special report: private label 2013 retailers re-assess quality as shoppers focus on value instead...

8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price

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SPECIAL REPORT

Private Label

NOVEMBER 2013

Introduction page 2Executive Summary page 3Turning Key Insights Into Actions page 5Retailers Close the Price Gap page 7Private Label is Quality, Not Just Low Price page 9The impact of Evolving Range Assortment page 11Food and Non-Food Private Label Trends Across Europe page 13Appendix Country by Country Review page 17

Balancing quality and value


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PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT

Introduction

2

This IRI Private Label 2013 Special Report provides insight into how private label is performing across

seven European countries. This year, we have added some measurements of the huge United States

(U.S.) market.Private label helps consumers reduce their weekly shopping costs and provides retailers in the United

Kingdom (U.K.), France, Germany, Italy, the Netherlands, Spain, Greece and the United States (U.S.)

with an opportunity to boost sales and grow their margin.

More consumers are learning to love private label as the quality of the offer improves and the price

remains attractive. At the same time, the price of standard and premium tier solutions is increasing

steadily in many countries and the price gap with national brands narrowing as manufacturers look to

protect their market share with aggressive promotions.

This report outlines where the private label market is today and how it is likely to evolve over the next

year and beyond. Manufacturers know they must work even closer with retailers to improve the range of

assortment so that both parties benefit.

All of us at IRI look forward to discussing these findings with you and helping FMCG retailers and

manufacturers as the global economy gradually improves.

Tim Eales

Director of Strategic Insight

IRI


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Executive Summary

3

maximise sales and margins in

every category.

Retailers and manufacturersacross Europe and in the U.S. are

taking a more analytical

approach to range assortment to

avoid stocking duplicate products

when it comes to serving and

satisfying customer needs.

Emphasis on assortment is

strongest in northern Europe and

the United States. In many

European countries, notably the

Netherlands, Italy and France,private label under-indexes its

share of assortment versus its

share of value sales.

Across surveyed countries, there

is a growing concern that some

categories are approaching a

ceiling when it comes to private

label. Retailers must determine

the appropriate balance of

private label and national brands

assortment, since having too

much private label in a category

turns off consumers. Additionally,

national brands invest heavily in

marketing to drive shoppers into

store and the importance of their

presence on the shelf must not

be underestimated.

Country Highlights

Spain - Retailers and

manufacturers have becomemore shopper-centric and are

adapting to changing

consumer habits and needs.

Private labels share of value

sales in Spain grew from

41.5% to 42.8% as the

Retailers are not promoting their

own ranges to the extent they

were a year ago, but nationalbrands continue to increase their

volume on deal which is having a

negative impact on price gap.

Overall across Europe, the price

of private label was on average

29.9% less per pack than

national brands with the price

gap widest in France and

Germany and narrowest in the

Netherlands, the U.K. and Italy.

The price gap has narrowed more

slowly in food and beveragesthan in non-food sector.

Only in France, the U.S. and for

the U.K. packaged foods, are we

not seeing growth in private label

food value share, whilst for non-

food growth it is in Greece, the

Netherlands, Italy, Spain and the

United States.

With private label prices

increasing, shoppers must be

convinced they are getting value

as well as quality.However if

difficult economic times continue

the market could see a further

narrowing of the price gap versus

national brands. This is a

strategy of price gap reduction

that many retailers are following.

In addition to honing promotion

strategies, retailers and

manufacturers are focused on the

issue of range assortment offeredby private label lines. In tough

times it is critical to have the

right offer on the shelves and the

correct mix of private label and

national brands to entice

shoppers into the store and

Current and Emerging Trends

In an environment where some

countries are emerging fromrecession at different speeds and

some remain in a gloomy

economic environment, private

label plays a vital role for

retailers and manufacturers,

since shopper confidence remains

incredibly fragile.

Private labels three-tier

approach with economy,

standard and premium ranges

means there are often savings tobe made for consumers who

switch from national brands.

Retailers are winning the

argument when it comes to

persuading shoppers that private

label can give them quality as

well as value. In the U.K. it has

been reported that it is the

standard sector that is seeing the

fastest growth.

In the European countries we

have analysed, private label has

a value share of 36.7% and a

47.1% slice of unit sales. The

U.K. has the largest private label

share (value an unit) and this

grew again during the past year,

whilst the biggest unit growth

came in Spain and Greece where

the economic situation remains

incredibly difficult for shoppers.

In 2013 more private label

ranges are being treated as realbrands as the quality rises and

the trust that consumers have in

the retail brand translates into

confidence to buy private label

across food and non-food

categories.


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Executive Summary

4

brands need to be more

innovative to retain sales.

Overall private label share ofvalue sales has risen by 0.5

points, to 40.4% as economic

difficulties continue.

Greece - Only Spain achieved

a higher annual increase in

private label values share than

Greece, where private labels

slice of the market rose by 0.9

points to 14.6%, as austerity

measures, unemployment and

wage cuts continued to take

their toll. However, in unitterms Greece saw the biggest

evolution of all the countries,

+0.9 points. The larger

supermarkets are servicing

shoppers at all three tiers of

private label and many smaller

retail chains are expanding

their private label lines.

United States - Private label

dollar sales grew 2.3% in

2013, but macro-level trendspoint to a proverbial glass

ceiling. Private label

penetration has reached

100%, but penetration varies

drastically at the channel,

banner and category level.

Retailers across channels are

focusing more on building,

expanding and strengthening

their private label programmes

in attempt to spur continued

growth. The good news forprivate label marketers is that

consumer perceptions of

private label are favourable.

Private label share is highest

in the supermarket channel,

whilst share growth is

strongest in the drug channel.

sales in Germany, in a country

with a solid discounter and

private label culture and thelowest promotional pressure.

This could change as the

discounters stock more

national brands. The challenge

for retailers is to add value

and change the perception

that private label must always

be low price. Private label

increased value share by 0.3

points to 34.3% and unit

share by 0.5 points to 48.6%.

Italy- Private label increasedits share of value sales by 0.8

points to 18.4%. Unit share is

up 0.5 points to 22.4%, as

Italian shoppers reacted to

price increases by hunting out

deals. Retailers have focused a

lot more on non-food private

label during the last year,

introducing new ranges of

household, gardening and

even underwear to meet hard-

pressed shoppers needs.

Across all fast moving

consumer goods (FMCG)

categories, shoppers continue

to trade down, to the benefit

of private label.

Netherlands- Retailers here

are going against the

European trend by focusing

more on the value end of

private label. This strategy is

an attempt by the mainstreamstore chains to combat the

discounters who are

convincing shoppers that their

products not only cost less but

are also good quality.

