Brands under pressure from own labels

Food brands are under increasing pressure from supermarket own labels as NPD from private labels overtook brands for the first time in 2011, according to the latest research from Mintel.

Marks Spencer

Private labels accounted for 54% of total NPD in 2011, compared to 46% for brands. In 2010, brands accounted for 55% of all new products innovations.

The shift was driven by a concerted effort from supermarkets to improve own label offerings. Sainsbury’s, Tesco, Morrisons and Asda have all overhauled own label ranges in the past 18 months.

Marks & Spencer launched an everyday range under the Simply M&S brand earlier this month. (Pictured)

The market for own label food and drink reached £37bn in 2011 – a 24% increase since 2006 and is projected to reach £46 billion by 2016 according to Mintel.

Brands are falling down on perceptions of value for money and only 16% of consumers think that brands offer good value for money compared to 82% that think that own label products do, according to the research.

Brands are seen by consumers as being trustworthy (52%), traditional (51%) and authentic (44%), but are not seen to be as family-friendly as own label ranges (45% versus 28% for brands).

More than half (57%) of consumers think that own label products have improved in taste and quality in the last year, while 52% actually prefer them to brands in some cases. However, 58% of adults still say that only brands will suffice for some products, particularly at the premium end.

Eight in 10 consumers already buy own label products and this is expected to grow this year as consumers face continuing pressure on household budgets while 20% of shoppers are set to buy less in the coming year, finds Mintel.

Chris Wisson, senior food analyst at Mintel, says: “Retailers are appearing to put greater weight behind their own label ranges in attempts to encourage consumers to switch to using them. More comprehensive ranges, product improvements and even range relaunches have all put greater pressure on food and drink brands.”

“Times have changed and there is no longer a perception about own label equating to lower quality. The increasing credibility of private label products which, crucially, often undercut brands on price is a warning for brands who are under increasing pressure from consumers who are becoming more open to the idea of buying own label groceries.”

Tesco relaunched its basics range as Everyday Value in a bid to improve the quality of its own label products.

Morrisons CEO Dalton Philips’ aims to overhaul its entire private label offering and so far the roll out has included the launch of its M Kitchen ready meals and M Savers basics range.

Asda relaunched its Smart Price basics range in January and overhauled its mid level range as Chosen by You last year.

Sainsbury’s has also embarked on an ongoing refresh of its own label ranges starting with its premium Taste the Difference range in 2010.

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