'Prices of own-label ranges rising faster than of branded ones'

Private label grocery products, often marketed as “budget” options, have experienced faster price increases than branded goods in UK retailers, says a recent report.

According to a report by data group Circana, over the past 12 weeks, private label goods saw a price rise of 16.3 per cent, surpassing the 10 per cent increase in branded goods.

The gap has slightly widened in the past four weeks, with retailers’ private labels rising by 17 per cent.

In a report titled “FMCG Demand Signals” released on Tuesday (16) by Circana, formerly IRI and The NPD Group, strong private label growth has been pointed out across all six of the largest markets in Europe, with the highest penetration in Spain (47 per cent) and Germany (41 per cent). Uk has the lowest penetration (37 per cent) - where shoppers continue to buy the National Brands they trust to deliver good value.

The report also states that private labels now make up 38 per cent of total fast moving consumer goods (FMCG) value sales in Europe (€229 Bn).

Shoppers across Europe are choosing more private labels for edible goods. With the highest price inflation almost entirely centred on food categories, the penetration of private labels in chilled, fresh, and ambient foods has been particularly high, states the report. Among non-food categories, there has been greater penetration of private labels in household care, especially staples, such as laundry and hygiene items.

Also, national brands aren’t necessarily losing loyalty, but shoppers are buying less volume. These brands need to keep innovating to maintain momentum and stay ahead of competition, states the report. For example, shoppers are balancing their desires to purchase with the demands on their purses, making it a business imperative for national brands to focus their sales strategies on good pricing and healthier plant-based options.

Ananda Roy, senior vice-president at Circana, noted that retailers have transformed Private Labels into strategy-led, consumer-focused, well-differentiated and data-driven alternatives to National Brands.

"National Brands are now having to regard many retailers as significant competition that they can no longer ignore. Retailers are clearly winning on many fronts.

"While not always the least expensive on display in the minds of shoppers, Private Labels offer good value, quality, a range of benefits that meet shopper’s dietary choices or lifestyles and can be trusted as much as National Brands with high equity sitting on adjacent shelves," Roy said.

These findings emerge as more cash-strapped customers turn to cheaper ranges to cope with the cost-of-living crisis. It emerged in multiple recent reports that there is a growing trend towards own-brand products in categories such as chilled, fresh and ambient food, as well as laundry and hygiene items.