CHICAGO: Private label brands can look forward to "enormous" long-term growth potential because sales are still equal to only 10% of all grocery value globally, a new retail report has forecast.
According to analysis from Euromonitor International, the strategic market research firm, private label brands have become an essential component for consumers in developed markets but there is considerable room for growth in other markets.
The report, entitled The New Face of Private Label: Global Market Trends to 2018, found that as many as 89% of shoppers buy private label products in developed markets, but the concept is largely unknown in Russia, where 23% say they never buy them, and has made little impact in China.
However, consumers in India are much more positive with 27% saying they intended to buy more private label goods over the next 12 months – a rate almost on a par with the 23% of consumers in France who expressed the same intention.
The economic downturn has provided further opportunities for retailers, the report concluded, as consumers are likely to remain minded to buy private label goods for some time to come, especially as perceptions about their quality have improved.
A further driver of growth will come from retailers expanding their ranges while taking steps to increase customer loyalty and investing more in their marketing campaigns.
At the same time, the ongoing expansion and consolidation of modern grocery channels is expected to be another key driver of growth for FMCG private labels, although the report warns that they will face fierce competition from national brands.
Among its other findings, the report noted that chilled foods and ready meals offered the best opportunity for private label development within the packaged food sector, although trusted national brands are expected to dominate in confectionery, soft drinks and baby food.
Data sourced from Euromonitor International; additional content by Warc staff