Brand manufacturers should be deeply disturbed by the disclosure – straight from the horse’s mouth during a recent Marketing Week conference – that Sainsbury’s has every intention of widely distributing own-label products outside its own supermarket stores.
Previously, all the supermarket chain would admit to was a limited plan offering some of its products through village shops. Not so, according to no less an authority than director of brand marketing David McNair. Somerfield chocolate chip cookies are now sold in Amsterdam and Tesco peanut butter is available on the Costa Del Sol. The conclusion should be obvious: ‘We have built brands that need not be confined to the four walls of a piece of property with the same name,’ he said. The universal supermarket brand is coming of age.
Time was when own label could be dismissed by brand manufacturers as tiresome commercial vampirism. True, there was little that could be done about what was sold behind the ‘four walls’, however irksome the daily prospect of blatant passing off. But brand manufacturers could at least count on two solid lines of defence: they had much wider distribution than the supermarket brands; and they were, by definition, much more innovative than the copycat merchants.
Even that second line is now yielding. Major food brands such as Heinz, Nestlé Foods and Kellogg are (in some areas) experiencing difficulty with new product development. Supermarkets, on the other hand, can’t get enough of it.
So have brand manufacturers lost the war? Not at all. According to some industry experts, such as Taylor Nelson Sofres’ Stephan Buck, the retailers’ own-label offensive has petered out. The strategic attempt to marginalise leading premium brands and create more store loyalty has failed.
Sainsbury’s own experience is a case in point. No one went further down the route of developing sophisticated own-label sub-brands – for example Novon for detergents and Classic for cola. But taking on the might of P&G and Coca-Cola soon proved a bridge too far and more recently Sainsbury’s has scaled down the level of its own-label activities. In the case of Classic, McNair has admitted that the war with Coke effectively lost the supermarket overall share of the cola market. Collaboration with major brands has now, by and large, replaced confrontation. Such suppliers are more likely to be consulted about the category repertoire on the supermarket shelf.
Nevertheless, brand manufacturers should not be complacent about this new status quo. The war goes on, but the terrain has changed.v
Alan Mitchell, page 34