ACNielsen

ACNielsen

September 27, 2005 10:00 ET

Growth of Private Label Continues Worldwide, Says ACNielsen

MARKHAM, ONTARIO--(CCNMatthews - Sept. 27, 2005) -

- Europe Still Leads the Pack in Terms of Share, but Other Regions Growing
Faster

- Refrigerated Foods Now Tops List - Demonstrates "Premium" Private Label
Strategy by Retailers

Private Label fast-moving consumer goods continue to steadily increase their share of the global marketplace, according to The Power of Private Label 2005 Executive News Report released today by ACNielsen. Based on ACNielsen data collected from 14 product areas containing 80 categories in 38 markets, Private Label goods comprise 17% of total value sales for the 12 months ending the first quarter of 2005, up from the 15% level found in a similar ACNielsen report published in 2003. In terms of growth, Private Label more than doubled the growth rate of manufacturer brands, 5% to 2%. In fact, in more than two-thirds of the markets studied, Private Label value sales grew faster than manufacturer brand counterparts.

Europe Still Dominates

Europe continued its traditional dominance in terms of market share of Private Label value sales, with a 23% share across 17 markets and a growth rate of 4%. As found in the 2003 ACNielsen Executive News Report, the top five markets for share of value sales all hailed from Europe: Switzerland (45%), Germany (30%), Great Britain (28%), Spain (26%) and Belgium (25%). The Emerging Markets (comprised of Croatia, Czech Republic, Hungary, Slovakia and South Africa) collectively saw the fastest Private Label growth rate of 11%, though achieved from a much smaller base. As found in previous studies, Latin America and Asia Pacific also have small Private Label markets in terms of share but did not achieve the same double-digit growth rates as in the Emerging Markets. North America maintained both a high share (16%) and also achieved a significant growth rate (7%).

Refrigerated Foods Takes the Lead

As demonstrated in earlier ACNielsen Executive News Reports, the product area of Paper, Plastic & Wraps (containing such commodity-perceived categories as Aluminum Foil, Paper Towels and Plastic Wraps) has long been the dominant Private Label market share and sales leader when pitted against manufacturer brands. In the 2005 study, however, Refrigerated Foods (containing such categories as Milk, Cheese and Complete Ready Meals) was able to move to the top with Paper, Plastic & Wraps (see Table 1). In terms of growth, Refrigerated Foods more than tripled that of Paper, Plastic & Wraps; 9% versus 2%.

Table 1: Private Label Shares and Growth Rates by Product Area
(Based on Value Sales)



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---------------------------------------------------------------------
PRODUCT AREA PRIVATE PRIVATE PRODUCT AREA PRIVATE PRIVATE
LABEL LABEL LABEL LABEL
SHARE GROWTH SHARE GROWTH
---------------------------------------------------------------------
1 Refrigerated Food 32% 9% 8 Non-Alcoholic 12% 3%
Beverages
---------------------------------------------------------------------
2 Paper, Plastic 31% 2% 9 Home Care 10% 2%
& Wraps (PPW)
---------------------------------------------------------------------
3 Frozen Food 25% 3% 10 Snacks & 9% 8%
Confectionery
---------------------------------------------------------------------
4 Pet Food 21% 11% 11 Alcoholic 6% 3%
Beverages
---------------------------------------------------------------------
5 Shelf-Stable Food 19% 5% 12 Personal Care 5% 3%
---------------------------------------------------------------------
6 Diapers & Feminine 14% -1% 13 Cosmetics 2% 23%
Hygiene
---------------------------------------------------------------------
7 Health Care 14% 3% 14 Baby Food 2% 13%
---------------------------------------------------------------------
---------------------------------------------------------------------


The rise of Refrigerated Food confirms a steady trend in the Private Label strategy of retailers worldwide: pushing Private Label products into premium segments that go beyond the "low price-high volume" commodity-driven practices of the past. In fact when ACNielsen compared the average price differential between branded and Private Label products within the 14 product areas, Refrigerated Foods had the smallest price differential at 16%, compared to a global average of 31% across all categories.