Supermarkets and national

economic crisis continued and

retailers fought to increase

consumption. It was thebiggest share jump of any

country. Tough times have

meant more deals for national

brands and range assortment

is a big topic of conversation

in the Spanish industry.

France- Private label is a

mature market in France, but

its share of value and unit

share is falling. Value share

slipped 0.6 points to 36.0%

and unit share slid 0.9 pointsto 49.6%. Behavioural shifts

indicates that French shoppers

look for quality more than

price and the quality

perception gap between

private label and national

brands has widened. The

retailers response has been to

launch more premium end

private label.

U.K.- The U.K. was thebirthplace of private label and

the market has matured, with

retailers now confident enough

to leverage their own retail

brand to boost sales of their

own brand. Overall, private

labels value share has

increased by 0.6 points to

51.1% and unit share is up

0.2 points to 57.6%. This

coincides with a fall in private

label volume sold withpromotional support, from

40.3% to 36.3%, at a time

when national brands deals

rose.

Germany- Discounters hold

two-thirds of private label


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Turning Key Insights into Actions

5

Private label has increased in all countries

across Europe with the exception of France.

Private label value share is 36.7% and unit

share is 47.1%.

Manufacturers must focus on joint business

planning with their retail partners and

convince them that stocking their brands

benefits everyone, including shoppers. They

need to work together with predictive

analysis to identify best prices for a whole

category and then optimise shelf space,

assortment and promotions.

INSIGHT ACTION

Private label sales are in growth across most

markets, and performing well in countries

where overall sales are in decline due to

tough economic conditions.

Manufacturers must build strong brand

loyalty with a direct access to their

consumers. Retailers will also benefit from

these efforts, as the result will drive

shoppers to their store and loyalty programs

Private label share of food is up across

Europe, except in France. Private label share

of non-food varies considerably across the

continent.

Food manufacturers in particular must

review brand propositions to appeal more to

shoppers in the face of continued pressure

on shoppers. Variation by country andcategory illustrates how crucial it is that

manufacturers and retailers work together

with predictive analysis.

In several countries, a reduction in the

promotion share for private label and an

increase in deals for national brands, has

meant that the price gap has closed.Private

labels were priced, on average, 29.9% lowerthan national brands.

Be very straightforward on your promotion

strategy. Set goals and gain appropriate

analytics solutions to simulate price and

promotion tactics to improve margins,

revenue, category and your competitiveadvantage.


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Turning Key Insights into Actions

6

INSIGHT ACTION

Shoppers are buying more private label

based on quality and not just price as they

demand overall value.

Brands need a clear view of what impacts

each shoppers trip mission for each shopper

segment if they are to gain market share

and/or develop margins.

The narrowing of the price gap between

national brands and private label means that

private label shoppers are getting a worse

deal than they used to, although national

brand shoppers can still save money if they

switch. It also has the tendency to drive

private label value share relative to unit

share.

KPIs that measure both price gaps and share

trends are a critical part of metrics for

managing category positions effectively.

These should relate to shopper behaviour for

a fuller picture of what drives change. The

price gap will more likely be maintained or

widened where a category is shrinking due to

recessionary pressure.

Retailers and manufacturers across Europe

and in the U.S. are taking a more analytical

approach to range assortment.

A national brand must demonstrate that it

not only sells well and generates a healthy

margin for the store but that it entices

shoppers through the door in the first place.

National brands marketers must think not

only about its own brand and category, but

must address the assortment issue from a

broader shopping basket perspective, using

powerful predictive analysis to identify best

scenarios for sales optimisation.

Private label sales trends are out-performing

national brands in most countries.

Manufacturers must assess the category

competitive risk from private label growth

and development and adjust their portfolio

and retail approach accordingly.


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Retailers Close the Price Gap

7

National Brands Promotions:

A Complex Challenge

Manufacturers will note with envyhow retailers are managing to

boost their margins because it is

the national brands spending on

promotions which, in many

cases, is driving footfall. Though

it is national brand marketing

that often lures shoppers into the

store, they will often choose

private label products at the

shelf.

Some manufacturers areseriously considering reducing

the number of promotions to

reclaim some of their own

margin, which has taken a

hammering since the economic

downturn began in 2008.

In non-food, Reckitt Benckiser,

for instance, whose brands

include Dettol, Finish and Vanish,

has publicly said that too many

deals simply create a short-term

market share spike and do little

to grow a category.

Retailers have embarked on a

deliberate strategy to focus on

those product areas that deliverthe best margin. And, as more

retailers position their private

label as brands in their own

right, they are able to increase

prices effectively by stealth. More

effective range assortment (see

page 11) is also part of this

strategy.

Quality Enhancement for

Private LabelMore premium private label is

being introduced with higher

prices and higher margins across

a number of categories.

Consumers want to buy private

label, which they perceive as

good quality solution that is a

lower priced alternative to a

national brand.

It appears that most consumers

will pay a little more for a privatelabel alternative than they used

to. Indeed, shoppers have not

reacted negatively to rising

private label prices because they

are still saving money.

In Germany retailers are

strategically notching up prices of

their premium and standard

private label products at the

expense of their economy lines,

which remain the foot soldiers inthe fight against the discounters.

At the same time, the national

brand marketers in Germany are

looking at how best to increase

their distribution within the

discounters marketplace.

Price Gap is Narrowing

A reduction in the number of

promotions for private label andan increase in deals for national

brands means the price gap has

closed by 0.9 points, as retailers

increase prices for their own

ranges to reclaim some margin.

Overall across Europe, private

label is priced, on average,

29.9% less than a similar

national brand, with the price gap

widest in France and Germany

and narrowest in theNetherlands, the U.K. and Italy.

The percentage of private label

volume on deal has fallen from

16.5% to 16.2% , while

promotions for national brands

jumped from 31.2% to 32.3%

over the same period.

There have been reductions in

private label promotional support

in the United Kingdom, Italy,

Greece and France. The U.K. wasthe only country to see a

reduction in total volume on deal

but still have the highest trade

promotion activity.

Price gap has narrowed more

slowly in food and beverages

than in non-food.

In non-food, the price gap

diminished in most countries, but

widened in Greece, the U.K. and

Germany. Average savingsdeclined most notably in the

Netherlands, Spain and Italy.

The narrowing in the overall price

gap may be only 0.9 points but

this is equivalent to a gain of 0.5

billion euros returning to the

retailers bottom line.


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Price and Promotion Evolutions in Europe

8

The gap between private label and national brands continues to narrow year over year, with private label becomingrelatively more expensive in all countries with the exception of Germany.

