Private label gets healthier but price cuts hurt A-brands

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In Uk the share of retailer brand food products launched with a ‘better for you’ claim reached a five-year high in 2014. On the other side 53 of the top 100 brands are losing sales
Private label gets healthier but price cuts hurt A-brands
Private label products in the Uk are getting healthier. According to research from Mintel, the share of retailer brand food products launched with a ‘better for you’ claim reached a five-year high in 2014. The data revealed that 6.6% of private label products launched in 2014 carried a low, no, or reduced fat claim, up from 5.9% in 2010, while ‘slimming’ claims also saw growth, up from 1.3% to 4% over the period. The proportion of private label products featuring a low, no, or reduced calorie claim rose from 1% in 2010 to 1.8% in 2014.

Mintel found that almost two thirds (63%) of shoppers consider the healthiness of products when choosing food for use at home, with this being considered more important than low cost (59%). The healthiness of food is the second most important consideration for shoppers, with taste being considered important for nine out of ten of them.

In the meanwhile the A-brands are discovering that price cuts and trade promotions are hurting their financial performance. In the Uk, research by Nielsen and The Grocer magazine shows that 53 of the top 100 brands are losing sales. Some of the most well-known A-brands are suffering sales declines of more than 10% as shoppers switch to Aldi, Lidl and other value-oriented retailers.

Britain’s biggest grocery brands are playing a dangerous game. With the discounters advancing and prices being cut across the board, many are starting to look like pawns in the battle between the discounters and mainstream grocery retailers.

The A-brands’ emphasis on price promotions goes beyond the Uk. Driven mostly by the food sector, the level of trade promotions increased in the fourth quarter across Europe, Just-food.com reports. The trend was especially strong in Italy and Spain. All countries, except for The Netherlands, saw an increase in trade-promoted sales in 2014, especially in the fourth quarter.
The financial pressure is causing some A-brand companies to retrench. Danone, for example, says it has been focusing on cutting costs and reorganising its production in Europe to build profits to compensate for weak sales as shoppers shift to less expensive brands.

 

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