Own-label sales rise in India

07 February 2012

NEW DELHI: Large FMCG retailers in India have seen sales of their own-label brands rise rapidly, reflecting the increasingly sophisticated strategies adopted by these firms and the shifting habits of consumers.

According to Nielsen, the insights provider, many of India's largest retailers have witnessed demand grow for store brands, which now take around 7% of the market and are set for further growth.

The floor cleaner made by Big Bazaar, part of Future Group and one of the India's main chains, now derives 52% of category sales in its stores. Its glass cleaner matched this total, Nielsen revealed.

Such figures came in at 42% for packaged atta, 29% for packaged ghee and scouring pads, 22% for spices, 20% utensil cleaners and 16% for packaged rice, showing its products have a broad reach.

Kishore Biyani, the chairman of Future Group, told the Economic Times: "Three years ago, our private label sales grew mainly because of experimentation and trials by consumers. But now, sales are driven by repeat purchases.

"We have quality products packed innovatively, priced attractively and placed strategically at our retail stores. So the success of private brands is a combination of all four Ps."

Bharti Walmart, another grocery chain, yields 50% of floor cleaner sales from its private label range, hitting 35% for packaged atta, 31% for packaged rice, 22% for branded tea and 20% for salty snacks.

William Savage, chief merchandising officer of Bharti Walmart, said: "Customers have begun to like private labels due to better quality, high food safety standards, international look and feel of products, customized packaging created after customer feedback and the credibility of the retailer."

Aditya Birla, also a major retailer, rejuvenated its More Value and More Choice brands two years ago, rolling out numerous regional variants of products to attract shoppers.

Its own-label handwash now delivers 32% of in-store sales, coming in at 30% for its pickles, Nielsen estimated.

George Angelo, executive director of Dabur, the FMCG manufacturer, suggested that such shifts had not occurred across the board.

"When it comes to foods or personal and beauty care products, consumers have been loyal to branded items and will continue to remain so," he said.

Krishna Mohan, CEO of Emami, a rival to Dabur, said the personal care and over-the-counter healthcare segments have proved more robust for well-known products, but believes retailers could soon catch up.

"We are sure they are working on the same and eventually will venture into these categories, which are huge," he said.

Data sourced from Economic Times; additional content by Warc staff