BASINGSTOKE, England, November 12 /PRNewswire/ -- According to a new
report from leading beverage research agency Canadean, the global economic
downturn is providing the perfect conditions for private label products to
flourish. Private label products in the total soft drinks sector now account
for over 1 in every 10 litres traded in the global marketplace; if you
discount the on-premise sector, where private label use is marginal, then
private label's share of the market rises yet further. The rise of private
label is proving to be a considerable threat to branded soft drinks.
The dramatic financial turbulence of recent times has undoubtedly
provided a major opportunity for private label. Apart from the obvious factor
that consumers are more inclined to seek out the value that private label
products represent in a downturn, there has been another factor that has
boosted the private label segment; the shift from on- to off-premise sales.
In many markets the footfall in bars and restaurants has fallen back sharply
but consumers are compensating for this by drinking more at home and buying
soft drinks in the off-premise, where the bulk of private label products are
found.
Global Index: Growth of All Soft Drinks vs Private Label
Growth Index 2005 = 100 2005 2006 2007 2008 2009F
All Soft Drinks 100 105.0 110.9 116.1 118.9
Private Label 100 109.3 116.5 119.3 126.0
In Europe the recession has also provided the ideal environment for the
'discount retailers' to expand rapidly and they have invested heavily in
widening their net across Europe. Feedback from across the region points to
the success of these outlets and there is now even a 'hard discounter' in the
Canary Islands. Although some discounters do stock branded products, many
choose to exclusively stock their own low cost 'pseudo' brands and inevitably
as their sales prosper, so too does the private label segment.
As the modern retail channel develops, B brand operators in particular
are vulnerable to the expansion of private label ranges; both compete against
A brands on price. A brands are also losing out, as the quality of private
label offerings improves and private label products take up a wider range of
price positioning to now incorporate value, discount, mainstream and premium
price positions. There is also a trend for other on-premise or convenience
retailers to adopt their own private label. Fast Food chains, sandwich stores
and even garage forecourt chains are now increasingly doing so.
How vulnerable a soft drinks category is to private label alternatives
hinges on a number of factors, which have resulted in varying levels of
private label penetration across the soft drinks spectrum. Juice in
particular has proved more susceptible than other categories because it is a
relatively mature category; with ambient juices in particular difficult to
differentiate in terms of taste and there is also a retail bias to purchase.
Consequently private label products make up nearly a quarter of all juice
volumes.
The importance for branded players to develop defensive strategies cannot
be understated. Differentiating from private label rivals and justifying the
price gap based on their equity is the key to any successful defensive
strategy. Private label products will continue to make headway but brands can
be reassured that private label will always struggle to compete with brand
heritage and ultimately consumers want retailers to provide them with the
choice that brands provide.
Canadean's new report "Private Label Trends in the Global Soft Drinks
Market" is available now - for further details please contact Debra Richards
on tel: +44(0)1256-394227, email: soft@canadean.com, marketing@canadean.co.uk
or visit our website http://www.canadean.com.
Editor's Note:
Canadean is the beverage industry information specialist, providing
market research, reports, databases and consulting on the global beverage and
beverage packaging industries.
With headquarters in the UK and regional offices around the world,
Canadean has built a reputation as the benchmark for global beverage market
intelligence. Local operations are now based in Madrid, Buenos Aires, Mexico
City, Hong Kong, Beijing, Shanghai and Sydney.
Issued by the Corporate Marketing Department of Canadean Ltd, the leading
global beverage research company.
Canadean Ltd
12 Faraday Court
Rankine Road
Basingstoke
RG24 8PF
England
Tel: +44(0)1256-394210
Fax: +44(0)1256-394201
Email: sales@canadean.com
Website: http://www.canadean.com
SOURCE Canadean
