Friday, January 27, 2006

Private label CPG in Europe

This article tells us that private label CPG market share in Europe is at 23%, and has reached an astounding 35% in the UK (I think it's about 15% or so in the US).

It is becoming an increasing issue for manufacturers who need to decide whether to produce private label (as many have always done -- in Europe and the US) or if that will cannabalize their own sales. Another issue is major retailers taking over manufacturing themselves:
“Certainly if retailers can get facilities for knockdown prices from an old famous brand that has collapsed, this might tempt them. In the US it is something that's being mooted at the moment.”
One alternative that is offered is to create your own down-market brand to battle or pre-empt private label penetration of your category:

But some manufacturers seem to be shifting direction. American-owned Budweiser has expanded its range to add premium and cut-price alternatives to its famous number-one brand, rather than produce private labels.

“They have taken a leaf out of the private label book by offering a value product too, called Busch beer. It's cheaper, with less packaging but still benefits from the ‘halo effect' of the wider Bud name.”

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