At a total FMCG level, all countries in Europe, with the exception of the United Kingdom, have seen increased levels ofpromotional support year over year. The picture for promotional support behind private label products is more mixed,with significantly reduced levels in Italy (temporarily) and the United Kingdom. There have been strong increases inGermany and the Netherlands.

Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year. Excluding hard discounters.

* Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013.


*Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013.

+0.4 pts

-0.1 pts+0.2 pts

+0.7 pts

+1.9 pts

+1.7 pts

+0.3 pts

+1.3 pts

+0.2 p

40%

50%

60%

70%

80%

90%

Total Europe Germany France Netherlands Spain Italy U.K. Greece U.S.*Privatelabelpriceindexvs.nationalbrands

Private Label Price Level and Evolution versus National BrandsLatest two years, total FMCG

Private label price index vs. national brands 2012 Private label price index vs. national brands 201

+0.6 pts

+1.5 pts

+0.1 pts

+2.7 pts+0.8 pts

+0.4 pts

-1.2 pts

+0.9 pts

-0.0 pts

-0.3 pts

+1.9 pts -0.3pts+3.7 pts

+0.3 pts

-1.2 pts

-3.9 pts

-1.0 pts

+0.4

0%

10%

20%

30%

40%

50%

60%

TotalEurope

Germany France Netherlands Spain Italy U.K. Greece U.S.*

%v

olumesalessoldonpromotion

Trade Promotion - % Volume on Deal and EvolutionTotal FMCG and private label

Total FMCG % volume on deal and change vs. year ago Total private label % volume on deal and change vs. year

Labels above 2013 bar shows year over year percentage point change in private label price index

Year over year evolution is expressed as percentage point change in volume sold on deal


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Private Label is for Quality and Not Just Low Price

9

of many premium ranges, private

label is still struggling in some

countries to convince shoppers.In the Netherlands, the hard

discounters enjoy a high quality

perception, but supermarkets are

drawing a more neutral response

from shoppers.

While wealthier shoppers are

willing to switch from national

brands to premium private label

solutions, many poorer

households continue to turn to

lower price private label options.

IRI has observed that lowerincome families continue to drive

the market for economy private

label.

In the United States,

expectations for private label are

solid for the coming year, with

39% of consumers indicating

plans to increase their purchase

of private label products during

this timeframe. As evidenced in

Europe, U.S. consumers havefavorable perceptions of private

label quality, with 82% of

consumers finding the quality of

private label is the same or

better as compared to national

brand alternatives1.

As private label wins the quality

and price debate, it heaps even

more pressure on national

brands. But manufacturers are

still arguably more innovativethan retailers when it comes to

creating products.

The difficulty manufacturers face

is that innovation tends to come

at the premium end, where the

price gap with private label is

widest. They also expect a new

farmers. Some 400 new products

have been added to the line and,

200 items were discontinued.In France, theIntermarchchain

has launched a cosmetics range

called Labell Paris. It has been

pitched at the standard and

premium tiers, with the motto

low prices, expertise and

accessibility.

In Italy, the strong quality

reputation of private label is

helping retailers to export their

ranges. Conad has started toexport its private label premium

line, Sapori & Dintorni, which

contains typical and regional

Italian food. The retailer has just

started exporting to the United

States.

The Power of Private Label

Brand

This new development

demonstrates the power of a

private label brand when it gains

a reputation for quality.

Additionally, in Italy, Conad has

Sapori & Dintorni mono-brand

shops.

U.K. retailer Waitrose is having

success with its private label

ranges in Singapore and across

Asia where, until now, private

label has been relatively under-

developed compared to Europeand the United States.

Nonetheless, shoppers

perceptions of private label

quality does vary across Europe.

Whilst the French, British and

Italians may have a high opinion

Perceived Quality of Private

Label is Rising

Private label is a multi-tieredstrategy covering economy,

standard and premium lines and,

in many countries, shoppers are

switching as they become

convinced that the quality of

many products is as good as

national brands.

This is particularly true in France,

Germany and the United

Kingdom, where shoppers feel

they are getting a good deal and,despite a narrowing price gap,

savings remain attractive.

In France the premium sector

grew 3.3%, whilst economy is

down by 2.0%. In the U.K.,

standard private label is the most

successful sector.

Private label ranges are being

increasingly marketed as real

brands, bolstered by solid and

improving quality perception andthe trust consumers have in their

retailer, which provides

confidence to spend their limited

budget on private label. This is

certainly true in the United

Kingdom, particularly at top-end

retailers such as Marks & Spencer

and Waitrose.

Tesco is responding by

relaunching its Finest food range,

to reassure shoppers of thequality of the line following the

horsemeat scandal and the

subsequent effect on sales. The

move includes updating recipes,

redesigning packaging and

adjusting marketing to focus

more on partnerships with British

1Source: IRI MarketPulse survey, Q3 2013


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+0.4 pts +0.3 pts -0.6 pts+0.5 pts

+1.4 pts

+0.8 pts

+0.6%

+0.9 pts +0.0 pts

+0.3 pts +0.5 pts-0.9 pts +0.3 pts +0.7 pts

+0.5 pts

+0.2 pts

+0.9 pts+0.0

0%

10%

20%

30%

40%

50%

60%

70%

TotalEurope Germany France Netherlands Spain Italy U.K.* Greece U.S.**

Privatelabelshareoftotalmarket

Private Label Share and EvolutionTotal FMCG, in value and units

Private label value share 2013 and share point change vs. year ago

Private label unit share 2013 and share point change vs. year ago

FMCG Trends in Europe

10

Private label share has increased in all countries across Europe with the exception of France. Private label value shareis 36.7% and unit share 47.1% in the latest year. The U.K. has the largest private label share in Europe whilst Spainhas seen value share growth accelerate ahead of other markets. Greece has the fastest growing private label sector interms of unit share.

All countries have seen FMCG value sales growth in the latest year, with the exception of Italy and Greece (wherethere has been significant decline). Private label sales are growing in all markets, contributing to more than 50% ofthe growth in Europe, and are performing strongest in countries where overall sales are in decline (Italy and Greece)or where overall growth is less than 1% (Germany, Netherlands and Spain) as well as in the United Kingdom.Countries where total growth is stronger, except for the U.K., are primarily driven by national brands performance.

Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year.

*Source: Kantar Worldpanel; 52 weeks ending 10thJune 2013 versus same period prior year. Channel coverage: all outlets.

**Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013 versus same period prior year.


*Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013 versus same period prior year.

