Coles & Woolworths Continue to Grow Private Brands

This article comes from the rural Australian newspaper The Land, the details the ongoing growth of Private Brand down under and controversy, which has surrounded it for the last year.

Big two push their labels

Grocery shelves will be dominated by private label brands if plans by supermarket rivals Coles and Woolworths to dramatically increase the produce they own come to fruition.

Coles has no less than 553 brand names pending and registered while Woolworths has 721, in a wide range of categories including liquor.

Prepare for Marlborough Sound wine, Bolt and Flinders beer, Nelson County Bourbon, Buckeye and Iguana rum – all owned by Woolworths.

Coles has Bendigo Valley and Tallagandra trademarked for a meat range along with Coles Lighter Living and Grill.

The supermarkets’ ploy is not original – German discount store Aldi, which has steadily increased its presence with about 260 stores claiming about five per cent market share since its Australian launch in 2001, stocks about 95pc private label items.

Research has shown customers believe the unfamiliar Aldi brands are “European” rather than private label.

Australian Food and Grocery Council (AFGC) chief executive Kate Carnell said the aggressive incursion into private labels shifted power from the food producer and processor to the retailer, particularly if supermarkets got a foothold into processing.

“The $1 per litre milk war has demonstrated that sales for the private label increased and demand for the branded label decreased; the price for the latter is a bit higher because the margin for the processor and the farmer is higher,” she said.

“So, private label milk processors and farmers suffer.”

Ms Carnell said supermarkets had total control over their private label brands, from pricing and contracts to where it sits on the shelf.

“And more and more space is being given to private labels,” she said.

“With milk, the great dilemma is you just can’t turn cows off.

“You can’t control supply and you have to take the price on offer.

“We have been incredibly lucky to have fresh white milk every day across Australia.

“That is not the case overseas, even places like Holland and the Netherlands and parts of France where there is a lot of dairying, but big private label infiltration — they couldn’t make money with fresh milk so they’ve gone into UHT (long life) milk where there is less wastage and it’s easier to maintain profitability.

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Christopher Durham

President & Chief Strategist at My Private Brand/Folio28 LLC

Christopher Durham is the president and founding partner of the retail and Private Brand consultancy Folio28. He is a consultant, strategist and retailer with close to 20 years of real-world retail and corporate experience, creating, launching and building billion dollar Private Brands.

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