The boost in market share gain by hard discounters in Spain directly correlated to a 24% increase of private label penetration over the last 5 years

The hard discounters Mercadona and Lidl are the retailers growing their market share at the fastest rate in Spain at the end of the 2023 year, increasing their share by 0.6 and 0.5 percentage points respectively to reach a total share of market of 26.2% and 6.4% according to Kantar data.

The share of private label (PL) in both retailers’ portfolios accounts for as much as 75% and 82 % of their total value sales according to the same source (Kantar), and these percentages have not stopped increasing in the last 5 years. This fact would suggest that there is a direct correlation between promoting PL products and gradually increasing market share while – in the case of Mercadona and Lidl, keeping a very tight and similar strategy in store formats: homogeneous stores of around 1,500 sqm with uniform store layouts.
If we focus on total food alone, private label in value terms at end 2023 jumped to 57.7% (with a 68.8% share by volume) of total modern retail sales according to Circana-IRI data, with all other retailers also increasing their share of PL as a % of total sales even if not quite as dramatically as Mercadona or Lidl.

As a consequence of this trend, 60% of shoppers have reported that they can no longer find some of their preferred brands on the shelves of their chosen supermarket (Expansion article 14th April 2024) and 1 out of 5 shopping baskets ONLY contain private label products (Nielsen).

Private label’s value share of the market at end 2023 was 10 percentage points more than 5 years ago and over this timescale has effectively resulted in the removal of a quarter of national brand products from the shelves as private label has increased its assortment by 13%.

In this battlefield where retailers are trying to aggressively win market share, shouldn’t brand manufacturers innovate and communicate more intelligently rather than just focusing on price and promotional activities? Shouldn’t they also perhaps rethink their Route-to-Market models?

Antonio Obieta
Managing Director, Green Seed Spain

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