Own-branded products are moving up from the bottom shelf

  • News
  • June 16, 2015
  • Sarah Dunn
Own-branded products are moving up from the bottom shelf

People like my uncle seem to be on the way out, however. Neilsen data shows that for every $100 spent on groceries in New Zealand, nearly $14 is spent on “private-label” brands. Nielsen predicts private label growth to continue to outpace supplier brands this year – we asked some supermarkets what they think of this.
Foodstuffs Own Brands Ltd’s national private label manager Jocelyn McCallum says the chain’s customer research and online feedback has shown that today’s consumer is primarily interested in value, but the increase in “premium” products is a growing trend that Foodstuffs is keen to support.

McCallum says customers remain very price aware, but consumers are becoming more confident. She quoted Nielsen’s latest Consumer Confidence Survey, which shows an increase of one point from fourth-quarter 2014 and two points over a year ago. At 102 points, New Zealand remains ahead of both Australia and global confidence.

She confirmed that the trend towards “premiumisation” is growing in strength, saying it is driven by factors which include increasing consumer optimism and possible emergence from the austerity of the post-GFC economy.

[The Register team explored grocery premiumisation in the current issue of NZ Retail magazine, out now.]

Foodstuffs is at the forefront of premiumisation, McCallum says: “We are challenging our supplier base to deliver appropriate products to satisfy consumer demand.”

She says consumer research has identified a range of specialist offerings which can fall under the “premium” umbrella. Foodstuffs groups these different definitions of premium around how people live their lives, where their interests lie and how they like to socialise with friends and family, creating consumer categories such as “Young and upwardly mobile.”

McCallum would not be drawn on specifics regarding Foodstuffs’ own-brand revenue. Asked for a figure of own-brand spending per $100 in Foodstuffs stores, to compare with Nielsen’s data, she said only that the Nielsen data was a fair representation of the average spend per $100 across Foodstuffs’ private portfolio.

Private label numbers are pretty stable across Foodstuffs, McCallum says. She noted that increasing the share of private label does appear to be an increasing focus across the Tasman, but was doubtful about the value of following the lead of Australian supermarkets.

“We don’t believe growing private label at the expense of branded products is the right strategy in a country the size of New Zealand,” McCallum says. “Suppliers need an incentive to innovate and create products that will meet the evolving needs of our customers and to continue to do so they must see a return on their investment both in financial terms and with regard to R&D.”

In 2012, The Guardian reported that for the first time the year before, more own-branded labels had been launched in the UK than branded goods. It said companies had been investing in their own-branded lines for some time and consumers had now come to trust that the quality they sought would be there.

McCallum declined to comment on Pams’ significant rebranding, saying only the packaging was “constantly evolving” as Foodstuffs sought to “surprise and delight” customers.

A Countdown spokesperson listed its own-brand products as including Homebrand, Select, Signature Range, Macro, Free From and Gold. She said the own-brands were “popular” but the company could not provide any sales data due to commercial sensitivity.

The spokesperson explained that each own-brand range had a different selling point, and each was keyed to a different price point – “good”, “better” and “best”.

The entry-level Homebrand products are popular among customers looking for the best value, she said, while the Free From products were aimed at those with food allergies. The Macro range is for customers seeking “wholesome nutritional fare” and the premium Gold products are for customers after something more indulgent.

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