Growth of Private Label Continues Worldwide, Says ACNielsen

• Europe Still Leads the Pack in Terms of Share, but Other Regions Growing Faster
• Asia Pacific and Latin America have the least price difference between Private Label and Manufacturers brands
• Refrigerated Foods Now Tops List – Demonstrates “Premium” Private Label Strategy by Retailers

28 September 2005
Hong Kong

Private Label fast-moving consumer goods continue to steadily increase their share of the global marketplace, according to The Power of Private Label 2005 Executive News Report released today by ACNielsen.  Based on ACNielsen data collected from 14 product areas containing 80 categories in 38 markets, Private Label goods comprise 17 percent of total value sales for the 12 months ending the first quarter of 2005, up from 15 percent as reported in a similar ACNielsen study published in 2003.  In terms of growth, Private Label more than doubled the growth rate of manufacturer brands, 5 to 2 percent.  In fact, in more than two-thirds of the markets studied, Private Label value sales grew faster than manufacturer brand counterparts.

Europe Still Dominates

Europe continued its traditional dominance in terms of market share of Private Label value sales, with a 23 percent share across 17 markets and a growth rate of 4 percent.  As found in the 2003 ACNielsen Executive News Report, the top five markets for share of value sales all hailed from Europe: Switzerland (45%), Germany (30%), Great Britain (28%), Spain (26%) and Belgium (25%).  The Emerging Markets (comprised of Croatia, CzechRepublic, Hungary, Slovakia and South Africa) collectively saw the fastest Private Label growth rate of 11 percent, though achieved from a much smaller base.  As found in previous studies, Asia Pacific and Latin America also have small Private Label markets in terms of share but did not achieve the same double-digit growth rates as in the Emerging Markets.  North America maintained both a high share (16%) and also achieved a significant growth rate (7%).

Refrigerated Foods Take the Lead

As demonstrated in earlier ACNielsen Executive News Reports, the product area of Paper, Plastic & Wraps* has long been the dominant Private Label market share and sales leader when pitted against manufacturer brands.  In the 2005 study, however, Refrigerated Foods** was able to move to the top with Paper, Plastic & Wraps.  In terms of growth, Refrigerated Foods have more than tripled that of Paper, Plastic & Wraps; 9 percent versus 2 percent.

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*Paper, Plastic & Wraps containing such commodity-perceived categories as Aluminum Foil, Paper Towels and Plastic Wraps

**Refrigerated Foods (containing such categories as Milk, Cheese and Complete Ready Meals)

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Private Label Shares and Growth Rates 제품별 Area (Based on Value Sales)

The rise of Refrigerated Food confirms a steady trend in the Private Label strategy of retailers worldwide: pushing Private Label products into premium segments that go beyond the “low price-high volume” commodity-driven practices of the past.  In fact when ACNielsen compared the average price differential between branded and Private Label products within the 14 product areas, Refrigerated Foods had the smallest price differential at 16 percent, compared to a global average of 31 percent across all categories.

The previously mentioned category of Refrigerated Complete Ready Meals (found within Refrigerated Foods), where retailers provide consumers with all the ingredients for a complete meal in a variety of packaging, styles and recipes, now commands 49 percent of overall category value sales.  This nearly equal share with branded products in a category that emphasizes quality, freshness and often “healthy choice” clearly demonstrates how retailers can use Private Label to build loyalty and store equity.

“Strategically, retailers worldwide seem to be placing more and more of an emphasis on branding and marketing their Private Label wares to match the lifestyles and values of their shoppers,” noted Bienvenido Niles, Regional “Although retailer concentration correlates with strong private label development, in most Asia Pacific markets where retailers are highly concentrated, the share of private label is still relatively low,” commented President of ACNielsen Asia Pacific, Bienvenido C. Niles Jr.

Who Buys Private Label?

IIn addition to an in depth Private Label analysis across 38 markets via retail measurement sales information, ACNielsen looked at who is buying Private Label via consumer panel information gathered from 14 markets across the globe.  These household-focused insights revealed that nearly everyone buys Private Label goods.  In fact, 100 percent of households in two-thirds of the markets reviewed had purchased Private Label goods during the past year, and even the “lowest” penetration level was a still strong 77 percent (Singapore).  With the growth of premium Private Label products, share of purchases skewed only slightly more towards lower income and larger families.  

The perception that Private Label is meant for the tight budget households varies considerably across Asia Pacific however. “If you look at Private Label brands’ prices globally, they are about a third lower than the manufacturers’ brands, and that difference narrows to 25 percent in Asia Pacific, which is much less when compared with other regions like Emerging Markets (40%) or Europe (37%).

Growth of Private Label – Where is the Peak?

While Private Label still commands only 17 percent of the global marketplace, in some markets it is far higher.  For example, in Switzerland, Private Label share of value sales is now at its highest level of 45 percent.  Can retailers worldwide continue this kind of successful expansion of Private Label?  If consumer attitude is any indication, the answer seems to be yes.  Supporting this claim, in a separate ACNielsen global study conducted in May 2005 across 38 markets, more than two-thirds of consumers either slightly or strongly agreed with the statement that “Private Label brands are a good alternative to other brands.”

“Just how far retailers can grow Private Label will be the center of much industry debate.” noted Niles. “Whether worldwide shares will reach those of Switzerland, or even if high share markets like Switzerland have reached their peak, is yet to be seen.”

Methodology

ACNielsen collected retail measurement sales data from 38 markets, covering five regions – Europe, North America, the Emerging Market Asia Pacific and Latin America (See Table 2). In total, these 38 markets represent over 60% of the world’s Gross Domestic Product (GDP). The 38 markets studied were chosen as areas where there was an established Private Label presence.

Markets Included – Retail Measurement Sales Information

For the household level insights, consumer panel data was collected by ACNielsen from 14 markets covering four regions – Europe, North America, Asia Pacific and Latin America. Data was collected from a sample of household panels in each market to reflect the total population of that market.

Markets Included - 소비자 패널 조사 Information

Information was collected for the years ending April 2004 and 2005.

Editor's Note - for the complete text (pdf format) of the ACNielsen Global Services Executive News Report: The Power of Private Label 2005 visit www.acnielsen.com.