Supermarkets: Private Labels vs. Brands – Who Wins [γράφημα] –

Loyal… to branded products and not to private label Greek consumers remain, despite high inflation gnawing away at a significant portion of their income.

At least this is what emerges from various evidence and reports that see the light of day, which shows the resistance of brands to the “attacks” of cheap anonymous products that have been gaining ground in recent years.

This is a… Greek peculiarity, since in the rest of Europe the private label has been highly preferred by consumers for several decades.

The Swiss “bow” to private label

In fact, according to what is mentioned in a recent investigation by the Competition Commission, Greece is one of the last countries in terms of consumers of private label products with a rate of 23.9% compared to 51.8% in Switzerland (in terms of sales value in the fast-moving consumer goods category goods in 2023), which is in first place in a total of 17 countries.

The percentages are equally high in Spain (44.4%) and Portugal (42.4%), countries in the south of Europe that faced similar problems to our country during the last decade after the collapse of… Lehman Brothers.

As stated in the Competition Commission’s investigation, “it has been observed that the strength of the private label generally varies with economic conditions”. That is, private label market share generally increases in difficult economic conditions and decreases in stronger economic periods.

The role of tenders and supplier strategy

It has certainly played a catalytic role the decision of the industries that produce branded products to proceed with an aggressive pricing policy, focusing on given offers and the pressure exerted by the household basket that was mostly filled with private label products.

In order to stop the… onslaught of PLs, whose sales were growing at double-digit rates, they launched bold promotions to retain their customers and stem the tide of cheaper labels.

Which they succeeded to an extent. According to data from the measurement company Circana, which has been integrating data from the Lidl chain for some time, in the first seven months of 2024 the private label share rose to 26.8% from 26.2% in the same period of 2023.

Quality and closing the gap

As for the gap that existed a few years ago in the level of quality between private label products and branded products, according to the Commission’s research, this gap has narrowed.

“Private label quality levels are much higher than ever before,” it notes, noting that “companies contracted for private label production have improved their procurement processes and are more careful in monitoring quality.”

Profit ceiling and… 2025

In the meantime, the government according to what it stated the Minister of Development, Takis Theodorikakos will keep the cap on the profit margin on food and other consumer staples well into 2025.

This measure, first imposed in 2021, aims to control prices and protect consumers from excessive increases.

The companies have pledged to cut prices on around 600 products over the coming months in an effort to provide relief to consumers.

The minister stressed that the profit ceiling is an important means of putting pressure on the market to ensure that price increases remain limited.

At the same time, he said that discussions with representatives of the market have led to the commitment to price reductions on about 600 products in the coming months, as an effort to relieve consumers.

DIMEA’s survey of 35 companies

At the same time, as revealed by OT, a huge investigation by DIMEA is in full progress which concerns 26 large food and non-food companies, as well as 9 supermarket chains (including the largest based on turnover).

The investigation, which has been launched since July and has meanwhile been “enriched”, as large meat importers and wholesalers have been added to the list, has a deadline of November 10.

The aim of these extensive checks involving over 2,500 product codes is to record any unjustified increases in the items in question.

Source: ot.gr