Private Label Brands: Catch the new wave before it sinks you!
About three months after the world greatest private label trade show, PLMA 2018, we would like to take a look back and share some of our thoughts, facts and ideas with you. We’d like to offer our experience-based thinking to all of you readers (wholesalers/distributors/retailers or business professionals) who might be interested in PL (private label) brand trend happening globally. What can you do about it?
PL might sound complex, but the reality is, with the right supplier as a partner you will go through this process smoothly, successfully and relatively fast. Complexity depends on supplier’s experience and knowledge of PL as well as deep understanding of production capacities, costs, package and logistic optimization etc. Thus, be careful when you make your decision. It’s vital for your PL brand success. We’ve been through this process many times and we’ll try to share our experience with you as simple and useful as possible.
In this post we will present some data on PL trends globally. We would like to show you the incredible potential you should start exploiting now in case you still haven’t. It’s important to process the numbers in order to better understand the reasoning we will share further in our future posts where we will speak about topics like: the reasons to launch a PL brand despite the fact you are not a retailer, verifying your readiness for a PL brand launch, what it takes to launch a PL brand, how to make PL brand supplier evaluation and many other PL brand related challenges. Now let’s go through the key numbers.
PL brands keep growing across Europe. According to Nielsen data the PL brands now “stand at 30% or above in 17 countries” out of 19 countries tracked. Consumer confidence in PL brands keeps getting stronger. Following latest Daymon Private Brand Intelligence Report 2018, consumers look for more solutions rather than individual brands (US market shows the private brands outpaced national brands by about 8 times with an increase in sales by 4% compared to an increase in sales of national brands of 0.5%). Furthermore, Daymon’s report claims that 74% of surveyed consumers say private brands are better value for the money than national brands; 53% say they shop at a store specifically for its private brand; 59% believe private brands offer greater variety; 85% trust private brand at least as much; 84% believe in quality of PL brand at least as much and 81% buy PL brands on every or almost every shopping trip. These are some serious numbers to look at, especially if we take into account PL roots in the food industry.
A brief timeline: when initially introduced (in the 50s), PL food brands were considered as a cheaper alternative to regional, national or international brands with significantly lower quality and lack of variety. This consequently led to a small market share. Then, in the 70s their share began growing, but still their quality was perceived as inferior. The focus was on good margins only. Next significant period to look at is 2007-2012 when the PL brands experienced robust growth. Normally, in times of crises, consumers cut expenditures, making PL brands sales flourish. As the economy was improving, there was a slight decline in PL brands sales due to various reasons: 1) more money in the pocket made consumers switch back to their favourite brands; 2) more money helped national brands too, allowing them to aggressively respond to the rise of PL brands with heavy promotions and marketing activities all over the world and 3) very important change happened: PL brands started to invest in quality and variety, thus they slightly increased prices. This is when PL brands took a new direction: quality and innovation fight and not price fight only.
From today’s perspective, we see it was the right direction to take because they reached a new era in their evolution. Consumers now compare PL brands to A brands (you can check a recent interesting article on this topic here). If they kept being the cheap option with limited offer then in good times, with more money to spend, consumers would have totally abandoned PL brands or they would have brought PL to a survival stage at least. Instead, we see a new rise on the horizon and a serious threat for the A brands.
A completely different image of PL brands is in front of us each day we go shopping: beautiful, attractive package designs with high quality content, in varieties that many of the A brands do not offer and all this at more competitive prices as compared to A brands. PL stopped being a finance tactic only. It’s become a strategy for market differentiation, creating and fostering consumer loyalty and driving consumer satisfaction. Even though there is still plenty of PL brands who maintain the image of low cost alternatives to national brands and this is totally fine, yet it’s a fact that the world of “premium” brands has opened the doors to PL brands too – something that probably could not be imagined back in the 50s.
Today we look at PL as a source of innovation and flexibility at competitive prices. That is why we recommend you to start developing your own brands among different product categories soon, just before the crowd arrives.
The facts above were shared in order to motivate you walk further and explore the PL brand opportunities. In our next post we will tell you why you should launch your own brand even though you are not a retailer. We as producers of PL brands have the chance to see this trend happening among wholesalers and distributors right in front of our eyes. Don’t waste time and get on board. We will help you pave the way to the next top brand of yours hitting great sales numbers globally!
We are always eager to hear your feedback, comments, suggestions and proposals on how to improve. Feel free to drop us an email and ask us any question that might pop up while thinking about this subject.
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