Private Label Shopping Trends in Food and Non-Alcoholic Beverages

Published by: Datamonitor

Published: Nov. 14, 2008 - 8 Pages

Table of Contents

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

With global private label sales approaching one trillion dollars, 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 food spend across most countries

Consumption of non-alcoholic beverage private label brands is typically lower than food in most countries

Key takeouts and implications: the presence of private labels is increasing, and is becoming a significant threat to producers' brands and manufacturers' profitability

INSIGHT: Price-led value has a significant influence on consumers' food and beverage choices at a time when commodity prices have soared

Trends in commodity prices have intensified the search for products perceived as better value

The search for value is increasingly dictating where consumers purchase food and beverage products

Price/value is a key influencer of food and beverage choices and this bodes well for additional private label growth in the sectors going forward

Brand name/brand image is a secondary consideration to most food and beverage decisions

Key takeouts and implications: private label appeals to the growing number of food and 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 food and non-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 food and beverage purchases will intensify

More consumers have made food and beverage purchases on the basis of value in 2008

But a desire and tendency to gravitate towards higher quality food and beverages is still a prominent trend characterizing many food and beverage choices

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, especially in food and non-alcoholic beverages

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

The desire for 'everyday value', including attentiveness to rising food costs, has created a demand for discount private label food and beverage brands

Health and wellness trends have a huge influence on consumer lifestyles and food and beverage choices

Organic and ethical private label ranges will appeal to a large proportion of food and beverage shoppers

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 doesn't 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

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

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

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

Consider if brand related stores can help enhance brand prestige and loyalty

APPENDIX

Definitions

Methodology

Further reading and references

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Total private label penetration and spend (US$ millions) in Europe, Asia Pacific and the US, by country, 2002-2012

Table 2: Total private label food penetration and spend ($ millions) in Europe and the US, by country, 2002-2012

Table 3: Total private label food penetration and spend (US$ millions) in Asia Pacific, by country, 2002-2012

Table 4: Total private label non-alcoholic beverages penetration and spend (US$ millions) in Europe and the US, by country, 2002-2012

Table 5: Total private label non-alcoholic beverages penetration and spend (US$ millions) in Asia-Pacific, by country, 2002-2012

Table 6: The FAO Food Price Index (FFPI), 2000-2008

Table 7: 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 8: Consumer survey: the influence of price, habit/preferred brand, and brand image on food and non alcoholic beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008

Table 9: Consumer survey: the influence of price on food and 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 brand name/brand image on food and beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008

Table 11: 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 12: Consumer survey: the propensity to choose food and beverage products 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 13: Consumer survey: the propensity to choose higher quality food and beverages 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 importance attached to diet and nutrition in creating a felling of wellbeing in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008

Table 15: Consumer survey: the influence of health on food and beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008

Table 16: Consumer survey: the influence of production methods on food and 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 ethics or sustainability benefits on food and 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 food and non-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 food and non-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, a message for retailer and manufacturer brands alike

Figure 2: Overall private label penetration across FMCG categories is higher in Europe and the US than it is in Asia Pacific

Figure 3: Private label food penetration accounts for a disproportionately high percentage of the overall private label market in most countries

Figure 4: Private label non-alcoholic beverage penetration accounts for a disproportionately high percentage of the overall private label market in some European countries, but the opposite is true across the Asia Pacific region

Figure 5: The Food and Agricultural Organization of the United Nations Food Price Index (FFPI) scaled new heights in 2008

Figure 6: Good value for money has become the most important influence over grocery store choice globally

Figure 7: Price is second only to sensory benefits in influencing consumers' food and beverage choices

Figure 8: Consumers generally state that they are not overly pre-occupied with brand image

Figure 9: French, US and Brazilian consumers are the most price conscious food and beverage consumers

Figure 10: Emerging market consumers are more brand conscious when it comes to food & 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: Consumers are feeling the effects of the downturn on their personal finances

Figure 15: Half of lower income shoppers are having difficulty buying the groceries they need

Figure 16: There has been a shift towards value based food and beverage shopping in 2008

Figure 17: Consumers have continued to purchase higher quality food and beverages with greater regularity in 2008 as a trend of 'hi-lo consumerism' continues to shape broader buying behavior

Figure 18: The nature of the private label offering has changed considerably

Figure 19: Private label brands are experiencing growth, with four distinct benefits/attributes

Figure 20: Premium private label products exude indulgence with descriptive names and upscale packaging

Figure 21: Enjoying small indulgences to escape everyday pressures has remained a theme in global consumer behavior in 2008 in spite of the economic downturn

Figure 22: In Australia and the UK, the discount brands associated with major retailers often have notable shelf standout owing to the simplistic nature of the pack design

Figure 23: Health considerations have a significant amount of influence on food and beverage choices made by consumers across the globe

Figure 24: A large proportion of consumers already feels there is too much choice when doing grocery shopping which means the private label range expansion must be managed carefully

Figure 25: Globally, consumers are familiar with private label and this better enables them to make a brand versus private label decision

Figure 26: Perceptions of private label are changing across the majority of FMCG categories

Figure 27: Private label brands are no longer perceived as merely low cost alternatives to famous brands

Figure 28: Global consumer attitudes towards private label are typically favorable

Figure 29: For some categories, private label is not deemed as a credible alternative to famous brands

Figure 30: Japanese consumers show the least amount of advertising fatigue but more than 40% of consumers overall believe there is too much advertising today

Figure 31: Consumers think that a significant chunk of the higher price associated with famous brands does not bring them tangible benefits

Figure 32: More US consumers currently report buying private label products

Figure 33: There is little variation in the influence that price has on food and beverage choices by age

Figure 34: Young Adults and Mid-lifers place the most importance on brand image when choosing food and non-alcoholic beverage products

Figure 35: National brand players are faced with a dilemma over whether to produce private brands or not

Figure 36: Investment in marketing is important in effectively capitalizing on the recessionary climate as an opportunity to grow private label share

Figure 37: Industry players must determine the strategic approach taken to manage private label development

Figure 38: Private label players adopt different approaches to branding depending on whether the strategy is geared towards differentiation or low pricing

Figure 39: Fostering effective supplier relationships is crucial to the longer term growth prospects of private label branding

Figure 40: Enhance the full scope of the consumer experience by strengthening overall retailer positioning

Figure 41: Manufacturers looking to capitalize of premiumization in personal care must excel more than their competitors in the provision of factors associated with the PPI

Figure 42: Four key personal benefits as well as the additional ease of customizing have driven the trend toward more personalized CPG

Figure 43: Charmin Basic, an example of a famous brand adopting the tiered pricing strategy of many private labels, and the possible private label response

Abstract

• 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 food and non-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 food and non-alcoholic beverages. Geographic coverage includes Europe, the US, Asia Pacific and the BRIC markets

• 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 food and non-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

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