Food inflation helping growth in German Private Label

Driven by the pandemic and more recently by the war in Ukraine, inflation has become once again an important issue. For retailers, this means change in the perception of Private Label (PL) by consumers.

A recent study by IPSOS supported by the Lebensmittelzeitung has just been published and is entitled „PL Monitor 2022“. This quantitative study focuses on sustainability and the effect of inflation on purchasing behavior.

First of all, consumers are very much aware of price increases in basic food articles with 83% noticing this. A similar 83% response is given to the question whether consumers that they are getting much less product for the money in their purses than a year ago.

Many respondents do not really differentiate between Brand and PL. In both these segments, 79% have registered price increases. An additional worry (59% amongst Branded and 49% amongst PL respondents) is that manufacturers could be cutting back on product quality to combat the cost inflation and maintain prices at a low level. 70% of consumers are now paying more attention to price levels and 68% see PL as a good route to save cost when food shopping.

65% of respondents nowadays see PL and Branded to be of similar quality level, with 8% even seeing PL to be of superior quality. The most important argument in favour of PL remains price, mentioned in the 2022 study by 57% as the most important attribute. In the 2020 study, 64% of respondents found price to be of prime importance, in 2018 76%.

What are consumers doing to reduce the effect of food inflation? 48% are reducing the number of shopping occasions and 64% are converting to shopping more in just one outlet. And 71% are reverting to the old method of using a shopping list and avoiding spontaneous, non-planned purchases.

Also, special offers are becoming more important. 73% of respondents now check out promotional prices and 69% look specifically for promoted products. 64% of respondents buy special offer products to store at home and there as well save money.

On-line has not really benefited from the current inflation in grocery items although overall, it grows in share and importance. 43% of respondents stated their usage of on-line had grown during the pandemic. On-line users seem to think PL is of less importance in their priorities, with 41% considering they buy less PL on-line (but 54% think the share to be similar to their purchases in supermarkets).