Topics: Brand, Brand management, Private label Pages: 21 (4735 words) Published: April 4, 2013

Commerce thrives on fierce competition, with retailers and wholesalers vying for the attention and loyalty of customers. Every day, customers vote with their feet for the stores of their choice. Shops therefore depend on maintaining the reputation of their business and the trust of their customers. Own brands products, in many cases marketed under the store’s own label, have developed at all levels of value in both food and non-food products in response to consumer demands for value for money: often they are market leaders. They also allow stores to offer something unique to differentiate them from their competitors. There is currently a lively political debate on own brands which is characterised by a number of misconceptions. With this brochure we aim to shed some light on own brands and provide a clearer picture about what they are. In particular, we would like to give answers to the following questions: • What are own brand products?

Why do consumers like own brand products?
Are own brands a threat to competition or consumer choice and do they hamper innovation? • Who produces own brands?


Increasing consumer choice and driving innovation

What are own brand products?
The term own brands, also known as store brands
or private labels, refers to “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.” (Source: PLMA website) Own brand products are not a new phenomenon. They have been in the market for almost a century. Whereas some retail formats have de veloped almost exclusively as own brand sellers, most retailers sell a mix of both branded and

own brand goods.
In the early days, own brands were often perceived as cheap or generic. Over the past 20 years or so, however, they have shown an impressive development. Own brand products have become more and more sophisticated and

their market share has grown significantly in all
types of retail. Nowadays they sit alongside other brands at all value and price ranges. Nevertheless, market penetration in Europe
varies significantly between member states,
store formats and product lines. In most European countries own brand market share lies between approximately 20 and 30 percent. Own brands are particularly popular in Switzerland
and the UK with a market penetration of more
than 40 percent. At the lower end of the scale
are countries like Italy, Poland and Greece with
market shares between only 10 and 15 percent.
Notwithstanding this diversity, Europe is at the
forefront regarding own brands: The world-wide
weighted average market share is only approximately 15 percent (Source: Nielsen 2010). Today, a broad selection of own brand products
is available in stores, ranging from fresh, tinned
and frozen foodstuffs, organic and fair trade
products to household products, health and
care products, home improvement products and
many more.
The market shares of own brands at product level
show large variations. Product ranges with a high
proportion of own brands are household goods
such as aluminium foil, rubbish bags or kitchen
towels as well as vegetables, fish and meat, and
milk products. Ready meals are a particularly suc1

cessful example of own brand products. Toiletries,
baby food, beer or soft drinks, on the other hand,
account for the lowest shares of own brands.
Own brand foodstuffs, an important segment,
are available in a number of categories such as
gourmet food or local and regional specialities.
In terms of quality, there are, for example, value,
gourmet, regional or festive foodstuffs. In terms
of health and wellness, the range comprises
products with authenticated health claims, “free
from allergen” foods or functional, e.g. cholesterol reducing, food. A more recent phenomenon is the strong growth of eco-friendly, ethical and organic...
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