4 - Refresco.de

Market review 2009
“Retailers need to strike a balance between
their credibility in
Grievink adds: “The ‘value’ type will grow especially because
more varieties will be introduced.” Schreijen: “The growth
currently found in value private label is notably due to the
recession. Retailers are expanding their SKUs and consumers
are getting more price conscious. Grievink: “When the economy
recovers, strong growth will be seen in the rather small third
type of private label: premium, because people can then afford
more luxury.” De Jong adds: “Here lies a huge opportunity for
retailers. They can define target groups, formulate a theme
that addresses what is going on in society and they can grow
distinct segments, e.g. for the elderly, or halal food, or organic.
This will benefit them because they can adapt it to suit almost
all categories. Not even the biggest A-brand manufacturer has
so many categories at his disposal. Retailers are thus building
consumer loyalty and are in fact trading up consumers. When
A-brands perform less, growth can also be seen in the standard
‘me too’ type.” Schreijen: “On the private label supplier side
too there is still room for improvement in terms of efficiency
and consolidation. When you look at the margarine market, for
instance, it is considered a mature market; a few big suppliers
cover Europe without much overlap.”
What are the biggest challenges for A-brands?
Grievink: “A-brands should be aware of becoming a commodity,
easy to copy and very mainstream. It is expected that in the
coming years about 25% of the A-brands will be in danger
of disappearing. At the same time, retailers are uplifting
stores into brands. They are transforming from being simply
distributors into concepts, representing lifestyles, adding
emotional value to their product. The need to stand out is
growing, showing growth in private label type three ‘premium’.
De Jong: “The biggest challenge for A-brands will be: how
to deal with private label after the recession. The past few
years have shown that after a period of economic downturn,
customer loyalty to private label products remains.
The majority of consumers who choose private label will not
go back to choosing A-brands when times get better.”
What should A-brands do to compete with private label?
Grievink: “Innovate & differentiate. We now see the incremental
value of some A-brands disappearing. The only A-brands
that will survive are the ones that grow into ‘superbrands’,
meaning those brands substantially better regarding product
specifications (functionally) and regarding brand experience
(emotionally). Innovation should not only be taking place in
product, but all along the production chain, from product,
packaging, consumer experience to distribution channels etc.
The focus should be on differentiation from other (private
label) products by promoting the quality and the emotional
added value. What A-brands absolutely need to avoid is solely
price promotion.” De Jong: “I agree. In these tough times
A-brands should heavily invest in promotions in order to
support their brands. Advertising costs are now significantly
lower because of the economic situation and the urge is there
to keep the consumer’s loyalty. The current high advertising
budgets spent by the major brands in the UK show that
A-brand manufacturers see the importance of this.”