A recent report made by Sebastiaan Schreijen suggested that grocery stores’ private label goods are expected to increase its market share in the overall packaged food area in the coming years. In 15 years, these store brands are expected to make up 50 percent of the market.
Schreijen, who is an associate director for retail and processed food at Rabobank, stated in his report that the growth of these store brands will be driven by consolidation of retail in progressive markets. The implementation of new retailing strategies and the growing acceptance of stores’ private labels are also factors to this increase in sales.
According to Schreijen, the economic recession has been a big contributing factor in boosting the sales of these store brands. Also, these private label goods have significantly improved in terms of quality. Private brands, such as Wal-Mart’s Great Value, often have lower prices when compared to popular name brand products that are manufactured for instance by Unilever, Nestle or Kraft Foods.
Store brands, like those that are from Wal-Mart and Kroger in the U.S., Tesco in Britain, Carrefour in France, and Germany’s Aldi make up around 25 percent of packaged food that are sold in groceries.
Despite this increase in market share of these store brands, popular national brands will still remain strong in their positions as they are, and will be considered, as basis for quality and price in their respective categories. Instead, increased pressure will now be thrown at secondary brands, which will probably experience weakened sales due to competition between suppliers.