04 / Private label upsurge

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The growth of private labels within grocery is accelerating and the liquor industry is following fast.

Australia is now seeing a huge upsurge in private labels. Nearly 25% of Australia’s grocery sales and 20% of Woolworth and Coles businesses are now private label.

The GFC may have been one of the main factors fuelling this already growing trend, but now as economic conditions are starting to improve, shows no sign of slowing down or dropping off. Australia now has a taste for it and seems to really like it!

Traditionally it was mainly the low income families buying the private label (accounting for some 30% of their grocery costs) Other socioeconomic groups such as young singles, couples without children and high-income families, have all jumped on the saving train and are buying up more and more.

Of course the major supermarkets are now then spending large sums on activities which will convert many of these groups. This can be seen by the style of instore promotions and attempts to bring their own brand image and branded products together. Own brand “branding’ has risen out of the mix to try to win over these newer consumer groups. Woolworths Select, Coles Finest, Coles Organic or Green Choice and Woolworths Naytura etc, have all been developed as a way to attract private label buyers from all socioeconomic groups.

As the private label grows in food, the liquor industry is catching up fast and with 45% of Australia’s liquor retailing market owned by Coles and Woolworths we are destined to see a huge spike in growth.

We only have to watch how the US and UK have developed with respect to private labels. In the UK for example, they take up more than half of the grocery market and almost 30% of their liquor market. Marketers and companies alike need to adjust their strategies accordingly and wouldn’t go far wrong by watching overseas trends as they filter over to Australia. Watch this space!