The current growth of own label is on a solid, sustainable platform but innovation remains key, says Liz Hamson

Own label is on the rise again. The question - one we have identified as a key issue for the industry - is whether the rate of growth is sustainable.
Speaking exclusively to The Grocer, Brian Sharoff, president of the Private Label Manufacturers Association, insists that it is. “I am speaking in particular of the incredible strides made in fresh, frozen and refrigerated foods created and marketed by major retailers,” he says. “These categories reflect changes in the purchasing habits of consumers and, unlike categories that are purchased on the basis of price, answer consumer needs for convenience, single or double portion, restaurant-quality and product trust. These factors will not be changing any time soon.”
Sharoff highlights another potential area for own label growth: non food. “Here retailers are moving into a void created by other retailers that have been slower to develop their own brands or promote them aggressively. This trend reflects a shift in retail format and objectives and, again, will not change any time soon.”
With the retailers rather than the manufacturers behind the steering wheel, own label can only become more prevalent, he suggests, especially in mainland Europe.
He points out that own label now makes up 41% of the Belgian market in volume, and stands at 38% in Germany, 32% in Spain and 31% in France.
“Meanwhile, it is moving upward strongly in Scandinavian countries and making inroads in Central and Eastern Europe,” he says. “It is obvious that the popularity of own label is the result of retailers adopting strategies to build their own brands.”
The challenge is to become more innovative. Retailers and manufacturers also need to stay on top of supply chain issues, he says, adding: “Retailers will need to reinforce the concept of partnership between suppliers and buyers while manufacturers will need to adjust their own supply chains to the ever-growing global demands of retailers. The opportunities are in new categories and the emergence of retail brands as premium global brands.”
However, although a flurry of big branded suppliers bit the own label bullet last year, they are unlikely to be followed by many others, he says.
“Own label has grown so much that most branded suppliers who wish to be involved in own label have probably made that decision already. Some well-known brands have toyed with the notion, but overall the players are set.”
The only wrinkle in the fabric would be interest from Asian manufacturers, he suggests.
“But they are quite busy supplying branded manufacturers with lower-cost components and may not figure in the calculations for a while.”