1.6%

0.9%1.5%

0.9%

0.6%

-0.3%

3.8%

-2.4%

1.8%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

TotalEurope

Germany France Netherlands Spain Italy U.K. Greece U.S.*To

talFMCGvaluesales%c

hangeYOY

% change driven by private label % change driven by national brands

Value Sales Evolution National Brands and Private LabelTotal FMCG, year over year

Labels show % change in value sales year over year


11/37


The impact of Evolving Range Assortment

11

Addressing Assortment from a

Shopping Basket Perspective

Each national brand mustdemonstrate thatit not only sells

well and generates a healthy

margin for the store, but also

that it entices shoppers through

the door in the first place. This

Private Label has a Stronger

Presence on the Shelf

Retailers and manufacturersacross Europe and in the U.S. are

taking a more analytical

approach to range assortment.

In a stagnating or falling market,

retailers cannot simply add more

products to their shelves.

Rather, they must think more

strategically about space

constraints and consumer

demand.

Stores have been spending more

time and money ensuring they

have the right mix of private

label and national brands. They

must avoid adding products that

duplicate what is already on the

shelf while also ensuring that no

gaps exist in the range, which

could jeopardize shopper loyalty.

Private label is increasingly

taking priority on the shelf. And,

with the fast development of

Click-and-Collect e-commerce in

countries like France and the

United Kingdom, its a new

challenge for national brands to

maintain visibility on retailers

portals. National brands must

work harder than ever to tell a

compelling and shopper-centric

story. They must focus on joint

business planning withtheir retail

partners and convince them thatstocking their brands benefits

everyone, including shoppers.

product or variant to be heavily

promoted by the retailer, and the

price and their margin to bepushed down over time.

Quality brands and their

extensive advertising still bring

shoppers into stores. But, to the

growing frustration of

manufacturers, shoppers are

increasingly choosing private

label solutions at the moment of

purchase.

During the past five years,

shoppers have becomeaccustomed to the idea of more

affordable groceries. Now, their

expectations for value are even

higher, and this is increasingly

influencing purchase decisions.

Going forward, retailers must be

mindful of engineering their

private label products to achieve

even more cost savings and

value. But, they must tread

lightly. Reducing the quality of

the meat used in economy

ranges or reducing pack sizes

may upset loyal shoppers. While

small pack sizes may be suitable

in some countries, such as

France, where households are

becoming smaller and demand is

less, other shoppers in Europe

and the U.S. are more likely to

feel aggrieved if they are paying

the same price for less product.

This type of situation couldnegatively impact the trust in

private label brands that retailers

have worked so hard to earn.

A Prize Worth Having

The Challenge

A French retailer operates in two

channel formats: hypermarkets

and supermarkets. The premium

gastronomy range of private

label in its supermarkets is

underperforming.

The Solution

With an assortment benchmark,

IRI enabled the retailer to identify

gaps and growth opportunities by

reviewing the private label

premium segments in all

categories, identifying all the

competitors in both channels

using the IRI SKU counting and

product matching dictionary

capabilities.

The Outcome

Some 21 new private label items

that were available in

hypermarkets were introduced in

supermarkets to offer a larger

choice to the premium products

seekers.First results show that on two

SKUs listed the revenue is above

$100k per year with full

distribution in supermarkets.


12/37


The Impact of Evolving Range Assortment

12

In Spain, retailers are focusing

on improving assortment to

counter declining consumption,particularly around their fresh

offer.

The Differentiation Challenge

When it comes to private label

and assortment, retailers

certainly face challenges.

Private label segmentation was

introduced a few years ago by

leading chains, such as Carrefourand Tesco, who discovered how

difficult it can be to create new

but distinct products in the

private label space. It is difficult

for stores to differentiate

themselves from other private

label brands and there is always

the risk that any new product will

simply replicate what is already

on the shelves, leading to

stagnant growth for the category.

Still, retailers intense focus on

assortment means national

brands must fight harder to

justify a price premium and

continually demonstrate

innovation.

As shoppers across Europe get

used to private label and realise

the quality is acceptable, they

will not pay more for a national

brand unless they can see real

added value.

means national brands must

think beyond their ownbrand to

address the assortment issuefrom a broader shopping basket

perspective.

Today, the assortment question

is as important to retailers as

getting price and promotion

strategy right.

As food retailing, in particular,

enters a dynamic period of

change, there is an increasing

need for joint business plans that

acknowledge the shared goals ofimproving margins.

Join Business Planning to

Grow Business for All

Sharing category-level insight will

maximise sales for entire ranges

and categories. There must be a

mutual recognition that both

national and private label

marketers want to improve their

return on investment and boost

profits.

The aim for retailers is to get a

higher share of sales for private

label relative to the amount of

space allocated to the private

label offer.

In many European countries

private label already marginally

performs better in terms of sales

versus its share of assortment. In

Germany private label

contributes 34% of value sales

from a 27% share of assortment.

This trend is also present in the

Netherlands (30%/29%), Italy

(22%/17%) and France

(30%/26%).


13/37


14/37


Food and Non- Food Trends in Europe

14





** IRI UK data for packaged foods only.

1.6%1.7% 1.7%

1.4%1.2%

0.5%

2.5%

-2.5%

1.7%

-4%

-2%

0%

2%

4%

6%

8%

TotalEurope

Germany France Netherlands Spain Italy UK** Greece US*

Totalfoodvaluesales%c

hangeYOY


Value Sales Evolution National Brands and Private Label for FoodYear over year, by country


-0.8%

-2.4%

0.7%

-2.8%

-1.3%

-3.6%

1.5%

-2.3%

1.8%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

TotalEurope

Germany France Netherlands Spain Italy UK Greece US*

Tota

lnon-foodvaluesales%c

hangeYO

Y



Value Sales Evolution National Brands and Private Label for Non-FoodYear over year, by country


15/37


About the Report

15

This report contains data gathered from seven countries in Europe: France, Italy, Spain, the United

Kingdom, Germany, the Netherlands and Greece. The data has been sourced from IRI Infoscan

retail databases; 52 weeks ending June, 2013 versus the same period prior year. The report also

highlights data from the United States sourced from IRI MarketInsightTM

; 52 weeks ending 14th

July, 2013, versus same period the prior year.

Macro-categories analysed: chilled and fresh food, ambient food, frozen food, non-alcoholic drinks

(including tea and coffee), household, personal care, confectionery, pet food/pet care and alcoholic

drinks (note: does not include wine and spirits for the United Kingdom; Greece includes beer and

ouzo only).

