PRIVATE LABEL SHARE DECLINED IN 2021, BUT CHANGING MARKET DYNAMICS INDICATE GROWTH FOR 2022
The value share of Private Label in Europe (28%) declined (-0.5%) in 2021, according to NielsenIQ’s data across 32 European markets, as reported during PLMA’s pre-show seminars on 30 May. In the context of the Covid pandemic, consumers in West Europe continued to maintain their spending power but had limited possibilities to spend. This boosted premium in-home consumption at the cost of Private Label. In South European markets, this was less the case and resulted in increased Private Label share for Spain and Portugal.
NielsenIQ surveyed 18 markets for PLMA’s 2022 International Private Label Yearbook and noticed a decrease for retail brands in 11 countries. Still, European markets remain some of the biggest Private Label markets globally. 11 markets sustained their market share position above 30%, and 4 markets remained above 40%. According to NielsenIQ’s data, perishable & frozen foods, paper products, and ambient food are the top 3 categories of Private Label value share with an average of 43% representing in total €189.6bn across the 18 European countries tracked.
In Europe’s largest retail markets, Germany’s Private Label share declined -0.9% to 37.6%, while the United Kingdom gained +0.3% to 42.1% representing €63bn in 2021, where half of all products sold are a retailer brand. Strongest Private Label decline is seen in Austria -1.2% and Switzerland -1.1% where perishable foods and confectionery & snacks play an important role in Private Label decline, but with a share of above 50% remains the highest in value share in Europe.
On the Iberian Peninsula, in Spain and Portugal Private Label gained share with +1.3%, +0.7% strongly driven by perishable foods across the 2 markets. Italy showed a slight decline of -0.2% mainly due to the decline in alcoholic beverages, confectionery and pet food.
In Belgium and The Netherlands, market shares for retail brands declined with -0.5%; where confectionery, snacks and pet food play a large role in the decline of Private Label share. Nevertheless, Belgium (36.3%) and The Netherlands (43.8%) remain well above the European average and ranked in the top 5 of most sold private label products in Europe with a volume unit share of 54.6% and 49.8% respectively. France remains well above 30% with a value share of 31.3% representing €36.7bn and reporting the third highest revenue, after United Kingdom and Germany in Europe.
In Eastern Europe, Private Label share continues to grow. Strongest gains were seen in Czech Republic +2.1 % and Hungary +0.6%, keeping their positive momentum of the past 4 years. Poland remains above 30% but declined with -0.4%.
In Scandinavia, Private Label evolutions are less strong. Norway reports a slight share gain +0.1%, while Sweden declined with -0.2% in 2021. In the Mediterranean, Greece declined in Private Label share -0.8% to 21.4%, while Turkey experienced an increase of +0.6%.
The evolution in 2021 is in big contrast with the start of 2022. Unforeseen circumstances from an economic and geopolitical point of view result in the highest inflation seen in decades. Rising food prices across European markets drives Private Label share growth in 14 out of the 18 countries, analysed by NielsenIQ for YTD 2022. The past has shown that economic crises are a platform for Private Label growth and 2022 is on track to proof this again. As a result, the evolutions seen in 2021 are not likely to repeat itself in 2022.
WHAT ARE PRIVATE LABEL PRODUCTS?
Private label products encompass all merchandise sold under a retailer's brand. That brand can be the retailer's own name or a name created exclusively by that retailer. In some cases, a retailer may belong to a wholesale group that owns the brands that are available to only the members of the group.
WHAT PRODUCTS ARE SOLD AS PRIVATE LABEL?
Major supermarkets, hypermarkets, drug stores and discounters today offer almost any product under the retailer's brand. Private label cover full lines of fresh, canned, frozen, and dry foods; snacks, ethnic specialties, pet foods, health and beauty, over-the-counter drugs, cosmetics, household and laundry products, DIY, lawn and garden, paints, hardware and auto aftercare.
WHAT ARE THE ADVANTAGES OF PRIVATE LABEL?
For the consumer, private label represents the choice and opportunity to regularly purchase quality food and non-food products at savings compared to manufacturer brands, without waiting for promotional pricing. Private label items consist of the same or better ingredients than the manufacturer brands, and because the retailer's name or symbol is on the package, the consumer is assured that the product meets the retailer's quality standards and specifications.
WHO MAKES PRIVATE LABEL?
Manufacturers of private label products fall into three general classifications:
- Large manufacturers who produce both their own brands and private label products.
- Small and medium size manufacturers that specialise in particular product lines and concentrate on producing private label almost exclusively.
- Major retailers and wholesalers that operate their own manufacturing plants and provide private label products for their own stores.
A UNIQUE ORGANISATION FOR A UNIQUE INDUSTRY
The private label business is unique. It has it's own needs and objectives. That's why there is a trade association that serves the industry exclusively. Founded in 1979, the Private Label Manufacturers Association is the international trade organisation dedicated to the promotion of private label brands. With offices in Amsterdam and New York, PLMA represents more than 3,500 manufacturers and suppliers worldwide, ranging from companies that specialise in private label to those that produce private label products in addition to their own manufacturer brands. PLMA offers trade shows, programmes, and services that are specifically designed for the industry.