Private label ousting big brands as cost of living crisis grows



By Richa Naidu

LONDON, Aug 24 (Reuters) - Tomasz Łuksza, who took over his father's Polish confectionary business just over a decade ago, has a problem he's not unhappy about: European supermarkets want more gummy bears and chocolate-covered marshmallows than he can make.

"We're seeing at least two times the demand of last year and we can't take all the orders," said Łuksza, managing director and owner of 3 Topole, which supplies the private label brands of French retail giant Carrefour CARR.PA and several other European supermarkets.

Private label sales have been on the rise for years, but a global cost of living crisis driven by soaring energy prices appears to be turbo-charging the trend.

"Consumers are starting to be more price-aware," Łuksza said. "Inflation is making them want to save money so they're looking for cheaper alternatives and private label seems to be the answer."

An 85-gram bag of Haribo Golden Bears on Carrefour's website in Poland costs 3.49 zloty ($0.73), while a 100-gram bag of Carrefour Classic Żelki misie gummy bears, made by 3 Topole, costs 2.69 zloty.

In Europe, private label sales already account for a larger chunk of grocery purchases than in North America. Sales are expected to grow this year, according to the Private Label Manufacturers Association, though it did not give a figure.

Of all staple food sales in Western and Eastern Europe last year, more than 29% and 9% respectively were private label purchases, according to Euromonitor. In the hygiene and tissues sector, the figures were 41% and almost 19% respectively.

Though own label manufacturers face the same cost pressures as branded product rivals, they can rely on guaranteed demand from retailers who specify what goes into the product, how it's packaged and how much it will cost. Retailers are also more likely to swallow price increases on own label products because they are more profitable for them than branded items.

"Private label is one of the tools that they will use to convince shoppers to continue to walk through those doors rather than walk through the door to their competitors," said Andrew Walker, client knowledge director at market researcher Kantar.

In contrast, branded product manufacturers face increasingly fraught negotiations with retailers. Britain's biggest supermarket Tesco TSCO.L removed Kraft Heinz KHC.O products from its shelves earlier this year after failing to agree pricing with the manufacturer.

In June, consultancy McKinsey & Co surveyed 5,000 shoppers in Western Europe about their shopping habits. Roughly 40% of respondents said the biggest change they had made recently was to try new private label products.

Increasingly, consumers are happy with the quality, taste, variety, and innovation in private label products - and sticking with them, McKinsey Associate Partner Angus McOuat said.

'SMASHING IT'

Behind labels such as Tesco's "Finest" and Carrefour's "Simpl" are thousands of businesses that make food and personal goods on behalf of the supermarkets. These firms are often small operations that serve several retailers at the same time, from low-cost Lidl to John Lewis' high-end Waitrose stores.

Their products are sold at a discount to the brands of companies like Kraft Heinz and Nestle NESN.S , which spend far more on product innovation and marketing.

In the UK, sales of private label products are at record levels, according to Kantar, with sales up 7.3% in the 12 weeks to Aug. 7 and holding 51.6% of the market.

Family-run cheese maker Joseph Heler Cheese has seen sales to discount stores Aldi and Lidl - which mostly sell private label products - rise sharply in the past year.

"Aldi and Lidl are absolutely smashing it at the moment," Gregor Abell, Joseph Heler's sales and marketing director, said.

A 400-gram block of Aldi private label cheddar costs about 2.29 pounds ($2.70). A similar-sized block made by Cathedral City, Britain's biggest cheese brand, costs more than 4 pounds.

Seventy percent of Joseph Heler's 120 million pounds in annual turnover are from own-label products for retailers, Abell said.

Aldi said it was well positioned for further growth in private label sales. Lidl declined to comment.

BETTER DEALS

Rising energy prices, record inflation and an anticipated recession are pushing European shoppers to look for better deals, retailers say.

"Everything now is moving to cheaper solutions," said Manolis Giamniadakis, commercial manager at Tsililis, Greece's biggest producer of tsipouro spirit.

Tsililis supplies Germany's second-largest supermarket chain REWE and Ahold Delhaize-owned AD.AS AB Vassilopoulos with low priced spirits and wine. A 700 millilitre bottle of REWE Feine Welt London Dry Gin, made by Tsililis, costs 12.99 euros, versus a 22.99-euro bottle of Bombay Sapphire London Dry Gin, according to REWE's website.

Swedish supermarket chain Axfood and Belgian discount retailer Colruyt both told Reuters they had seen greater demand for own label goods in recent months.

Even upmarket stores are relying more on private label.

"In the last six months, we've seen a large increase in orders from the biggest retailers in the country," said Nissim Nissim, director of UK confectionary business Sweet Me Keep Me, which supplies department stores like Harrods and John Lewis.

Ahold, the owner of more than 20 retail brands including Albert Heijn in the Netherlands and Stop & Shop in the United States, is seeing private label demand rise across all its regions, and especially in Europe.

The supermarket group is relying more on private label suppliers because big brands are charging too much, CEO Frans Muller told Reuters, citing "hard negotiations."

"I am not completely happy with how the big international vendors talk about inflation and what kind of price increases they bring to us," he said. "We cannot justify those price increases to support their own profitability."

About half of Ahold's business in Belgium, the Netherlands and Luxembuorg is private label, as is nearly a third of its U.S. business. Own-brand sales were up more "moderately" in the United States, but Muller expects growth to speed up.

"We see increased private label share," Muller said. "This will not stop."

($1 = 0.8322 pounds)

($1 = 4.8015 zlotys)
Reporting by Richa Naidu Editing by Matt Scuffham and Mark Potter

دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔

ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔

کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔

ہم کوکیز کا استعمال آپکو ہماری ویب سائٹ پر بہتریں تجربہ دینے کیلیے کرتے ہیں۔ مزید پڑھیے یا اپنی کوکی سیٹنگ تبدیل کیجیے۔

خطرے کی انتباہ: آپکا سرمایہ خطرے پر ہے۔ ہو سکتا ہے کہ لیورج پروڈکٹ سب کیلیے موزوں نہ ہوں۔ براہ کرم ہمارے مکمل رسک ڈسکلوژر کو پڑھیے۔