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Global future of store brands

March 28, 2011

Grocery retailers' store-brand products are expected to double their share of the global packaged food market over the next 15 years to make up half the market, reports Reuters.

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Grocery retailers' store-brand products are expected to double their share of the global packaged food market over the next 15 years to make up half the market, reports Reuters.

Growth of private-label brands will be fueled by retail consolidation in developed markets, adoption of modern retail in developing markets, and increased consumer acceptance of private-label brands following the recession, according to a report by Sebastiaan Schreijen, associate director of processed food and retail at Rabobank.

Overall, the impact of the recession has given private label an enormous boost ... Indirectly, the effects of the recession will fuel further private-label expansion across the globe for years to come, according to the report, which cited increased consumer awareness and competitive pressure.

Private-label suppliers are getting more professional, the report said, and the quality of the products have been improved. Private-label brands, such as those from Wal-Mart Stores Inc. and Kroger Co. in the U.S., Tesco Plc in Britain, Aldi in Germany and Carrefour in France, account for about a quarter of the food sold in grocery stores, the report said, and private labels often carry lower price tags than branded goods from national brands manufacturers.

Even as private brands gain market share, leading national brands will keep their market position and gain in importance, Schreijen said, as they stand as reference points for price and quality for each product category. That means pressure will mount on the secondary brands, likely leading to weak sales and heavy price competition between suppliers.