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Private Label's Rise Continues Globally: ACNielsen

NEW YORK -- Private Label products are steadily increasing their share of the international marketplace, according to a new report on the market from ACNielsen, a VNU business and sister company of Progressive Grocer. The report, "The Power of Private Label 2005 Executive News Report, " private label items made up 17 percent of total value sales for the 12 months ending the first quarter of 2005, up from the 15 percent level ACNielsen reported in 2003.

Private label more than doubled the growth rate of manufacturer brands, 5 percent vs. 2 percent, ACNielsen said. In over two-thirds of the markets studied, private label value sales increased faster than manufacturer brand counterparts.

Europe maintained its traditional dominance of market share of private label value sales, with a 23 percent share across 17 markets and a growth rate of 4 percent. As in the 2003 report, the top five markets for share of value sales are all in Europe: Switzerland at 45 percent, Germany at 30 percent, Great Britain at 28 percent, Spain at 26 percent, and Belgium at 25 percent. The emerging markets of Croatia, the Czech Republic, Hungary, Slovakia, and South Africa collectively saw the highest private label growth rate of 11 percent, though achieved from a much smaller base.

Bearing out the results of earlier studies, Latin America and Asia Pacific also have small private label markets in terms of share but didn't show the same double-digit growth rates as in the emerging markets. North America had both a high share (16 percent), and a considerable growth rate (7 percent).

Although previous reports found that the paper, plastic, and wraps, which encompasses the aluminum foil, paper towels, and plastic wraps categories, have long been the dominant private label market share and sales leader when compared with manufacturer brands, the latest study found that refrigerated foods, containing such categories as milk, cheese, and complete ready meals, had tied for the top spot with paper, plastic, and wraps. In terms of growth, refrigerated foods more than tripled that of paper, plastic and wraps, with 9 percent as opposed to 2 percent.

According to ACNielsen, the new popularity of refrigerated food confirms a steady trend in retailers' private label strategies: the introduction of private label items into premium segments that go beyond the "low price-high volume" commodity-driven practices of years past.

"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," said Jane Perrin, managing director of ACNielsen Global Services and sponsor of the ACNielsen Executive News Reports. "From the Tesco Healthy Living range of products to Loblaw's President's Choice expansion into organics and health-oriented lines, retailers are expanding their brands far beyond a singular focus on low price points. We are even seeing retailers leverage the equity of their private label brands outside of fast-moving consumer goods into areas such as personal finance, insurance, and telecommunications."

ACNielsen additionally looked at who's buying private label, via consumer panel information collected from 14 markets worldwide. These household-focused insights showed that virtually everyone buys private label goods: 100 percent of households in two-thirds of the markets studied had bought private label items during the past year, and even the "lowest" penetration level, in Singapore, was still strong at 77 percent. With the growth of premium private label products, share of purchases skewed only slightly more toward lower-income and bigger families.

While private label still commands only 17 percent of the international marketplace, in some markets it's far higher. For instance, private label share of value sales in Switzerland is now at its highest level, 45 percent. ACNielsen believes that its findings show that retailers around the globe can continue this successful expansion of private label, based on positive consumer attitudes. Backing up the company's assertions, a separate ACNielsen global study conducted in May 2005 across 38 markets revealed that 68 percent of consumers either slightly or strongly agreed with the statement "Private label brands are a good alternative to other brands."

Said Perrin, "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."

ACNielsen collected retail measurement sales data from 38 markets, covering five regions: Europe, North America, the Emerging Market Asia Pacific, and Latin America. In total, these 38 markets represent more than 60 percent of the world's Gross Domestic Product (GDP). The 38 markets studied were chosen as areas where there was an established private label presence.
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