The market channels used for each country in this report are as follows:

Country Channels used

U.K. Hypermarkets, supermarkets, pharmacies and impulse outlets

Spain Hypermarkets and supermarketsGreece Hypermarkets and supermarkets

Germany Hypermarkets, supermarkets and hard discounters

Netherlands Supermarkets

Italy Hypermarkets and supermarkets

France Hypermarkets, supermarkets and hard discounters

U.S. Supermarkets, drug stores, mass merchandisers, military commissaries,select dollar and club retail chains and convenience stores


16/37


17/37

SPECIAL REPORT

Country by Country Review

Appendix


18/37


Trends in Spain

18

variations, manufacturers andretailers are developing regionalbrand strategies.

A variety of innovative programsare being implemented byretailers as they seek to addressregional preferences. Carrefourdeployed a program, called

Panel Test Carrefour, to gathershopper insight and opinion. ElCorte Ingls has launched a newrange of cosmetics, dubbed AllIntense, and redesigned itsonline store to make promotions

and offers more obvious.Meanwhile, Alcampo has a newin-store area for environmentallyfriendly products, both nationalbrands and private label, and hasexpanded its online business.

Ultimately, retailers and

manufacturers have had to

become more shopper-centric

and adapt much more quickly to

changing consumer habits and

needs.

Loyalty to particular stores has

declined in the face of on-going

economic hardship. The Spanish

shopper is savvier than two years

ago: up from 20% in 2011 to

24% in 2013, and the share of

shoppers who say they prefer

national brands over private label

solutions declined from 40% to

36%1.

result they are cautious and

hesitant about spending.

In Spain, 60% of private labelshoppers have changed their

shopping behaviour due to the

economy, and half of them have

switched to less expensive

brands. When the economy

improves, only 21% will trade

back up to more expensive

brands, which indicates that

consumers have been largely

satisfied with trade-offs made

due to economic pressure1.

The challenging economic and

consumer landscape has

prompted more promotional

activity across national brands

and private label. The percentage

of branded volume sold with

promotional support rose from

24.2% to 25.8% during the past

year, while private label

increases were less drastic, up

from 10.7% to 11.0%.

The quality perception of private

label has improved in Spain and,

with cheaper prices, private label

market share continues to rise

despite a narrowing price gap.

National brands prices have

remained flat while private label

marketers have managed to push

through higher prices.

Private label trends in Spain vary

at the regional level. Private

labels share is lower in thenorthern part of the country.

Across the country, private label

popularity is dictated by various

factors, including the level of

unemployment and social

deprivation. As a result of these

Private labels share of value

sales in Spain grew by 1.4 points

to 42.8% in the midst of on-going economic challenges,

supported by retailer efforts to

increase consumption. Spain

demonstrated the biggest share

jump of any of the countries

surveyed.

Private label value share peaked

at 43.6% in April. Unit volume

share for private label is also up

significantly (+0.7 points) to

51.6%.

Among the retailers benefitting

from Spanish consumers growing

affinity for private label are

discount retailers, including

Mercadona, Dia and Lidl, each of

which is viewed as responding to

shoppers economic needs.

Auchan is also gaining sales,

whilst El Corte Ingls, Eroski and

Carrefour are losing ground.

The increase in VAT from 18% to

21% in September 2012 made

consumers even more reluctant

to spend money and forced

retailers to try different

strategies because volume sales

slid. Retailers are focused on

ensuring that their product

assortment maximises sales

across private label and national

brands. Carrefour also removed

VAT from its fresh products for

some specific groups ofshoppers, such as the elderly and

those with large families.

Spanish shoppers are struggling

against tax hikes, rising

unemployment, frozen wages

and austerity measures and, as a

1Source: Latest IRI Shopper Insight survey in Spain.


19/37


2.7

3.0 1.5

2.3

1.4

2.21.5

-0.35.2

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Privatelabelpriceindexvs.nationalbrands

Trends in Spain

19

Private label is growing value sales in all categories in Spain, with the exception of frozen food and personal care.Additionally, the majority of value sales growth in all expanding categories has been driven by private label. The onlyexception is pet food, where national brands have been responsible for 60% of the category growth.

Across the nine macro-categories, private label priced 28% cheaper than equivalent national brands in Spain and thisdifference has narrowed by 1.9 points during the latest year. The only category where the price gap has widened yearover year is personal care.

0.7%

3.1%

-0.1%

2.9%

-2.7%

-1.4%-0.1%

-2.8%

7.6%

-4%

-2%

0%

2%

4%

6%

8%

Macro-categoryvaluesales%c

hangeYOY


Value Sales Evolution National Brands and Private Label in SpainBy macro-category, year over year


Labels show year over year change expressed as percentage point change in private label price index vs. national brands

Private Label Price Level and Evolution versus National Brands in Spain

By macro-category, latest two years,


20/37


Trends in France

20

solutions. Still, on average,

overall private label prices have

risen faster than national brands.For the first time, shoppers are

starting to buy smaller packs.

This is a significant call to action

for private label marketers, since

private label has focused on the

family-size pack. Private label

marketers must adapt their pack

sizes to cater to French shoppers,

who are looking to control the

quantities they are buying to

satisfy the needs of theirshrinking household sizes.

France, like other countries, has

seen this trend accelerate in

private label during the past

year. Private label marketers will

need to continue to adapt to the

French shoppers desire for

smaller packs if they are to grow

market share in many categories.

channel, that are not included in

the report, where private label is

over-assorted and over-sold.Drive represents more than 40%

of private label value sales in

drive, versus a greater than 50%

share of value sales in

competing. The drive channel is

mainly used by young shoppers.

Retailers have increased

assortment at the premium end

of the private label spectrum by

about 8.0%, which helped drive

growth of top-end value sales by

3.3%. More premium privatelabel products have appeared in

food and in non-food categories,

including cosmetics. Meanwhile,

sales for value-tier private label

sales are declining.

The percentage of national brand

volume sold on deal in France

rose from 17.0% to 17.3%

during the past year, as a result

of a price war that is growing

across many categories, due totelevision advertising and in-

store flyers. In contrast, private

label sold on deal fell from 8.8%

to 8.6% during the same period.

The emphasis on quality, whether

private label or national brand, is

amplifying promotional pressures

for manufacturers and retailers.

It is also contributing to market

share losses among hard

discountersFrench shoppersmay be price-conscious, but they

remain reluctant to compromise

on quality.

Manufacturers have tried to

remain price competitive and

match price hikes instituted

across standard tier private label

France is the only country where

private labels share of value and

volume sales is falling. Thesedeclines are occurring despite

continuing economic hardship for

French shoppers.

