A fresh breeze in the private label market
The popularity of private label products continues to increase in German grocery retail and drugstore markets. A new record market share of 45 % according to Nielsen reflects the growing success of the “home-grown” business in 2017.
Various factors have an impact on the positive development of the private label market. “Stiftung Warentest”, the German consumer testing organisation, observed that in comparison to brands, consumers judge the performance of private label products often remarkably well with regard to price, trustworthiness and quality. This applies especially in the area of everyday products such as butter, cheese or spaghetti. According to a survey by the trade magazine Lebensmittel Zeitung and Ipsos, 76 % perceive private label products as cheaper compared with branded products, 71 % consider them as trustworthy and 75% as of the same quality.
At the same time, consumer expectations are increasing. Product design and appearance have for example been seen to play an increasingly important role. This is primarily true in order to attract a younger consumer target market. Grocery retailers try to meet these new requirements by more and more innovative and creative product ranges including fresh design – not only in the convenience category. A few examples are a black smoothie with activated carbon (REWE to go) or ice lollies with a liquid vodka-energy centre (K-Classic from Kaufland).
Special attention is also being paid to value-added private label segments such as premium, organic and fair trade. In addition, these non-mainstream products play an important role because they enable retailers to differentiate themselves from the competition and to sharpen their consumer profile.