US sees store brands grow 10 per cent; UK sales total 39 per cent
New data from the US show that private-label grocery products are emerging from the shadows to become the star of the economic downturn.
Nielsen figures produced for the Private Label Manufacturers Association (PLMA) show that in the year to November 29, 2008, value sales of US private-label products across all channels rose 9.7 per cent to $53.6 billion. Sector growth significantly outstripped total market growth, which stood at 3.2 per cent over the same period, and trounced branded sales, which rose just 1.8 per cent.
With the market worth a total of $294.4 billion, private label's share of US grocery is still a relatively modest 18.2 per cent, up from 17.1 per cent a year earlier. But it means there is plenty of room, and potential, for private label to grow, and the indications are that this will happen.
An attitudinal survey undertaken recently by GfK, again for the PLMA, found that 31 per cent of respondents were buying more store-brand products than a year ago. In addition, the percentage of consumers who said they bought private label 'frequently' had increased sharply to 55 per cent from 41 per cent in 2006 and 12 per cent back in 1991. All these figures suggest the US is heading in the same direction as Europe, where private-label products already represent a far greater proportion of grocery sales. PLMA figures from 2007 show that in the UK, private-label sales represented 39.3 per cent of all grocery sales by value. In Germany the figure was 30.8 per cent and in France 25.2 per cent. More up-to-date figures for the UK, from TNS Worldpanel, put private-label market share as high as 50.7 per cent by value in the year to February 2009.
What does this all mean for functional foods and dietary supplements? It's hard to say. Own-label functional-foods sales are not measured by the PLMA, and the most recent available data for the supplements sector are for 2007 — before the recession hit.
These figures show that private-label products had 25.1 per cent of the US supplements category in 2007, by dollar value, and that this market share was down 1.1 per cent on 2006 levels.
In the UK, the PLMA data for 2007 indicate supplements had 38.2 per cent of the market compared with 36.3 per cent in 2006. The more recent TNS figures, however, show supplements had 53.7 per cent of the UK market, but that sales were down 1.25 per cent.
In terms of functional foods, the TNS figures show that sales of UK private-label yoghurt drinks — which include active health drinks such as the probiotic Actimel and Yakult, and the cholesterol-lowering Benecol and Flora Pro-Activ — rose 10.2 per cent. The market rose just 1.1 per cent; brands by a paltry 0.24 per cent. However, own-label products in this category still command only 9.4 per cent of the total market, which means the market remains overwhelmingly dominated by brands.
It's far from clear-cut and, in fact, the world's leading authority on private label, PLMA president Brian Sharoff, believes products containing functional ingredients will not be a primary target for retailers' private label during the recession, arguing that their focus lies elsewhere.
"Some retailers are attempting to maintain their customer loyalty by competing with the discounters, who they are afraid might be taking business away from them during recessionary times," he said. "This is a separate strategy and does not take anything away from the value-added brands."