Value share fell 0.6 points to

36.0% and volume fell 0.9 points

to 49.6%. National brands

captured share by increasing

promotional activity.

During the past three years, IRI

has conducted an annual analysis

of how consumers perceiveprivate label versus national

brands in terms of quality.

Findings from this work indicate

that the quality perception gap

between private label and

national brands in France has

widened considerably during the

past three years. French

consumers are simply not

convinced that the quality of

private label solutions is

measures up to that of nationalbrand alternatives.

As in the United Kingdom, private

label is a very mature market in

France. Consumers have grown

up with the concept and many

older shoppers regard own label

lines as strong brands in their

own right. Because private label

is so engrained in French culture,

they compete on near equal

terms to national brands, andthey face the same challenges.

The decline that we can notice

here of private label sales in

hypermarkets, supermarkets and

hard discounters has been

exacerbated by the development

of the Click-and-Collect (Drive)


21/37


Trends in France

21

Private label is lagging behind national brands in all sectors, with minimal year over year sales growth in fivecategories and declines in chilled and frozen food, confectionery and pet food.

Across the nine macro-categories, private label is priced an average 38% lower than equivalent national brands inFrance. This difference has narrowed by 0.2 points in the latest year. Generally, there has been minimal change inprice positioning between private label and national brands year over year, with the exception of alcoholic drinks,where private label has become more than 2 points cheaper, and non-alcoholic drinks, where the price differential hasnarrowed by a similar margin.

3.9%

2.1%

1.0% 1.2%

0.3% 0.6%

1.8%

0.2%

3.0%

-1%

0%

1%

2%

3%

4%

5%


ha

ngeYOY


Value Sales Evolution National Brands and Private Label in FranceBy macro-category, year over year


-2.3 0.5

0.1

-0.2

0.1

-0.4

2.1

0.8 1.0

0%

10%

20%

30%

40%

50%

60%

70%80%

90%


Private Label Price Level and Evolution versus National Brands in FranceBy macro-category, latest two years

Labels show year over year change expressed as percentage point change in private label price index vs. national brand


22/37


23/37


Trends in the United Kingdom

23

inevitably means going to the

lower end of the price range. This

then brings with it the issue ofcompetition with the incumbent

economy private label.

Private label can help to engage

shoppers and boost long-term

loyalty. In September, forinstance, Co-Op relaunched its

private label offer under the

name Love By Us in a bid to

entice younger shoppers.

In the United Kingdom, retailers

want private label to be seen as a

key differentiator. Here, there is

no single private label journey for

a shopper and retailers are

successfully adapting and

introducing products across all

three private label tiers to meetspecific consumer needs. They

are doing this by becoming better

at understanding shopper habits.

Private labels value share has

increased 0.6 points, to 51.1%,

and unit share increased 0.2

points, to 57.6%.

The aim for retailers is to

continue to give their products

more personality as brands and

focus less on low prices. U.K.

shoppers will only continue to

choose own brand if they are

convinced it meets their needs

while saving them money.

U.K. retailers must also decide

whether to go down the umbrella

brand or venture brand route to

really engage with shoppers.

Using the umbrella brand route,

they build on their established

reputation and engage shopperswith their brand image. Using the

venture brand route relies more

on price positioning to establish

brand credentials, which almost

The strengths of retailers own

brands stimulated private label

sales in the United Kingdom,where shopper trust built up over

many years armed retail chains

with the confidence to launch

new ranges despite a fragile

economic recovery.

Retail brands such as Tesco and

Asda and premium retailers such

as Waitrose and Marks & Spencer

are competing effectively with

discounters such as Aldi and Lidl

by leveraging their heritage and

brand reputation.

Tesco, for instance, has created

the Goodness brand for

children and Pro Formula

beauty range, covering skin care

hair care. Waitrose has

introduced Love Life a line of

meal solutions. Marks & Spenser

now offers a snacking collection,

called Guilt Free. And, Asda has

revamped its 3,500-strong

private label food products underthe Chosen By You name.

Aldi remains focused on

protecting and growing its share

of the private label pie. The

retailer is still pushing its Swap &

Save promotion to tempt

disgruntled supermarket

shoppers. This program is

certainly having a positive

impact, evidenced by the fact

that Aldisshare is growing by30% a year (source: IGD). Lidl,

too, remains committed to

private label. Today, 80% of

Lidlsoffer is now own label.


24/37


Trends in the United Kingdom

24

National brands are growing value sales in all categories in the United Kingdom, with the exception of alcoholic drinks.Private label is lagging behind national brands in all sectors except chilled and fresh food, with minimal year over yearsales growth in most categories and declines in household and alcoholic and non-alcoholic drinks.

Across the nine macro-categories, private label is priced an average 27% below equivalent national brands in theUnited Kingdom. This gap has narrowed by 0.4 points during the past year. However, the relative price of private labelversus national brands has decreased quite significantly in the two categories where the price differential is closest(chilled and frozen food). These are the two sectors where private label demonstrated the strongest performanceduring the past year.

-0.4%

3.2%

1.4%

7.4%

1.6% 1.2%

2.7%

1.4%

2.7%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%


hangeYOY


Value Sales Evolution National Brands and Private Label in the U.K.By macro-category, year over year


-0.8

1.2

-1.2

1.0

-1.5

0.8-0.5

0.7

2.1

0%

20%

40%

60%

80%

100%

120%

Private

labelpriceindexvs.nationalbrand

s

Private Label Price Level and Evolution versus National Brands in the U.K.By macro-category, latest two years


Note: UK food sector data for packaged foods only


25/37


Trends in Germany

25

The strength of the discounters

in recent years means shoppers

trust the quality of their privatelabel. Aldi has a corporate

strategy to be at the top of the

quality rankings, as measured

regularly by research agency

Stiftung Warentest. There is no

promotional activity on private

label in the discounters.

What IRI expects to see are more

price increases in private label,

as shoppers move to premium

and standard ranges at the

expense of economy and valuelines and stores concentrate

more on the well-known national

brands that consumers buy most

often.

Germany currently has a solid

discounter and private label

culture and low promotionalpressure. In Germany,

discounters account for two-

thirds of private label sales. But,

as more chains, such as Aldi,

Lidl, Netto, Penny and Norma,

begin to offer more national

brands, this environment may

change.

Aldi South, for instance, has

increased the number of national

brands within its assortment,

while Penny, the discountchannel of the REWE Group, has

consolidated its private label

under one brand to make room

for the introduction of more

national brands. Other retailers,

such as Edeka and Metro,

meanwhile are extending their

private label ranges.

