Product innovation and discounters drive growth in private label sales in the UK, IRI report shows


With the highest share for private label FMCG sales in Europe, accounting for over half of the market in share, the UK has seen slight growth again this year. This is according to the new Private Label in Western Economies report launched today by global market and shopper intelligence firm IRI. The special report provides an insight into how private label is performing across seven European countries, including the UK, France, Germany, Italy, The Netherlands, Spain and Greece, and in the US.

Private Label in the UK is up by +0.2 pt in value share and +0.3 pt in unit share as the UK’s biggest retailers continue to innovate across their private label ranges and improve the quality of their products and the discounters, which remain particularly strong in private label, continue to grow. The report also highlights the price gap between private label and brands, with private label becoming relatively more expensive.

The IRI report shows that value market share of private label for the total FMCG market in the UK was 51.5% in 2014, while unit market share was 59.2% (using data from Kantar Worldpanel). However promotion market share fell by -0.7 pt to 23.7%. 2013 and 2014 saw a reduction in private label share in the packaged groceries sector through the grocery multiples and traditional grocers due to promotional pressure from brands, while in the fresh food sector and among discounters private label thrives.

Tim Eales, head of strategic insight at IRI, said: “The UK has one of the strongest private label presences in Europe, which, after stabilising, has shown further share growth in recent years, despite a difficult economic environment. But while the supermarkets are continually innovating and bringing out new products in an effort to improve quality and build trust with shoppers, they are coming under increasing promotional pressure from national brands and from discounters where there is little or no national brand competition.

“We’ve been talking about the closing price gap between private label and brands for some time and it’s a trend that we continue to see. In just over half of cases, private label is widening the price gap with brands, but then half are closing the gap, becoming relatively more expensive than they were and offering us lower savings.”

While UK retailers continue to expand their private label ranges as national brands increase promotional activity, the discounters also continue to grow their own label products in the absence of competition from brands. Discounters have also been quick to innovate to attract shoppers in-store, such as Aldi, known for its ‘swap and save’ initiative to help drive customer loyalty and encourage customers to try the discounter’s products.

According to the IRI report, among packaged groceries where private label share decline is most severe, there is no clear pattern in terms of product type, but there are examples where increased levels of branded promotion are associated with private label decline.

UK private label trends:

  • Private label canned pasta saw value share drop from 21% or 19%, losing 20% in value sales as branded promotions increased from 58% of volume to 68%
  • Private label frozen burgers grew value share from 44% to 48%, while branded promotions fell from 61% of volume to 45%
  • Private label value share is above average for all frozen food categories with frozen vegetables one of the highest at 67%. Despite its strength, half of the frozen food categories showed private label in decline in terms of market share
  • Confectionary remains low, due to huge brand domination in that sector, but is still growing slightly, and while personal care private label has been in decline for many years, it remains stable

The IRI Private Label in Western Economies special report: