Supermarket Own Labels

Published by: Key Note Publications Ltd

Published: Jul. 1, 2009 - 178 Pages

Table of Contents

Executive Summary

1. Introduction

BACKGROUND

REPORT COVERAGE

DEFINITION

Foods

Drinks

Non-Foods

2. Strategic Overview

EVOLUTION OF OWN LABELS

KEY ISSUES

Competition Commission Concludes That Own Brands Are Not Competing Unfairly Against Branded Goods

Consolidation of Grocery Retailers Boosts Their Power Over Manufacturers

Table 2.1: Major Grocery Retailers Operating Larger Grocery Stores — Number and Percentage of Stores by Area (square metres), Based on Store Numbers as at July 2006

Economic Downturn Spurs the Rise of the Discounters

Supermarket Price War Steps Up in 2009

Own Brands Refocus on Value

MARKET DYNAMICS

Market Size

Table 2.2: The Total UK Grocery and Own-Label Market by Value at Current Prices (£m at rsp and %), 2004-2008

Figure 2.1: The Total UK Grocery and Own-Label Market by Value at Current Prices (£m at rsp), 2004-2008

COMPETITIVE STRUCTURE

Retailing

Table 2.3: Retail Sales Through `Predominantly Food Stores' in Great Britain by Value at Current Prices and at Constant 2000 Prices (£m at rsp and index 2000=100), 2004-2008

Table 2.4: Retail Sales Through `Predominantly Food Stores' by Size of Business by Value at Current Prices (£m at rsp and index 2000=100), 2004-2008

Table 2.5: Market Share of UK Grocery Sales by Major Grocery Retailer by Value (%), 2008

Own-Label Suppliers

PROMOTIONAL ACTIVITY

Advertising

Table 2.6: Main Media Advertising Expenditure on Food, Drink and Household Goods Brands (£000), Years Ending March 2008 and 2009

New Product Development

THE CONSUMER

MARKET FORECASTS

3. Foods

OVERVIEW

CHILLED READY MEALS

Background

Market Size

Table 3.1: The Total UK Chilled Ready Meals Market by Value at Current Prices (£m at rsp), 2004-2008

FROZEN FOODS

Background

Market Size

Table 3.2: The Total UK Frozen Foods Market by Value at Current Prices (£m at rsp), 2004-2008

Market Sectors

Table 3.3: The Total UK Frozen-Foods Market by Sector by Value at Current Prices (£m at rsp and %), 2008

Ice Cream, Cakes and Frozen Desserts

Meat and Meat Products

Fish and Fish Products

Ready Meals (Excluding Pizza)

Poultry and Poultry Products

Potato Products

Pizza

Vegetables and Fruit (Excluding Potatoes)

Vegetarian Foods

Share of Frozen Food Taken by Own Labels

Table 3.4: Market Share of Frozen Food Sales Taken by Own Labels by Retail Sales Value (%), 2008

MILK AND DAIRY PRODUCTS

Background

Market Size

Table 3.5: The Total UK Milk and Dairy Products Market by Value at Current Prices (£m at rsp), 2004-2008

Market Sectors

Table 3.6: The Total UK Milk and Dairy Products Market by Sector by Value at Current Prices (£m at rsp and %), 2008

Liquid Milk

Cheese

Yoghurts, Yoghurt Drinks and Chilled Desserts

Yellow Fats

Cream

DRY GROCERIES

Background

Market Size and Market Sectors

Table 3.7: The UK Dry Groceries Market by Selected Sector by Value at Current Prices (£m at rsp), 2008

Confectionery

Bread

Biscuits

Bagged Snacks

Breakfast Cereals

DELICATESSEN PRODUCTS

CANNED FOODS

Background

Market Size

Table 3.8: The Total UK Market for Canned Foods by Value at Current Prices (£m at rsp), 2004-2008

Market Sectors

Table 3.9: The UK Market for Canned Foods by Sector by Value at Current Prices (£m at rsp), 2004-2008

Vegetables

Fish

Soup

Meat

Fruit

Pasta

Desserts

Cooking Sauces

Share of Canned Foods Taken by Own Labels

Table 3.10: Market Share of Selected Canned Foods Taken by Own Labels by Value (%), 2008

TABLE SAUCES AND SPREADS

CHILLED SOUPS

4. Drinks

OVERVIEW

Table 4.1: Leading Suppliers of Drinks in the UK, 2008

SOFT DRINKS

Background

Market Size

Market Sectors

Table 4.2: Major Brands of Carbonated and Concentrated Soft Drinks by Sector, 2008

ALCOHOLIC DRINKS

Background and Market Size

Table 4.3: The UK Take-Home Market for Alcoholic Drinks by Sector by Value at Current Prices (£m at rsp), 2008

