Consumer starting to accept ‘Private Label’ goods

28 September 2005
Bangkok

Bangkok, September 28, 2005 --- Two thirds of global consumers consider Supermarket Own, or ‘Private Label’, Brands to be a good alternative to other brands, with as many as four in five consumers considering this the case in the developed markets of Europe, the Pacific and North America, according to a Global Private Label Consumer Study released today by ACNielsen, the world’s leading marketing research and information company.

The twice-yearly global ACNielsen Online Consumer Opinion Survey, the largest of its kind, polled over 21,100 respondents in 38 markets from Europe, Asia Pacific, North America, Latin America and South Africa (See Table 1 for country breakdown). The study asked consumers around the world what they thought about Supermarket Own Brands as an alternative to other brands in terms of their quality, value for money, packaging and positioning.

Against a global average of 68 percent who said that Supermarket Own Brands were a good alternative to other brands, consumers’ agreement was skewed heavily in their favour in the highly developed ‘Private Label’ markets of Europe (78%), the Pacific (78%), North America (77%) and South Africa (72%).  This compared to 64% of Latin Americans and 51% of consumers in Asia. 

“Private Label awareness and acceptance in Asia and other developing markets will in part go hand in hand with the growth of the Modern Trade in these countries. In Thailand, for example, Private Label penetration is currently running at 18 percent, compared to a Modern Trade share of grocery of 40 percent. Where the retail landscape is highly fragmented, a lot of shoppers are only just getting used to visiting supermarkets and hypermarkets regularly for their groceries, and Private Label is still a relatively new concept for them,” said Mrs Chantira Luesakul, Managing Director, ACNielsen (Thailand) Ltd.

Good Value for Money, and Quality on Par with the Big Brands

Consumers globally are in similar agreement when it comes to Private Label Quality and Value for Money, with a global average of 69 percent agreeing they were extremely good value for money, and 62 percent considering their quality to be at least as good as the big brands. 

Across individual countries, of those rating Private Label most highly on Value for Money, seven of the top 10 hailed from Europe, with the remainder made up of Canadians (#5, with 83% in agreement), Malaysians (#7, with 82%) and Australians (#10, with 81%).  Least in agreement on Value for Money were the Thais (25%) and Japanese (27%).

Some Categories More Suitable for PL than Others

When asked if they thought there were some products not suitable as Private Label where quality really mattered, a global average of 40 percent agreed, led by half the Latin Americans (51%) and Asians (48%). In Thailand, the share of Private Label ‘commodity’ categories is over seven percent – including products such drinking water, pre-packed rice and tissue and personal care products like razor blades, dental floss and facial tissues.

More Sophisticated Private Label Packaging Winning Consumers Over

As competition intensifies in-store, and the perceived quality gap narrows between Private and Supplier brands, retailers appear to have ratcheted up the quality of their packaging.   When asked, an average of 42 percent of consumers disagreed that Private Label products had cheap, off-putting packaging, led by half the Europeans, 46 percent of North Americans, and 45 percent of consumers in the Pacific.

Image and Education the Biggest Challenges for Retailers in Developing Markets

And just because they’re cheaper, it doesn’t mean they’re only meant for people on tight budgets who can’t afford the best brands!  When asked if they thought Private Label products were meant for people on tight budgets who can’t afford the best brands, a global average of 42 percent disagreed.

 “Partly this could be attributed to a lack of understanding about retailer brands in many of these developing markets.  In Malaysia and Taiwan for example, nearly half of respondents also agreed that they didn’t know enough about them to want to try them,indicating that ModernTrade stores with Private Label ranges should adapt their communications strategy to improve understanding and confidence in them,”Mrs. Luesakul added.

“Our survey clearly showed that the longer consumers have been exposed to Private Label – in terms of years’ in the market, how highly penetrated it is as a percentage of in store total category volume salesand the development of value packaging to build good consumer attitudes - the better they think about them.  Conversely, in markets where Private Label is less developed, consumers know less about them, and assume from their packaging and price that they are of lesser quality, and aimed at people who can’t afford the bigger brands,” Mrs Luesakul explained.

About ACNielsen

ACNielsen, a VNU business, is the world's leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen's market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns.  To learn more, visit www.acnielsen.com.

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Table 1

The 38 Markets Covered in the 2005 Global Consumer Confidence Study were: