The following is the fourth in a series of guest posts from the latest issue of Global Retail Brands and this is my contribution to the magazine. Throughout the week we will feature one article a day from the new publication – please take a few minutes and click-through to the site – read the entire article and see what the rest of the world is up to.
Hiding The Obvious: Should Retailers Fake It Or Fess Up?
By Perry Seelert
Around the world, retailers’ private brands have proven that they are part of shoppers’ everyday routine, lexicon and share of wallet, and they literally own some of the biggest categories. Milk, bread, eggs and cheese are private brand dominant, and they are all in the highest volume and most frequently purchased categories globally. However, these four categories are perceived commodities, where the advertising investment is minimal, and existing brand equities are low.
So, one of the biggest strategic Private Brand marketing questions we face in the future is how to attack the most advertised, fragmented and frequently purchased categories? We don’t want to be prominent in just the big, commodity-oriented categories, we want to be impactful in categories which are more brand and image driven, or have real segmentation issues that lead to fragmented shares. When you consider all three of these characteristics together, (size, advertising and fragmentation), it makes for an incredible challenge for retailer owned brands.
One category that has all three characteristics is beer, and it is one of the largest categories in the world. Heineken by itself produces over 170 different brands of beer, and InBev over 200, so there is no shortage of choice. And there is no shortage of consumer interest too, especially if you’re Czech, where per capita consumption is 132 liters per year (tops in the world).
Beer is universally loved, with over 35 countries having every person drinking at least one liter a week, and China and the U.S. leading total national consumption. Yes, we all love the “suds”, but beer is also one of the most highly advertised and fragmented categories, and this is why many retailers have avoided it from a Private Brand point of view. In the U.S., retailers’ own brands amount to less than 1% share within the category, however there is a recent shift in desire to improve upon this penetration, but how do you best do it? Which segment do you target? How do you brand and name it? How do you market Private Brands in a category where every leading brand is heavily advertised? How do you as a retailer stand behind your brands?