As modern retailing is gaining importance throughout the world, so is private label. Major trends and developments however are still determined by Europe, North America and Australasia, where private label as well as modern retailing is already well established. Private label often mimics the overall food and beverage market, but there are still some significant differences.
Confectionery, Snacks & Ready-to-Eat products for example is the most important category within overall packaged food, accounting for 31% of sales, but only the second most important within private label alone, where the segment is projected to generate merely 20% of the overall sales value. In developed markets consumers are still hesitant to replace branded snacks, due to quality concerns, while the importance of traditional retailers within this category is keeping sales high in emerging markets, due to the impulse character of many products.
As a whole, private label accounts for 10% of global food and beverage sales in 2018, with a significantly lower ratio within beverages (5%) in comparison to packaged foods (12%). Major differences can also be found between regions, as the retail landscape usually dictates the level of private label penetration. Modern trade is a must for private label and sales are therefore naturally higher in developed markets with a strong presence of chained supermarkets/ hypermarkets, convenience stores and of course discounters. The highest private label sales can be found in Europe, where they account for 22% of overall food and beverage sales in 2018. Europe is followed closely by Australasia with 16% and North America with 14%. Asia Pacific, Middle East and North Africa, Latin America and Sub-Saharan Africa all register significantly lower shares of private label sales, with numbers between 2-3%. Especially among the emerging middle class in developing markets, private label still has an image of being a cheap and low-quality alternative to established international brands. Furthermore, setting up a viable private label business requires an extensive network of stores, which is not feasible in many emerging markets, as traditional grocers remain dominant.
“Having the right family of packaging design will help both local, regional and international sales”.
Middle East Focus
The continuous growth of modern retailing is strengthening sales of private label in many countries in the Middle East and North Africa. Private Label sales in the GCC remained limited over the years, even though the strong network of modern retailing would have supplied a perfect base for strong penetration. Recent developments however suggest a rapid change in the coming years.
Hypermarkets in the GCC started to invest into private label premium lines to address growing demand for more budget-friendly healthy foods. Carrefour Bio for example received a strong boost through the development of a “Healthy Kitchen section” in several of its’ UAE outlets. The brand offers affordable organic options of various packaged food items and is appreciated by the growing number of health-conscious consumers. Private Label in the GCC is also expected to highly benefit from the introduction of the discounter concept in the region. Dukan, the first and sole discounter in Saudi Arabia was introduced in 2014 and has since gained strong market share. In 2018, Landmark group opened a discounter called Viva in the UAE, which is expected to expand its store count rapidly over the coming years. The discounter concept appears during a time that consumers throughout the GCC re-think their spending habits, as they face austerity measures, economic restructuring processes and the implementation of additional taxes and costs. This will give discounters and private label portfolios an opportunity to prove their superiority over branded products in terms of value and could lay the foundation for a long-term private label boom in the region.
We curated the details and stats of this fantastic insight from: Global Private Label Footprint Report; Private Label Middle East (PRIME) Expo. Gulfood Global Outlook Report 2019 excerpt.
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Thank you for reading.
Chief Creative Director