Own brands win market share and acceptance, Symphony IRI data shows

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Own label products are no longer just low-cost alternatives for national brands, they are accepted as strong brands in their own right.

That’s one of the key findings of Symphony IRI Group’s research on key FMCG trends in Europe. 

Consumers are drawn to own-label brands because of the savings they represent, claim researchers. 

A typical EU private label shopping basket costs on average 30% cheaper than one filled with national brands. 

But own labels are not taking over the world. Despite the pressure on budgets, consumers are shopping more discerningly than that – and retailers are currently in a stranglehold with national brands, who have responded with products that create new levels of differentiation, for example.  

The market share of own-label products had risen through the recession, as retailers strengthened their brand strategies, expanded product ranges and leveraged their price advantage, reports Symphony IRI. Overall, own label sales have increased in all countries except France, and after a pause promotion is on the rise again at the end of 2011.

Across Europe as a whole, retailers own label products are gaining market share, according to researchers. The most mature own label market in the world, shoppers in Europe buy nearly as many own label products as they do national brands and in some countries they are viewed as equal to, or better than, many nationally branded products. The volume share of private label products at the end of 2011 varied from as much as 57% of all FMCG products sold in the UK, and 50% in Spain and Germany to 20% in Italy. This compared to 23% in the USA. 

The continued stretch on own label sees many at the premium end of categories as the most expensive and innovative product on offer, reports Symphony IRI.  

Where this is well developed it is impacting the pricing for own label brands overall. In Germany, own label is already significantly cheaper than national brands – by nearly 40% – and is purchased mainly in discount stores. In contrast, own label brands in the UK are much closer to the price of national brands – just 20% less.

Nonetheless, the closer own label brands get to being consumer brands, the more the economics and the proposition means they need to emulate good brand practice, said Symphony IRI. Only this can provide the opportunity to drive additional value where own label looks to have saturated markets. 

Of course as this happens and where there is real appeal to the proposition, the more they will need to leverage trade promotions; a strategy rarely used when own label was already the cheapest product. 

As a result of range expansion, own label products are now available in nine out of every 10 FMCG categories, giving shoppers opportunities at every price point to buy a retailer’s own product, report researchers.

It is significant, and a reflection of the fact own label brands are real brands in their own right, the market share for own label grew in those categories traditionally dominated by  national brands and in which shoppers tend to be strongly attached to favourites such as tea bags, energy drinks, beers and colas. 

Own label is also strong within segments with less emotional engagement. Where we see personal needs enter the picture, we can spot an increase in brand preference, said Symphony IRI.

Despite the advances and smart brand positioning by retailers for their own label ranges, there is still a high level of loyalty towards national brands.  

Shoppers like to spend money for good quality and, although own label continues its assault on brands and shoppers have reduced the frequency of buying them, they are able to bounce back by exploiting the identity and affection that shoppers have for them.  

One strategy for building on this affection is to encourage loyalty. Manufacturers can develop direct online interaction with consumers, leveraging Web 2.0 technologies. 

Retailers, meanwhile, could invest in more sophisticated loyalty programmes that provide a key advantage and a platform to communicate with customers.