Market Sectors

Beer and Lager

Wines and Champagne

Spirits and Liqueurs

HOT BEVERAGES

5. Non-Foods

HOUSEHOLD CLEANING PRODUCTS

LAUNDRY AIDS

TOILETRIES

PAPER PRODUCTS

PET FOODS

6. An International Perspective

INTRODUCTION

EUROPE

THE US

7. PEST Analysis

POLITICAL FACTORS

ECONOMIC FACTORS

Gross Domestic Product

Table 7.1: UK Gross Domestic Product at Current and Annual Chain-Linked Prices (£m), 2004-2008, First to Fourth Quarters 2004-2008 and First Quarter 2009

Household Disposable Income

Table 7.2: UK Households' Gross Disposable Income Per Capita at Current Prices (£), 2004-2008

Inflation

Table 7.3: UK Rate of Inflation (%), 2004-2008

Unemployment

Table 7.4: Actual Number of Unemployed Persons in the UK (000), 2004-2008

SOCIAL FACTORS

Population

Table 7.5: UK Resident Population Estimates by Sex (000), Mid-Years 2004-2008

TECHNOLOGICAL FACTORS

8. Consumer Dynamics

OVERVIEW

Table 8.1: Summary of Survey Responses Regarding Retailers' Own Labels (% of respondents), November 2006 and December 2008

THE QUALITY OF OWN LABELS

Shops' Own Brands Are Identical in Quality to Well-Known Brands

Table 8.2: Perception That Own Labels Are Identical in Quality to Well-Known Brands (% of respondents), December 2008

Shops' Own Brands Are Not as Good Quality as the Well-Known Brands

Shops' Own Brands Are Better Quality Than Well-Known Brands

Table 8.3: Perception That Own Labels Are Not as Good Quality as the Well-Known Brands, Versus Perception That They Are Better Quality (% of respondents), December 2008

REASONS WHY SHOPS SELL OWN LABELS

Shops Sell Their Own Brands to Offer Lower Prices

Table 8.4: Belief That Retailers Sell Own Labels to Offer Lower Prices (% of respondents), December 2008

Shops Offer Own Brands to Increase Their Margins

Table 8.5: Belief That Shops Offer Own Labels to Increase Their Margins (% of respondents), December 2008

Shops Sell Own Brands to Increase Choice for the Consumer

Table 8.6: Belief That Shops Offer Own Labels to Increase Choice for the Consumer (% of respondents), December 2008

Shops Sell Their Own Brands to Gain More Customer Loyalty

Table 8.7: Belief That Shops Sell Own Labels to Gain More Customer Loyalty (% of respondents), December 2008

Shops Sell Their Own Brands to Be Different From Other Retailers

Table 8.8: Belief That Shops Sell Own Labels to Be Different From Other Retailers (% of respondents), December 2008

OWN-LABEL PRICES

Shops' Own Brands Are Lower in Price Than Well-Known Brands

Shops' Own Brands Are Either Identical or Higher in Price Than Well-Known Brands

Table 8.9: Perception That Own Labels Are Lower in Price Than Well-Known Brands, Versus Perception That They Are Either Identical or Higher in Price (% of respondents), December 2008

INVOLVEMENT OF RETAILERS IN CREATING OWN LABELS

Shops Tend to Think Up Ideas For Their Own Brands But Do Not Usually Manufacture Them

Shops Tend to Manufacture Their Own Brands Themselves

Table 8.10: Belief That Shops Create Ideas For Their Own Brands But Do Not Usually Manufacture Them, Versus Belief That Shops Tend to Manufacture Own Brands Themselves (% of respondents), December 2008

CONSUMERS' PURCHASING HABITS

I Try to Buy Brands Instead of Shops' Own Brands Where Possible

Table 8.11: Those Who Try to Buy Brands Instead of Shops' Own Labels Where Possible (% of respondents), December 2008

I Buy More Shop Own-Brand Products Than I Did 2 Years Ago

Table 8.12: Those Who Buy More Shop Own-Brand Products Than They Did 2 Years Ago (% of respondents), December 2008

I Am More Likely to Opt For Shops' Own Brands For Items I Buy More Often

Table 8.13: Those Who Are More Inclined to Choose Shops' Own Brands For Items They Buy More Often (% of respondents), December 2008

9. Company Profiles

RETAILERS

ASDA Group Ltd

Corporate Strategy

Own Labels

Profitability

Table 9.1: Financial Results for ASDA Group Ltd (£000 and %), Years Ending 31st December 2005-2007

Table 9.2: Financial Results for Wal-Mart Stores Inc ($m), Years Ending 31st January 2005-2009

Recent and Future Company Developments

The Co-operative Group

Corporate Strategy

Own Labels

Profitability

Table 9.3: Financial Results for The Co-operative Group (£m), Years Ending 12th January 2008 and 10th January 2009