The previously mentioned category of Refrigerated Complete Ready Meals (found within Refrigerated Foods), where retailers provide consumers with all the ingredients for a complete meal in a variety of packaging, styles and recipes, now commands 49% of overall category value sales. This nearly equal share with branded products in a category that emphasizes quality, freshness and often "healthy choice" clearly demonstrates how retailers can use Private Label to build loyalty and store equity.

"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," noted Jane Perrin, Managing Director, 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."

Who Buys Private Label?

In addition to an in depth Private Label analysis across 38 markets via retail measurement sales information, ACNielsen looked at who is buying Private Label via consumer panel information gathered from 14 markets across the globe. These household-focused insights revealed that nearly everyone buys Private Label goods. In fact, 100% of households in two-thirds of the markets reviewed had purchased Private Label goods during the past year, and even the "lowest" penetration level was a still strong 77% (Singapore). With the growth of premium Private Label products, share of purchases skewed only slightly more towards lower income and larger families.

Growth of Private Label - Where is the Peak?

While Private Label still commands only 17% of the global marketplace, in some markets it is far higher. For example, in Switzerland, Private Label share of value sales is now at its highest level of 45%. Can retailers worldwide continue this kind of successful expansion of Private Label? If consumer attitude is any indication, the answer seems to be yes. Supporting this claim, in a separate ACNielsen global study conducted in May 2005 across 38 markets, 68% of consumers either slightly or strongly agreed with the statement that "Private Label brands are a good alternative to other brands."

"Just how far retailers can grow Private Label will be the center of much industry debate." noted 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."

Methodology

ACNielsen collected retail measurement sales data from 38 markets, covering five regions - Europe, North America, the Emerging Market Asia Pacific and Latin America (See Table 2). In total, these 38 markets represent over 60% of the world's Gross Domestic Product (GDP). The 38 markets studied were chosen as areas where there was an established Private Label presence.

Table 2: Markets Included - Retail Measurement Sales Information



--------------------------------------------------------------
EUROPE ASIA PACIFIC
Austria Australia
Belgium Hong Kong
Denmark Japan
Finland New Zealand
France Philippines
Germany Singapore
Great Britain South Korea
Greece Thailand
Ireland
Israel EMERGING MARKETS
Italy Croatia
Netherlands Czech Republic
Norway Hungary
Portugal Slovakia
Spain South Africa
Sweden
Switzerland LATIN AMERICA
Argentina
Brazil
NORTH AMERICA Chile
Canada Colombia
United States Mexico
Puerto Rico
--------------------------------------------------------------


For the household level insights, consumer panel data was collected by ACNielsen from 14 markets covering four regions - Europe, North America, Asia Pacific and Latin America (See Table 3). Data was collected from a sample of household panels in each market to reflect the total population of that market.

Table 3: Markets Included - Consumer Panel Information



--------------------------------------------------------------
EUROPE ASIA PACIFIC
Finland Australia
France Hong Kong
Germany Singapore
Great Britain
Italy LATIN AMERICA
Spain Chile
Switzerland Colombia

NORTH AMERICA
Canada
United States
--------------------------------------------------------------


Information was collected for the years ending April 2004 and 2005.

Editor's Note - for the complete text (pdf format) of the ACNielsen Global Services Executive News Report: The Power of Private Label 2005 visit www.acnielsen.com or www.acnielsen.ca.

About ACNielsen

ACNielsen, a VNU business, is the world's leading marketing information company. Offering services in more than 100 countries, the company provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen's market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns.

ACNielsen is part of the VNU Marketing Information group. VNU is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media measurement and information (Nielsen Media Research) and business information (Billboard, The Hollywood Reporter, Computing, Intermediair). VNU is active in more than 100 countries, with headquarters in Haarlem, the Netherlands and New York, USA. The company employs 38,000 people. Total revenues under IFRS amounted to EUR 3.3 billion in 2004. VNU is listed on the Euronext Amsterdam (ASE: VNU) stock exchange. For more information, please visit the VNU website at www.vnu.com.

Contact Information

  • ACNielsen (Global)
    Bruce Lee
    (646) 654-8130
    or
    ACNielsen (Canada)
    Marlene Jenett
    (905) 943-8511