Private label increased value

share by 0.3 points, to 34.3%, in

Germany, food sector privatelabel share increased 0.4 points

(to 36.1%) and non-food

declined 0.2 points. Private label

increased unit share across all

categories by 0.5 points to

34.3%.

Whilst the national brand

manufacturers ponder the

benefits of discounters, the big

challenge for German retailers,

particularly the supermarkets, ishow to enhance consumer

perception of private label and to

find innovative ways to add

value.


26/37


Trends in Germany

26

Across the nine macro-categories, private label is priced an average 45% cheaper than equivalent national brands inGermany and this spread has widened by 0.2 points during the past year.

There is a clear split in category performance in Germany between the food and beverage sectors, which are all growinyear over year, and the non-food categories, which have all declined by an estimated 2% during the same period. Withthe exception of frozen food, where the growth is being driven entirely by private label, the directional performance ofprivate label and national brand is the same and national brands tend to be contributing the majority of growth ordecline in the category.

1.2%

2.6%

1.3%1.6%

3.5%

-2.3%

0.4%

-2.1% -2.1%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%


han

geYOY


Value Sales Evolution National Brands and Private Label in GermanyBy macro-category, year over year


-1.50.2

-1.0

1.2

-0.2

0.0

-0.8-0.8

0.1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


Private Label Price Level and Evolution versus National Brands in GermanyBy macro-category, latest two years



27/37


0.8

-0.2

0.0

4.5

-0.8

1.9

2.1

-4.1

1.7

0

2040

60

80

100

120

140

160

180

200

Privatelabelindexofvaluesharetoshareof

assortment

Trends in Germany

27

At an overall FMCG level, private label earns disproportionately high share of value sales relative to its assortmentlevel, with an index of 128. Private label contributes 34% of value sales from 27% share of assortment.

Category label above each bar shows year over year evolution in private label assortment index

Fair Share

Private labe

under perfor

relative to

share ofassortmen

Private labe

over perform

relative to

share of

assortmen

Private Label Index Value Share versus Share of Assortment

and Evolution in GermanyBy macro category, year on year evolution

above the index below the index

Note: average index is 100


28/37


Trends in Italy

28

Some categories do struggle

when it comes to private label.

As is common in most countries,Italian shoppers are less willing

to buy private label personal care

lines, for instance.

Across all categories, national

brands are starting to fight back

by leveraging the added value

they offer consumers and

demonstrating product

innovation. Nevertheless, they

are struggling protect and grow

market share.

Private label marketers are

focusing their messages on

convenience.

Conad has a new campaign, Low

and Fixed Prices, covering a

basket of 100 commonly-bought

items. Prices for these goods

have come down and discounts

are running until November

2013.

Coop is promoting convenience intelevision and radio advertising.

The retailer is also trying to be

innovative with private label by

promoting health and

sustainability.

Inflation among FMCG is on the

rise in Italy (about 0.6%) and

this could boost private labelperformance during the next few

months.

Italian shoppers are spending

less as they look to save money

and the average basket value

continues to fall. Consumers are

hunting out deals and the best

prices and this has helped private

label increase its share of value

sales in Italy by 0.8 points, to

18.4% this year. Unit share is up

by 0.5%, to 22.4%.

The big retail players (including

Coop, Conad, Esselunga and

Carrefour) account for about

60% of the private label market

by revenue. In unit terms, one in

four products sold by these

chains is now private label.

Retailers have focused on non-

food private label during the past

year, introducing new ranges of

household, gardening and even

underwear to meet hard-pressed

shoppers needs.

Across all FMCG categories,

shoppers continue to trade down,

which benefits private label due

to their relatively low price

points. This is certainly true in

the south of the country, where

discounters are strengthening

their grip. In the north, the more

structured distribution networkhelps retailers to promote their

own brands.

When it comes to discounters, a

shopper insights survey by IRI

discovered that 30% of people

visit a discounter for their weekly

shop.


29/37


5.5

1.5

2.0

2.5

1.02.5

1.0

1.51.6

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Privatela

belpriceindexvs.nationalbrands

Trends in Italy

29

Across the nine macro-categories, private label is priced an average 22% below than equivalent national brands inItaly and this difference has narrowed by 1.7 points during the past year. The relative price of private label versusnational brands has increased in all categories year over year, with the largest private label price increase occurring alcohol, confectionery and household sectors.

Private label is growing value sales in all categories in Italy. Additionally, private label has out-performed nationalbrands in terms of year over year value growth in all categories, with the sole exception of pet food.

0.6%0.8% 1.2%

-1.0%-0.9%

-0.6%

-4.0%

-4.5%

2.7%

-6%

-4%

-2%

0%

2%

4%


han

geYOY


Value Sales Evolution National Brands and Private Label in ItalyBy macro-category, year over year


Private Label Price Level and Evolution versus National Brands in ItalyBy macro-category, latest two years



30/37


-0.3

6.7

-3.419.3

1.2

-2.8 -1.5

-0.7

19.8

0

20

40

60

80

100

120

140

160

180200

Privatela

belindexofvaluesharetoshareof

assortment

Trends in Italy

30

At an overall FMCG level in Italy, private label earns disproportionately high sales, relative to assortment levels, withan index of 127. Private label contributes 22% of value sales from 17% share of assortment.

Fair Shar

Category label above each bar shows year over year evolution in private label assortment index

Private lab

under

perform

relative t

share ofassortme

Private lab

over perfor

relative t

share of

assortme

Private Label Index Value Share versus Share of Assortment

and Evolution in ItalyBy macro-category year over year evolution




31/37


Trends in the Netherlands

31

As seen in the United Kingdom,

retailers are working to link their

strong store banner brand equityto products to help solidify the

price-value image in consumers

minds. This was a motivation

behind Albert Heijn putting AH

on its new look AH Basic range.

Despite the investment and

efforts put forth by national

brands on innovations to retain

sales in food and non-food, it

seems that its not re-engaging

shoppers who have switched to

private label.

Overall, private labels share of

value sales has risen 0.5 points,

to 40.4%, as economic difficulties

continue in the Netherlands.

Promotional activity for private

label is less than for brands.

Private labels share is higher in

the west of the region where

Albert Heijn is strongest.

Whilst there is an acceptance

across much of Europe that

shoppers are prepared to pay forbetter quality in private label, it

is interesting to note how

retailers in the Netherlands are

focusing more on the value end

of the market.

Market leader, Albert Heijn, has

rebranded its value range from

Euroshopper to AH Basic to

reinforce the AH heritage. Rival

C1000/Jumbo is working with

U.S. company Daymon to

implement Jumbos private label

strategy, which has set an

ambitious target to get a private

label share of 40%.