Recent and Future Company Developments

Iceland Foods Ltd

Corporate Strategy

Own Labels

Profitability

Table 9.4: Financial Results for Iceland Foods Ltd (£000 and %), Years Ending 30th March 2007, 28th March 2008 and 27th March 2009

Recent and Future Company Developments

Marks and Spencer PLC

Corporate Strategy

Own Labels

Profitability

Table 9.5: Financial Results for Marks and Spencer PLC (£000 and %), Years Ending 31st March 2007, 29th March 2008 and 28th March 2009

Recent and Future Company Developments

Wm Morrison Supermarkets PLC

Corporate Strategy

Own Labels

Profitability

Table 9.6: Financial Results for Wm Morrison Supermarkets PLC (£000 and %), 53 Weeks Ending 4th February 2007 and Years Ending 3rd February 2008 and 1st February 2009

Recent and Future Company Developments

J Sainsbury PLC

Corporate Strategy

Own Labels

Profitability

Table 9.7: Financial Results for J Sainsbury PLC (£000 and %), Years Ending 24th March 2007, 22nd March 2008 and 21st March 2009

Recent and Future Company Developments

Tesco PLC

Corporate Strategy

Own Labels

Profitability

Table 9.8: Financial Results for Tesco PLC (Group Sales) (£000 and %), Years Ending 24th February 2007 and 23rd February 2008, and 53 Weeks Ending 28th February 2009

Recent and Future Company Developments

Waitrose Ltd

Corporate Strategy

Own Labels

Profitability

Table 9.9: Financial Results for Waitrose Ltd (£000 and %), Years Ending 28th January 2006, 27th January 2007 and 26th January 2008

Recent and Future Company Developments

SELECTED OWN-LABEL SUPPLIERS

Greencore Group PLC

Corporate Strategy

Profitability

Recent and Future Company Developments

Robert McBride Ltd

Corporate Strategy

Profitability

Recent and Future Company Developments

Uniq PLC

Corporate Strategy

Profitability

Recent and Future Company Developments

10. The Future

ECONOMIC TRENDS

Table 10.1: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2009-2013

Table 10.2: Forecast Actual Number of Unemployed Persons in the UK (million), 2009-2013

Table 10.3: Forecast UK Rate of Inflation (%), 2009-2013

FORECASTS 2009 TO 2013

Table 10.4: The Forecast Total UK Grocery and Own-Label Market by Value at Current Prices (£m at rsp and %), 2009-2013

Figure 10.1: The Forecast Total UK Grocery and Own-Label Market by Value at Current Prices (£m at rsp), 2009-2013

11. Further Sources

Publications

General Sources

Government and Official Sources

Other Sources

Key Note Sources

Abstract

Own labels have been taking an increasing share of the overall market for some time, driven by the growth of premium products, the expansion of sub-brands such as organic and `healthier' brands, the multiples' expansion into non-food areas, and the growing dominance of retailers over suppliers of branded goods. Key Note estimates that own labels accounted for around 42.3% of the market in 2008, up from 39.3% in 2004.

However, the economic downturn has given a fresh impetus to own-branded goods, with consumers increasingly turning to own brands in the belief that they offer better value than their branded counterparts. Initiatives and campaigns by the major retailers to encourage consumers to switch to own labels are also playing a part. The fact that retailers are devoting more shelf space to own labels at the expense of branded goods is contributing further to the growth of retailer brands. Major chains such as Tesco have even launched their own discounter brands to stave off the threat from grocery discounters such as Aldi and Lidl.

Similar trends, in terms of the increasing penetration of own brands, are being seen worldwide. Again, this is largely being driven by the global economic downturn. In the US, the country's biggest grocery sellers all reported that sales of their own brands were growing as customers cut back on their overall spending. The same has been true in Continental Europe. In particular, own brands are growing at their fastest pace in central and eastern Europe, where supermarket chains such as Tesco and Carrefour are expanding rapidly.

This report features exclusive consumer research (commissioned by Key Note and carried out by NEMS Market Research) into consumer attitudes and usage patterns with regard to retailers' own labels. Key findings included the fact that 85.6% of respondents thought that own labels were lower in price than well-known brands. Perhaps surprisingly, given the economic downturn, the proportion of people opting for brands rather than own labels where possible had barely changed between 2006 (at 45.4%) and 2008 (at 46.3%). However, 53.1% of the respondents to the 2008 survey said they were buying more own labels than they had been 2 years previously.

Key Note forecasts that the overall share of own labels within the UK grocery market will rise to 48% by 2013. In particular, own labels' share is expected to increase during 2009 as the economic slump forces consumers to cut back significantly on spending, either by seeking the lowest-cost goods or by forgoing certain items. The retailers will also exploit this development by taking an increasingly aggressive stance in promoting their own brands at the expense of branded goods. The expansion of own-label penetration into areas in which they currently hold a relatively low share of the market will also continue.

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