Private Label Under Pressure as Share of Total FMCG Market Falls - According to New IRI Global Private Label Report

Jun 22, 2016, 03:00 ET from IRI

BRACKNELL, England, June 22, 2016 /PRNewswire/ --

Price wars, promotions and shopper behavior are all challenging the role of private label on the shelf 

Private label is continuing to come under increasing pressure across Europe, according to a new report - 'Private Label in Western Economies' - launched today by IRI, the big data and market intelligence expert. The report analyses private label sales trends and price and promotions across six countries in Europe (France, Germany, Italy, Spain, the Netherlands and the United Kingdom), as well as in the US and Australia.

Private label's value market share in Europe fell by 0.6 points to 38.3% in 2015, compared to the previous year as a share of the total FMCG market. This highlights both a downward trend and the fact that retailers and manufacturers are struggling to cope with challenging market conditions, including pressure from a growing discounter channel, as well as national brands pumping large amounts of money into promotions. Private label market share measured by pack sales also dropped by 0.5 points to 47.4% last year.

While there are encouraging signs of economic growth in Europe, with GDP up +1.7% for 2015 and signs of unemployment slowing or stabilising, the story for private label tends to differ from country to country, suggesting that shoppers' decisions about whether to buy private label over national brands vary according to national choices and preferences.

France, for example, saw the highest private label share decrease of all the eight countries in 2015, but still with a robust private label value share at 34.1%, compared to Italy's 17.2% value share and Australia's 13.9% value share. The UK had the strongest result for private label, with an increase of 0.4 points that brings its value share to over half, 51.8%, in 2015 (Source: Kantar Worldpanel UK)*.

The IRI report also points to the fact that supermarkets are losing private label sales to the discounters, primarily from the economy end of their private label ranges. France also saw a strong decrease in the private label economy tier (-5.6% in value sales and -6.8% in unit sales) as well as from the standard (-3.5% in value sales and -3.8% in unit sales) tier, which diluted healthy growth coming from the premium ranges (+2.8% in value sales and +3.0% in unit sales).

"The report presents an interesting picture, despite a decrease in private label value and unit market share overall," comments report author, Tim Eales, Director of Strategic Insight at IRI. "Economy ranges are facing big challenges - not least from the discounters but also in the minds of shoppers who tend to equate 'economy' with 'low quality' - it seems that premium private label is actually growing. This is where retailers should be focusing their attention in order to win shoppers hearts' and minds when it comes to own label."

The IRI report also highlights that private label assortment is shrinking across Europe, a trend that is also impacting national brands, as FMCG retailers and manufacturers focus on cutting their range and assortment for higher performing categories, brands and point of sales.

Tim Eales adds: "We've seen this over-abundance of products on the shelves across many of the countries - there is simply too much choice for the average consumer today and private label is often the victim of cuts to products that appear on store shelves. Retailers and manufacturers need to put in place the right strategies to help them focus on what shoppers want, but also to understand the impact of their decisions when it comes to reducing assortment and range."

Category trends 

  • All categories are declining or are stable in value shares
  • The food sector remains a key area for private label across Europe, US and Australia.
  • Frozen food (43.0%) and chilled & fresh (39.0%) are category leaders in terms of value share across Europe.
  • Household (31.2%) and pet food (26.5%) remain the best performing non-food categories, while confectionery (12.1%) and personal care (13.9%) struggle to increase value share in Europe, due to strong national brand affinity with shoppers.
  • Non-alcoholic drinks and chilled & fresh food progression is being stopped in Europe by high promotional activity from national brands.  

Country trends 

  • For French retailers and manufacturers 2015 was a difficult year in a context of price war, which has impacted private label performance. All categories struggled, and from 2010 to 2015 while national brands grew 12.8% in value, private label saw a decrease of -1.0 value share points to 34.1%.
  • In Italy, a tough year resulted in a value share decrease of -0.2 points to 17.2%, but there has been investment in premium private label assortment (by product and category) giving shoppers trade-up options.  
  • In Spain, national brands were more successful in 2015 than private label. Many Spanish shoppers perceive national brands to be higher quality products and purchase branded items even if it means that they spend more.  
  • In UK supermarkets, the value share of private label is down year-on-year by -0.4 value share points, as growth from the discounters depresses their sales especially across the private label economy range.
  • In 2015, total private label unit market share was stable in the Netherlands, yet total private label value share decreased by -0.3 value share points to 39.9%. Retailers introduced lower value private label products to halt the growth of hard discounters but this has not been particularly successful as the quality was not comparable to that of the hard discounters.
  • Private label spend decreased in the USA taking its value share to 16.4%. High-end private label ranges are popular but an increase in promotional activity may have been a factor in its value share decrease.
  • Private label share in Australia is lower (13.9%) than in many European countries and retailers are keen to improve private label presence and share.


*Sources: IRI Infoscan hypermarkets and supermarkets for Spain and Italy; Kantar Worldpanel total market 52 w/e 3rd January 2016 for the UK; IRI Infoscan total market including hard discounters for Germany, the Netherlands and France (including Drive); IRI Infoscan total food for the US; IRI total food for Australia.

Find out more in the IRI Special Report 'Private Label in Western Economies', click here to download the report.

About IRI: 

IRI is a leader in delivering powerful market, consumer and media exposure intelligence and actionable insight from predictive analytics. It goes beyond the data to ignite extraordinary growth for its clients in the FMCG, retail and over-the-counter healthcare industries by pinpointing what matters and illuminating how it can impact their businesses. Follow IRI on Twitter.

For further information please contact: 

Amanda Hassall, Eureka Communications
Tel: +44(0)1628-822741; Mob: +44-(0)7855-359889

Anne Lefranc, European Marketing Director at IRI
Tel : +33-1-30-06-23-62