Budget own-label sales may be booming, but as The Grocer reported last month, the picture in the UK is mixed, with premium sales dropping 3% to £534m, according to TNS, while sales of branded goods accelerated.
It’s a symptom, says Brian Sharoff, the president of the Private Label Manufacturers’ Association, of a new dynamism in own label in the UK.
“The UK, until the mid 1990s, was a mature market. All the players knew what they were supposed to do; they knew their consumers, whether they were in Cambridge or Glasgow.”
But since the late 1990s, says Sharoff, there have been too many factors to consider own label as a distinct category. “It’s dynamic, deeply complex and unpredictable.” As well as the multiple tiering of own label that’s evolved, Sharoff believes changes in the role of the high street, the recent growth of the discounters and the impact of fluctuating commodities have all played their part in challenging the status quo.
“The British have always been more loyal to traditional supermarkets, which is one of the reasons why it’s taken the discounters longer to make headway in the UK. But the UK is now multi-ethnic. It’s so evident when you visit, everyone has a different colour skin, there are multiple languages, multiple communities.” With recession now the backdrop, the market has all the ingredients, Sharoff adds, for “a classic battle” between the “extremely nimble mults” and the “sophisticated simplicity” of the discounters.
Who? World of Private Label is an annual trade show organised by the PLMA (Private Label Manufacturers' Association) and attended by visitors from 90 countries.
What? 3,200 exhibitor stands representing 65 countries, including more than 30 national pavilions.
When? 26-27 May
Where? Amsterdam's RAI Exhibition Centre
Why? New Product Expo, Idea Supermarket, Pre-show seminars (25 May)
“It’s not exactly a come-and-learn environment for the UK,” says Sharoff. “Like the French and the Germans, British retailers know what it takes to run a good private-label strategy. But part of the job is not locking yourself in the castle. Even if you’re Tesco or Sainsbury's, you need to see what’s going on around the world, and the show is a convenient place to see ideas in practice and make new contacts in a convenient fashion.”
Attendance from UK retailers in the past has been limited and Sharoff concedes that a lot of the visitors have hailed from countries looking to emulate the sophistication of the UK market. This year is no different, in fact.
“You do have these wannabe countries like Bulgaria and Turkey, that are very anxious to learn what the established countries are doing to compete with their suppliers. So the other thing a UK retailer can do is defensive, whether it’s staying one step ahead of the curve, or talking to the manufacturers used by rival retailers, to see if they can get a better deal.”
And with multiples now operating in a number of international markets, it becomes even more imperative for the buying teams, he adds. “A buyer must come with the eyes of a local consumer. You can’t buy for the world from a central location. You’ve got to shop locally.”
Not surprisingly, Paul Foley, managing director of Aldi UK and Ireland, will be attending the show.
“I’m always looking for inspiration," he says. "We source 50% of our product from the UK and try to buy British whenever we can. But it’s important not to close yourself off. Inspiration comes from our colleagues in other countries. If a new range in another country does well we give it serious consideration, with our American and Australian businesses probably the first I’ll look at. But a show like PLMA is good because I want to create excitement in the store. And you never know what you’ll find.”
Foley will be looking, in particular, for one-off specials. Some of Aldi’s non-food lines have received a lot of attention in the past. But he is just as keen on these ‘when-it’s-gone-it’s-gone’ ranges for Aldi’s food aisles.
“Sometimes it may be as simple as stocking something you might have tried on holiday. But I’m always looking for an excuse to theme the stores, like the Olympics in China. I try to do it in food as well as non-food, which can be a little harder. And that’s where the PLMA can come in handy.”
This year’s PLMA show features, for the first time, the facility to set up meetings with suppliers, through the PLMA website, ahead of the event. Other features are more tried and tested, such as the New Product Expo, where displays this year from leading own-label manufacturers include a chocolate-flavoured bubble bath and a cat litter (see box) that changes colour if it detects Blatter’s disease.
The showcase is conveniently positioned in the same area as another old favourite, the Ideas Supermarket, an exhibition of products and packaging from leading supermarkets, hypermarkets, drugstores and retailers from Europe, North and South America, Asia and Africa.
British supermarkets are once again well represented, with displays from Tesco (its discount range), Morrisons (value), The Co-operative Group (healthy living) and Iceland (party packs).
The most widely anticipated displays are likely to be at the value end, with other new ranges from Switzerland’s Migros (M-Classic) and Coop (Prix Garantie), and the first sighting of a new value range from Carrefour France.
Burts Potato Chips
Greencore Convenience Foods
Honeytop Speciality Foods
Kolak Snack Foods
Simtom Food Products
The Real Petfood Company
Abergavenny Fine Foods
Sharoff believes the recession is also “a good opportunity” for British own-label manufacturers. With a long-standing reputation in quality prepared foods, cosmetics, beauty products and household goods, Sharoff singles out Greencore and McBride as two of the most successful UK exports on the supply side.
But he cautions against the easy assumption that British manufacturers will clean up thanks to the weaker pound. “It’s very difficult to turn a battleship,” says Sharoff. “It’s not a six-month strategy. You’ve got to be prepared to play a long-term game.”
The British Pavilion: Can the falling pound work in the UK's favour?
With the value of sterling down against the euro and the dollar, it is an excellent time for UK-based manufacturers to increase export sales. But the recent demise of Food from Britain means Government support for the food and drink industry - the UK's biggest manufacturing base - is in short supply. Add to this recession, and it's not surprising the number of exhibitors in the British Pavilion - now organised by William Reed, owner of The Grocer - is slightly down.
Nonetheless, there are four new exhibitors among the 13 manufacturers in the pavilion, including Indulgence Patisserie, a Colchester-based frozen and in-store bakery and desserts supplier. The company's exports doubled last year and now account for 10% of sales - and MD Angus Allan is confident sales will grow. But while the value of the pound has "undoubtedly had a beneficial effect, it is not the main reason for going to PLMA".
"We would have gone anyway, as it will allow us to get our name out there more," he says. "The Indulgence range of desserts is currently sold to Auchan, in France, and to foodservice customers in Denmark, France, Iceland, Norway and Turkey. The launch of a new frozen desserts range at the show will help us continue our growth. We have already received interest from retailers in Australia, Spain and Sweden."
Another new exhibitor is The Real Petfood Company. It exhibited at the show in 2004, but returned to find its biggest supplier in liquidation. "The leads were good, so now we have sorted out our local difficulties we're giving it another shot," explains MD Graham Wheeler. Almost 50% of the North Wales-based company's sales are from exports, and these were secured at the previous show.
Also returning is Simtom, a manufacturer of Indian pickles and cooking sauces for retail, foodservice and industrial purposes. Exports, which account for 20% of sales, are helping to offset the increased cost of ingredients and raw materials. "We tend to pick up branded business at the show, and if the retailer sees that it's working well, it may convert it to private label." It currently has contracts in France, Scandinavia and Iceland.
New Product Expo: Our pick of the latest innovations
The cat litter that detects disease
Health Indicator is a revolutionary cat litter from Sivomatic that detects changes in the pet's urine and indicates when to take the cat to the vet.
Bath & shower chocolate gel
Brought to you by Quimi Romar, this bath and shower gel picks up where Unilever's chocolate-scented Lynx anti-perspirant leaves off and takes it to a whole new level.
The adjustable egg ring
A Dutch company is launching this non-stick adjustable ring that can transform the presentation of rice, vegetables and, of course, eggs.
Ketchup for kids
The JaMaDu label from Coop Switzerland is a health-focused private label range that's been tested by consumer panels of kids. It is free from artificial thickeners and sweeteners and is low in sugar.