure 19: Enjoying small indulgences to escape everyday pressures has remained a theme in global consumer behavior in 2008 in spite of the economic downturn; Figure 20: In Australia,Woolworths' is seeking to capitalize on the growth of the low-carb beer segment; Figure 21: Organic and ethically aligned private label alcoholic drinks are likely to emerge in line with any concerted efforts the broader industry makes going forward; Figure 22: A large proportion of consumers already feels that there is too much choice when doing grocery shopping,which means the private label range expansion must be managed carefully; Figure 23: Globally,consumers are familiar with private label and this better enables them to make a brand versus private label decision; Figure 24: Perceptions of private label are changing across the majority of FMCG categories; Figure 25: Private label brands are no longer perceived as merely low cost alternatives to famous brands; Figure 26: Global consumer attitudes towards private label are typically favorable; Figure 27: For some categories,private label is not deemed as a credible alternative to famous brands; Figure 28: Enhance the full scope of the consumer experience by strengthening overall retailer positioning; Figure 29: Japanese consumers show the least amount of advertising fatigue but more than 40% of consumers overall believe there is too much advertising today; Figure 30: Consumers think that a significant chunk of the higher price associated with famous brands does not bring them tangible benefits; Figure 31: More US consumers currently report buying private label products; Figure 32: There is little variation in the influence that price has on alcoholic beverage choices by age; Figure 33: Young Adults and Mid-lifers place the most importance on brand image when choosing alcoholic beverage products; Figure 34: National brand players are faced with a dilemma over whether to produce private brands or not; Figure 35: Industry players must consider these advantages and disadvantages in making decisions about whether to embrace private label; Figure 36: 7-Eleven is looking to capitalize on the private label opportunity in c-stores; Figure 37: Investment in marketing is important in effectively capitalizing on the recessionary climate as an opportunity to grow private label share; Figure 38: Industry players must determine the strategic approach taken to manage private label development; Figure 39: Private label players adopt different approaches to branding depending on whether the strategy is geared towards differentiation or low pricing; Figure 40: Fostering effective supplier relationships is crucial to the longer term growth prospects of private labeling; Figure 41: Private label wine is being used by a number of US retailers to drive store loyalty and/or improve private label brand perceptions more generally; Figure 42: Manufacturers looking to capitalize of premiumization in alcoholic beverages must excel more than their competitors in the provision of factors associated with the PPI; Figure 43: Four key personal benefits as well as the additional ease of customizing have driven the trend toward more personalized CPG; Figure 44: Charmin Basic,an example of a famous brand adopting the tiered pricing strategy of many private labels,and the possible private label response

Private Label Shopping Trends in Alcoholic Beverages

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