No-name brands gather respect
COMPETITION: PRIVATE LABELS ARE GIVING HOUSEHOLD NAMES A RUN FOR THEIR MONEY
Retailers become more innovative.
Consumers are no longer seeing no-name brands as the cheaper alternative. R53.9 billion: that is how much is being spent on private labels annually, according to the 2019 Nielsen State of Private Label report, which covers the modern trade sector in SA.
This represents 9.6% yearon-year growth compared to the 4.4% growth of branded goods, seen within modern trade.
The growing importance of private labels is also seen in its 22% overall share of fast-moving consumer goods (FMCG) sales in SA, with a steady increase from 21% in 2018 and 20% in 2017.
Nielsen SA retailer vertical lead Gareth Paterson says: “Over the years as people have tried these private labels, they have realised they are just as good as some of the branded products and because of that trust, purchase private label brands instead of branded products,” Paterson says.
Increase in innovation
Paterson says as retailers’ private label products have become more innovative, 70% of the biggest contributors to incremental growth in 2019 came from perishables and dry groceries, with chicken and long-life milk bought the most. They have also seen a recovery in categories like chilled processed meats.
Other products that have seen good growth are confectionery, baby care and personal care products.
Paterson says retailers have made immense strides in finding the right suppliers and the right people in key positions for product development, who are able to position private-label products significantly in the market.
“We have definitely taken it more seriously, in understanding that if they are going to compete with these serious brands, they have got to make sure they understand the consumer.”
He says that it is important for retailers to understand consumer preference when it comes to packaging and ingredients.
Future trends
He sees retailers investing more into private-label products and new product categories that don’t currently have a share on private labels.
This will escalate the competition between private labels and brand labels.