Finally, the Superunie buying

organisation is focusing on value

with a new range called Ok,

and seven retailers are already

marketing this offer.

One of the main reasons for this

shift to value private label is a

deliberate attempt by

mainstream retailers to combat

the discounters who are

managing to convince shoppers

that their products are not only

cheaper but are also good

quality.

In fact, perception of quality of

private label varies significantly

within the Netherlands. Quality

perception within hard

discounters is high, neutral insupermarkets and poor among

low price national brands.


32/37



32

Across the nine macro-categories, private label is on average priced 24% cheaper than equivalent national brands inthe Netherlands and this difference has decreased by 0.7 points in the latest year. The price relationship variesconsiderably across the categories, ranging from the biggest differential on alcoholic drinks, personal care and petfood (c.45% cheaper) through no significant price difference on chilled and fresh food.

The categories with the largest value growth in the latest year (alcoholic drinks, ambient and frozen food) have allseen increased expenditure on both private label and national brands, with national brands driving a significantproportion of growth. However, in those categories which are showing slower growth or are in decline, there is a cleardivergence in national brands versus private label performance all national brands sales are in decline whilst privatelabels are all in growth.

5.5%

2.6%

-1.9%-1.2%

1.3%

-3.2%

0.1%

-3.4%

0.5%

-6%

-4%

-2%

0%

2%

4%

6%

8%


hangeYOY


Value Sales Evolution National Brands and Private Label in the NetherlandsBy macro-category, year over year


4.1

-0.7

0.5

0.5

0.9

3.1

2.0

-0.5 1.6

0%

20%

40%

60%

80%

100%

120%

Privatelab

elpriceindexvs.national

brands

Private Label Price Level and Evolution versus National Brands in the NetherlandsBy macro-category, latest two years



33/37


2.7

-0.6 2.6

6.9

0.9

2.5

-0.53.4 -1.1

0

20

40

60

80

100

120

140

160

Private

labelindexofvaluesharetoshareof

assortment


33

At an overall FMCG level in the Netherlands, private label captures a slightly disproportionate share of sales relative tits assortment level, with an index of 105. Private label contributes 30% of value sales from a 29% share ofassortment.

Fair Share

Category label above each bar shows year on year evolution in private label assortment index

Private labe

under

performs

relative to

share of

assortmen

Private labeover perform

relative to

share of

assortmen

Private Label Index Value Share vs. Share of Assortment

and Evolution in NLBy macro-category, year on year evolution




34/37


35/37


-3.3% -2.6%

-1.3%

2.9%

-4.1%

1.2%

-5.3%-6.0%

-4.3%

-8%

-6%

-4%

-2%

0%

2%

4%

M

acro-categoryvaluesales%c

hange

YOY

% change driven by private label % change criven by national brand

Trends in Greece

35

Across the nine macro-categories, private label is priced an average 35% below equivalent national brands in Greeceand this difference has narrowed by 1.3 points during the latest year. The price gap has primarily narrowed on foodcategories and widened on the drinks and personal care sectors.

All macro-categories, with the exception of confectionery and household, have seen value sales decline in Greeceduring the past year. In all categories other than confectionery, the private label products are outperforming thenational brands in their contribution to total category sales change, either comprising a smaller proportion of thedecline or, in the cases of ambient, chilled and fresh, confectionery and household, actually growing year over year.

Value Sales Evolution National Brands and Private Label in GreeceBy macro-category, year over year


-0.3

0.5

4.4

-0.2 4.1

0.5

-1.8

-2.5-0.3

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Privatelab

elpriceindexvs.nationalbrands

Private Label Price Level and Evolution versus National Brands in GreeceBy macro-category, latest two years



36/37


Trends in the United States

National brand and private label

marketers have long been locked

in a dance, each vying for shareof consumers $725+ billion

FMCG expenditures. The

recession served to intensify the

dance, and private label led for a

time. Since the recessions end,

private labels momentum

continues, but at a diminished

pace.

During the past year, private

label share of FMCG unit sales

remained unchanged, at 17.2%.

Meanwhile, share of dollar sales

inched up slightly, to 14.6%,

bolstered, at least in part, by

private label price inflation, which

has outpaced national brands

during the past several years.

A granular analysis of private

label growth confirms what IRI

posited one year agowithin the

United States, private label and

national brands are eachshowing

areas of strengthin selectchannels, retail banners and/or

categories.

Private label performance within

the drug channel has been quite

strong during the past year.

Though private label share

inched up slightly in the

convenience channel during the

same time period, it remains well

below industry average.

Growth across the drug andconvenience channels is

attributable to a number of

factors, including retailer efforts

to broaden and enhance private

label programs. These efforts

have been well-timed, for

consumers remain entrenched in

conservative purchase behaviors

that were initially adopted earlier

in the economic downturn.Private label efforts to drive

growth have met with success

across some important

categories. Private label share of

volume increased across five of

the 10 largest private label

categories during the past three

years.

During the same time period,

though, national brand marketers

gained ground in the remainingtop private label categories,

increasing the revenue they

generate in these categories by a

combined total of more than $1.7

billion across IRIs multi-outlet

geography.

To provide insights into

strategies that will guide both

national and private brand

manufacturers along the path to

continued growth, IRI conductedextensive analysis of the

interaction between private label

and national brand packaged

goods solutions. Findings from

this research are detailed in IRIs

November 2013 edition of Times

& Trends,Private Label &

National Brands: Paving the Path

to Growth Together.

36


37/37


2.0

0.1

0.0

-2.1

0.2

0.3

1.6 0.9

3.9

0%

20%

40%

60%

80%

100%

120%

Private

labelpriceindexvs.nationalbrand

s

Trends in the United States

Across the nine macro categories, private label is priced an average 13% lower versus equivalent national brands inth U it d St t Thi diff h d b 0 2 i t d i th t Th l t t th i

All macro-categories demonstrated value sales growth in the United States during the past year. National brands arethe driving force behind the significant majority of growth in all categories excepting household, where private labelgrew and national brands sales declined during this time period.

4.2%

1.9% 1.8% 1.9%

0.7%0.3%

0.8%

2.7%

3.7%

-1%

0%

1%

2%

3%

4%

5%

6%

Macro-categoryvaluesales%ch

ange

YOY


Value Sales Evolution National Brands and Private Label in the Unite StatesBy macro-category, year over year


Private Label Price Level and Evolution versus National Brands in the USBy macro-category, latest two years

Labels show year over year change expressed as percentage point change in private label price index vs. national bran

special report: private label 2013 retailers re-assess quality as shoppers focus on value instead...

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