Australian vs European Private Brands.

This is a compelling snapshot of Australian and European grocers and their Private Brands. Written by Daniel Palmer of the Australia Food News it presents an intriguing comparison of the two markets which could present parallels and learnings for American retailers.


How much can the Australian grocery sector learn from the European experience?
The European shopper has changed in much the same way as their Australian counterparts and the industry has been forced to respond, attendees of Highlands 2009 heard today.

Joanne Denney-Finch, CEO of IGD – a leading group of experts on the food and grocery industry, reported on the changes consumers have been making which have seen trends towards private label and discounters.

“Most shoppers are creatures of habit,” she said at AFGC’s Highland Conference. “And in the good times, in the developed world, they grew more cash rich and time poor. But in recession, many are trading time back for cash.”

“So in the UK we’re now eating more at home, instead of at restaurants…cooking more from ingredients…shopping around more…taking more time over our choices…cutting food waste…preparing more lunches at home…and even growing more of our own food.”

The contest to deliver value has never been so strong in the industry, Ms Denney-Finch said. And manufacturers are being forced to contend with the trends toward private label and discounters.

In the UK, private label share is markedly higher than Australia thanks largely to trailblazing retailers like Marks and Spencer and it is still growing, with budget own label soaring by 42% last year amid a deepening recession.

“They’ve encouraged a very sophisticated base of suppliers, doing things differently, pushing back the technical boundaries and developing entirely new categories like chilled ready meals and prepared sandwiches,” Ms Denney-Finch explained.

“It’s now multi-tiered … with not only “good, better and best” levels of quality but also healthy options, organic children’s ranges and foods for special diets.”

Own label commands an average market share in the UK of 47% as opposed to around 23% in the Australian grocery sector.

“It’s taken over thirty years for own label to reach this position in the UK,” she advised. “But now the precedent has been set, others can follow much faster … and own label has grown its share in each of the 18 European countries tracked by Nielsen over the last 5 years.”

Discounters, with their commitment to private label, posed “a second big threat to the leading brands”, according to IGD.

“In Germany, often called the home of discounting, Lidl and Aldi now hold a 35% share of the grocery market between them,” Ms Denney-Finch reported. “Whereas in Spain, almost half the population has been buying either more from discounters, more own label or both over the last year.”

“Some people call all of this activity “downtrading” but you have to be careful … shoppers don’t always see it that way. A fifth of British shoppers told us that they’ve been eating better recently … whereas only a tenth are eating worse.”

Economising should not be confused with downtrading, IGD contend, with a focus on saving cash without sacrificing quality often prevalent.

“Own label provides one route for this and as you can see from our latest research, a majority of European shoppers feel that quality standards have been improving,” Ms Denney-Finch noted. “So the growth of discounters in Europe is not just down to hard-up shoppers anxious to save money.”

“Of course Australia may not follow the same path,” she cautioned, “but it’s good to share the experience.”

There was no longer a “hiding place for anyone who doesn’t offer a genuinely good deal” but “value and not just price” is behind consumer decisions in the current climate.

Read the entire article.

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.