English Private Brand New Product Development Overtakes Branded

With the ever expanding range of high quality Private Brands offered at supermarket retailers, the influence of Private Brand products has never been stronger with market now worth around £37bn. And latest research from Mintel reveals that for the first time the proportion of Private Brand New Product Development (NPD) overtook branded in the UK last year as consumers continued to switch to cheaper alternatives in an effort to make their household budgets go further.

Historically, the proportion of new product development within food and non-alcoholic drinks has been higher for brands than for private labels. While brands held a 55% share of total NPD in 2010, the balance tipped in 2011 in favour of Private Brands as they accounted for 54% of NPD, compared to 46% for brands.

Meanwhile, Mintel’s research also showed that some 57% of consumers think that Private Brand products have improved in taste and quality, while 52% actually prefer them to brands in some cases. Furthermore, some 82% of adults think that Private Brand products provide value for money, compared to just 16% for brands.

Today, some 80% of shoppers buy Private Brand products (compared to 89% of consumers who buy branded goods), and retailers’ own products look set for further growth in 2012 as consumers expect to buy more of them. What is more, as many as 20% of those who buy branded products are set to buy less in the coming year.

Commenting on the research, Chris Wisson, Senior Food Analyst at Mintel said: “While there are signs that pressure on consumer budgets is slightly easing, 2012 looks set to see the majority of adults remaining watchful and discerning when shopping. Our research suggests that on balance, consumers expect to buy more standard and value Private Brand foods while cutting back on brands.”

Mintel’s research reveals that the market for Private Brand food and drink reached £37bn in 2011, a 24% increase since 2006. This growth has come at a slightly faster rate in relation to the wider market, which grew by 23% over the same period. The Private Brand market is expected to show similar growth trends in the coming years and is projected to reach £46bn by 2016.

Today, 69% of Brits buy value tier Private Brand food and drink products. While there are signs of the recession easing somewhat, its continued impact is still being felt by consumers. Indeed, just 6% of adults who currently buy value tier Private Brand products expect to reduce their usage in the coming year, while one in eight (18%) current users expect to buy more in the year ahead.

Mintel said that premium Private Brand have also fared well in recent years despite budgetary pressures and today are bought by 71% of UK consumers. Growth also looks set to continue in this segment, with 27% of adults expecting to buy more of these products in 2012 and only 12% to cut back.

“Retailers are appearing to put greater weight behind their Private Brands in attempts to encourage consumers to switch into using them. More comprehensive ranges, product improvements and even range relaunches have all put greater pressure on food and drink brands.” Wisson said.

The progress of Private Brands is such that Mintel’s research showed that over half (52%) of adults prefer the taste of Private Brand products to branded equivalents in some cases, suggesting that they are increasingly becoming brands in their own right. However, despite over half of adults thinking that Private Brand products have improved in taste and quality, 58% of adults still say that for some foods, only brands will suffice, with premium products in particular offering brands a safe haven.

UK consumers traditionally associate a wider range of positive attributes with brands than Private Brands, particularly being trustworthy (52%), traditional (51%) and authentic (44%), while just 2% of adults think that they are bland. However, Private Brands come to the fore for being family-friendly (45% versus 28% for brands) and, in particular, offering value for money (82% versus just 16% for brands). The most likely users to maintain their usage and support the Private Brand market are men (46%), over-55s (49%), retirees (54%) and, surprisingly, ABs (48%) and households with an income of £25,000-49,999 (50%).

Wisson concluded: “Times have changed and there is no longer a perception about own label equating to lower quality. Our research shows that many affluent consumers do not necessarily dismiss own label products out of hand, but they appear to in fact be keen users in certain categories. The increasing credibility of private label products which, crucially, often undercut brands on price is a warning for brands who are under increasing pressure from consumers who are becoming more open to the idea of buying own label groceries.”

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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.