Private Brand Wins The Price War in New Zealand

It is always interesting to see Private Brand news from around the world so this basket comparison from The New Zealand Herald is particularly interesting. It reaffirms one of the core principles of national brand equivalent Private Brands thousands of miles from American shores.

Buying budget saves big bucks
Supermarket shoppers can slash their grocery bill by about a third by choosing budget brands over name items.

A Herald on Sunday survey this week revealed savings of more than $20 for a basket of basics such as milk, bread and cheese – worth more than $1000 over a year.

We visited two supermarkets in central Auckland, one from each of the two companies which control the New Zealand market, and selected 10 products. One product was from a “name” brand and one was from the low-cost range.

At New World, the items from the Budget-shopping basket cost $14.11, 33 per cent less than the name alternative. At Countdown, the saving buying Home Brand products was $21.21, 37 per cent.

Progressive Enterprises, which owns Foodtown, Countdown and Woolworths, and Foodstuffs, which owns New World, Four Square and Pak’nSave, each have two in-house brands.

Progressives’ are the mid-market Signature Range and the budget Home Brand. The Foodstuffs equivalents are Pam’s and Budget.

Dave Bibby, senior lecturer in advertising and marketing communications at AUT University, says the growing popularity of in-house brands is a global trend.

At Switzerland’s biggest supermarket, almost half the grocery products sold are private-label.

“In Germany it’s 30 per cent, Spain 26 per cent and Belgium 25 per cent. In the UK it’s around a third.” He says in-house brands are cheaper because supermarkets save on advertising.

He says supermarkets make the same profit from in-house brands as name ranges, despite selling 15 per cent less.

Foodstuffs managing director Tony Carter says sales of Foodstuffs’ brands have increased in the past 18 months as consumers became more price-conscious.

Progressive spokeswoman Penny Newbigin says sales of Home Brand products had increased “in some categories” for the same reason.

Katherine Rich, chief executive of the Food and Grocery Council, a lobby group for supermarket suppliers, says in-house labels are cheaper because they don’t invest in product development.

“If you’re wanting to buy the best quality products, they are the established brands. The difference might be small, but there is a difference.”

A matter of taste

Shoppers at supermarkets in central Auckland had mixed views on brands.

At Countdown on Quay St, Hazel Lemoto, 27, said she switched to Home Brand baby products for her 1-year-old, Lafo, to save money.

“Now I save about $70 a week and I find the Home Brand nappies are more absorbent than the expensive ones I used to buy,” she said.

Student Taylor Malleri, 21, said she bought cheaper products, such as bread, milk and spreads but pricier brands for other items.

“You can taste the difference for some things – the cheaper cookies and sodas aren’t as nice.”

Annie Li, 25, said : “Things are expensive for a reason – I think the quality will be better.”

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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.