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The Rise of Private Brands

07 June 2019

Photo by Peter Bond on Unsplash

 

James Smart, Strategic Insight & Planning, Bord Bia – Irish Food Board

Traditionally, private labels have been used to give retailers, such as Aldi, Amazon, and Tesco, increased control over product marketing, distribution, and sales. Now these organizations are converting these labels into premium brands that are endangering traditional manufacturers of consumer goods. These private brands are growing at a rate of about 4% a year across Europe by capitalizing on areas where traditional manufacturers have failed. As a result these private brands have dominated the frozen food category by capturing 47.1% of the market while penetrating 44.8% of the chilled and fresh food categories. (2018, WARC)

 

An example of this shift, is UK supermarket Tesco. Tesco used its private brand in order to recover from drastic trading losses as a result of customers loosing trust in the quality of their products. Tesco directly targeted these dissenters through an extensive brand campaign emphasizing the quality of its store branded items. The engaging ‘Food Love Stories’ campaign celebrated individuals who to cook food for those that they love. The campaign was widely successful and resulted in a “brand reputation rebound”.

 

In response to this pressure, manufacturer brands have focused their resources on promotions and price cuts. Despite their effort many manufacturers have continued to suffer as health-conscious and experience driven shoppers are driven to the private bands. A study conducted in 2016, discovered that 65% of European shoppers somewhat or completely agree that private label products are good alternatives to famous name brands. (2019, Global Data)

 

Here are strategies Irish Manufacturer Brands can adopt to avoid the threat of Private Brands:

  1. Trademark. Trademark. Trademark. Many of the new brands created by retailers are copycats of the originals. These private labels build their brands by closely following traditional manufacturers’ marketing strategies. They use similar coloring and designs to lead customers to believe that they are buying the traditional product. Thus, it is important that brands that are not private obtain the rights to as much property as possible such as their packaging color.
  2. Capitalize on Areas in which a Private Brand does not have a strong presence. The ownership of private brands by large retailers often restricts their products from being introduced into various stores and platforms. For example, private brands have struggled to establish a strong presence in convenience stores and online. Therefore, it is crucial for traditional manufacturing brands to establish a solid presence in both of these locations.  

 

The shift from private brands to private labels has provided retailers with more control over the products they sell. However, traditional Irish manufacturing brands have the power of story behind their brand which allows them to capture consumers’ hearts in addition to their stomachs.  

 

References:

Parker, Richard. (2019). TrendSights Analysis 2019: Private Label Evolution: Innovating private labels from “me-too” to go-to brands. Retrieved from www.globaldata.com

WARC. (2018). From private label to private brand. Retrieved from www.WARC.com

WARC. (2019). What we know about private label brands. Retrieved from www.WARC.com