Private Label Brands

Private Label Brands

Issued by: ACNielsen

Retailer Own Brands have established popular identities globally, but is South Africa in line with this trend?

Private Label brands - otherwise known as Own Brands - have come a long way in the past few decades. In the late 80's, the terms 'generic' and 'private label' were used to describe any product that was known to be cheaper and of lower quality than branded goods. Since then, Private Label brands have established their own identities, becoming popular consumer choices both globally and in South Africa.

ACNielsen conducted a local Private Label study incorporating 136 categories grouped into 10 product areas. Kerith Dix, Group Service Director of ACNielsen's Client Service Division, explains that 'products are deemed to be Own Brands where consumers can clearly identify them as belonging exclusively to a particular chain. This descriptor excludes other chain exclusive brands that cannot be easily identified as products of that chain.'

National results were analysed in comparison to worldwide trends, which indicate that over 68% of the world believe Private Label to be a good alternative to branded products. Global studies also point to the fact that certain regions have reached saturation state in their Private Label reach. 75% of categories worldwide include Private Label offerings, these products holding an average value share of 15%.

Growth of Private Label is much higher in emerging markets than it is in established ones, suggesting that South Africa could provide a platform for the expansion of such products. The percentage of categories including own Brands is in line with global trends. However, in 78% of these categories, Own Brands comprise less than 10% share. Exceptions to the South African rule are Canned Tuna and Scourers: Own Brands enjoy over 50% in both categories. Next most popular categories for Own Brands are tissue products (toilet and facial) and long life milk.

However, food products really drive the performance of South African Private Label. Dairy, Perishable & Refrigerated, and Dry Food are the three overall sectors in which it is strongest. These three sectors comprise two thirds of the value that total Private Label contributes to the FMCG market. Of the three, Dry Food is the only one in which Private Label is declining. Dix explains how 'lower inflation rates and higher disposable income may lead to a change in spending patterns. There is evidence of a shift to more premium products (often branded products) within the country's Food sector. This means that Dry Food Own Brands are still not the preferred choice, but are purchased when no alternative is available.'

South Africa then is still behind global trends in terms of the significance of Own Brands. By category share, South African Private Label drags behind every global category sector, with one exception of Personal Care. This is partly related to facial and toilet tissue (both strong Own Brand categories) being defined as Personal Care products in South Africa.

On a national level, Own Brands comprise approximately R4,1 billion annually, holding 4.7% volume share in total South Africa and 11.3% in major retail stores. Own Brands are more prevalent in Spar

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