Not So Private Anymore

August 1, 2005
/ Print / Reprints /
ShareMore
/ Text Size+

Not So Private Anymore
Sarah Theodore  
Editor
Private label products are growing at a rate of 18 percent in the U.S. beverage industry, according to an extensive Citigroup Smith Barney private label report. In fact, store brands have been on the receiving end of a lot of positive press lately, including a write-up in Consumer Reports, the bible of the savvy shopper. All of that is good news for the companies producing store brand products, but a troubling trend for those on the branded side of the business.
One of the main reasons consumers are embracing private label products is that they perceive them as being of comparable quality to branded products. According to ACNielsen, more than two-thirds of North American consumers consider private label products to be good alternatives to branded products.
The company took a look at attitudes toward store brands in several regions of the world, including Europe, North America, the Pacific, Latin America and Asia. One of the most interesting findings was that private label products were far more popular in developed markets, than developing countries. Beliefs such as “I don’t think private label brands are suitable for products where quality really matters,” and “They’re really meant for people who are on tight budgets and can’t afford the best brands,” were most common in developing countries. In fact, North America and Europe were least likely to report those feelings.
Maybe it’s time to take another look at this category and find out what’s really driving it. The perception has been that store brands are most popular for consumers who can’t afford more expensive products, or that private label becomes appealing when consumer confidence is down — essentially, that consumers want branded products but can’t afford them. But ACNielsen’s findings show that private label is more popular in the most affluent parts of the world, and the strongest correlation to private label sales is how well developed the retail landscape is in a given market. Perhaps the trust consumers have in retailers is just as significant as their trust in brands. It’s also possible that the “badge appeal” on which branded products so often rely carries only limited weight.
The good news for branded products in the United States is that even with 18 percent growth, most beverages have been sheltered from private label. Store brands have an average of 21 percent market share throughout the beverage industry, but milk, frozen juice and bottled water feel the pinch the most. Products such as soft drinks, beer, refrigerated and shelf-stable juices, isotonics and wine fall well below the average.
How can you keep it that way? Innovation, say the experts. “Those who innovate gain share,” states Citigroup in its report. If private label is encroaching on the trust territory of branded products, it still can’t approach the innovation. I can only imagine how frustrating it is for branded product companies to invest their money, sweat and tears into a product only to have it copied as a less expensive store brand, but newer and better is what consumers expect from their favorite brands, and that’s what brands do best. BI
Sneak Peek
SEPTEMBER
Cover Story —  Beer Wholesaler of the Year, Origlio Beverages
Category Focus —  Dairy drinks
Packaging —  Coding equipment
Beverage R&D — Color technology
OCTOBER
Special Report —  The future of distribution
Category Focus —  Private label
Marketing —  Gender-specific branding
Beverage R&D — Organic ingredients
 

 Did you enjoy this article? Click here to subscribe to Beverage Industry.  

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

International Pineapple Day at Bahama Breeze

In celebration of International Pineapple Day on April 2, Bahama Breeze locations across the country invited the media and consumers to celebrate with cocktails that feature the tropical flavor of the pineapple. (Photos by Liz Parker and Jennifer Haderspeck)

10/10/13 2:00 pm EDT

Ditch the weighting agents: A cost effective solution for delivering flavors and actives

Available On Demand Learn how to reduce costs and energy use by enabling high oil load emulsions, eliminating the need for weighting agents like brominated vegetable oil (BVO).

THE MAGAZINE

Beverage Industry Magazine

BI April 2014 cover

2014 April

The April 2014 Beverage Industry includes a cover story on moonshine, as well as articles about CSD brands, whiskey, and more. Check it out today!

Table Of Contents Subscribe

Beverage Insider eNewsletter

Are you an Insider? Subscribe to Beverage Industry’s weekly e-newsletter to receive news headlines, new product information and magazine highlights.   

Spirits Segments

Which spirits segment will perform the best in 2014?
View Results Poll Archive

THE BEVERAGE INDUSTRY STORE

cleaning-in-place-dairy-foo.gif
Cleaning-in-Place: Dairy, Food and Beverage Operations, 3rd Edition

This book addresses the principles of cleaning operations, water supply issues and the science of detergents and disinfectants.

More Products

Webinars

Beverage Industry Webinars are an easy, effective and convenient way to get educated and informed on the latest industry trends and topics. All Webinars are FREE unless indicated. For more information, check out our Events page!

STAY CONNECTED

facebook40 twitter    youtubelinked