Private Label vs Brands - An Inseparable Combination

A new global research report 'Private label vs. Brands - an inseparable combination' from Rabobank's Food and Agri Research division (FAR) shows that

• The global market share of private/own label food products is set to double from the current 25 percent to 50 percent in 2025
• A-brands will retain their importance for retailers to anchor categories' price levels and give consumers choice and familiarity
• Good news for consumers is that they will still have access to familiar brands and have greater access to lower priced private label products
• Smaller secondary brands (B-brands) will have to strategically reposition to avoid being squeezed out of the market
• Two strategies are open to B-brands suppliers: either invest in quality and target the premium market, or specialise in private label.
• A consolidation spree among private label specialists is inevitable to achieve economies of scale and reduce the cost base

Rabobank's conclusion that global private-label penetration will reach 50 percent by 2025 is based on assumptions about food retail market structure. The report lists 11 drivers for private-label growth including
• Continued industry consolidation in developed food retail markets (western Europe, the US and Australia)
• Adoption of modern retail in developing markets (CEE, Russia and Turkey)
• Increased consumer acceptance of private label following the recession
• Further growth of the hard discount segment
• Professionalisation of private label supply

Author of the report Sebastiaan Schreijen is Associate Director Processed Food & Retail at Rabobank. "Our research shows that private label and A-brands are an inseparable combination. Like love and marriage, you can't have one without the other. But where two's company, three's a crowd. This report is an early warning to B-brand suppliers to adapt their strategies to survive."

To see the full report: Private Label vs. Brands

ENDS

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