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Private Label Will Control 50% Share of Food Retail Market by 2025

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Private Label Will Control 50% Share of Food Retail Market by 2025

Private Label Will Control 50% Share of Food Retail Market by 2025
April 07
11:42 2011

The global market share of private/own label food products is set to double from the current 25% to 50% in 2025. However, A-brands will retain their importance for retailers to anchor categories’ price levels and give consumers choice and familiarity, according to a recent global research report titled ‘Private label vs Brands – an inseparable combination’ from Rabobank’s Food and Agri Research division.

The report shows that smaller secondary brands (B-brands) will have to strategically reposition to avoid being squeezed out of the market. Two strategies are open to B-brands suppliers – either invest in quality and target the premium market, or specialise in private label. A consolidation spree among private label specialists is inevitable to achieve economies of scale and to reduce the cost base.

Rabobank’s conclusion that global private-label penetration will reach50% by 2025 is based on assumptions about food retail market structure. The report lists 11 drivers for private-label growth including:

* Continued industry consolidation in developed food retail markets (Western Europe, the US and Australia).

* Adoption of modern retail in developing markets (CEE, Russia and Turkey).

* Increased consumer acceptance of private label following the recession.

* Further growth of the hard discount segment.

* Professionalisation of private label supply.

Author of the report Sebastiaan Schreijen, associate director processed food & retail at Rabobank, comments: “Our research shows that private label and A-brands are an inseparable combination. Like love and marriage, you can’t have one without the other. But where two’s company, three’s a crowd. This report is an early warning to B-brand suppliers to adapt their strategies to survive.”

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