Innovation could lure consumers back from private label

Nielsen says that sales of private label products have increased by 17 percent compared to two years ago – up $12bn.

Opinions vary about whether the private label boom will continue after the recession, as store brands have traditionally done well in times of economic hardship only to slump again when the economy has improved. However, during this recession, there has been a concerted effort from manufacturers to not only lower the cost of private label foods, but to target additional consumer expectations in terms of overall value.

However, although value is still important, Nielsen claims that innovation in terms of new colors, flavors, packaging and marketing campaigns could differentiate brand-name products from store-brands.

“Brands that fail to innovate may also fail to win buyers back from store brands,”​ the organization said.

As for where to channel that innovation, Nielsen claims that there are several areas on which manufacturers should concentrate.

Health and wellness​

In particular, with consumer confidence expected to improve, it says that purchases of foods and beverages for health and wellness will rise – so those labeled ‘organic’, ‘natural’ or ‘high fiber’ are forecast to do well, as are diet and low-calorie foods, particularly in the New Year as consumers start their post-festive diets.

The organization also recommends that manufacturers should avoid being stingy with their marketing budgets, saying that 43 percent of sales are made with a manufacturer-funded feature ad, display or price reduction.

“Retailers need to demonstrate sales performance to get their fair share of trade funds,”​ it said, suggesting that coupons, cell phone applications and in-store TV network advertising could help stretch tight marketing budgets.

“Time will tell if new product innovation will be enough to drive shoppers back to traditional brands,”​ said Nielsen.

The Private Label Manufacturers Association says that in the 2001-2003 recession, private label’s unit market share climbed from 20 percent to 21.8 percent. And in the 1990-1991 recession, unit share for retailer brands moved up from 17.6 percent to 20 percent.