Store brand sales to surge in Australia

SYDNEY: Private label grocery products are set to rapidly increase their market share in Australia during the next five years, according to a report.

IBISWorld, the research firm, stated that store brands delivered 13.5% of supermarket sales in 2007/08, yielding A$9.96bn in sales. By 2012/13, these figures should reach 25.2% and A$21.6bn.

Looking further ahead, the analysis predicted such lines would take 33% of the market, worth A$31.8bn in expenditure terms, and equivalent to growth of 50% compared with five years ago.

"The recessive economic climate has been a strong driver of private label growth. Households have been reining in spending, paying off debt and increasing savings," said Karen Dobie, general manager of IBISWorld.

"This, coupled with an increase in the range of private label products available, has led many consumers to make the shift to home brands."

By category, the company suggested that retailer-manufactured goods should deliver 68% of supermarket sales in 2012/13, measured against 24% in 2002/03.

These totals hit 56% and 67% in turn for sugar. Similarly, the proportion of bread sales attributable to own label was pegged to expand from 18% to 56% during the forecast period.

Fresh milk will yield a more modest lift from 51% to 55%. Liquor will also see growth from 2% to 8% on the same metric.

"Products with a high degree of homogeneity that are staples of grocery baskets have shown the strongest private label growth," said Dobie.

By contrast, eggs are forecast to slide eight percentage points to 53%. "The decline is mainly due to a switch towards free-range, a segment not adequately represented by private label players," Dobie suggested.

Currently, store brands are most popular with families earning less than A$44,000 per year, making up 40% of grocery purchases. This fell to 15% for households earning over $75,000 a year.

"At present, consumers in middle and higher income groups represent the strongest growth opportunities for retailers looking to push private label products," said Dobie.

Data sourced from The Brisbane Times; additional content by Warc staff, 3 August 2012

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