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BIG BRANDS HURT AS PRIVATE LABEL GROWS
The growth of hard discounters and private label across Europe is having a big impact on the Abrands. “When you have Aldi, Lidl and Netto all growing their businesses and stocking relatively few brands, then any market share gains they make will have a knockon effect on the major branded manufacturers,” writes Retail Bulletin magazine in the UK.
Unilever recently reported a 12% volume sales decline from a prior year period and analysts believe its market share dropped because of competition from retailer brands. “Volumes are down across Europe because of pricing, but the point is more that they are losing market share against private label,” ac-cording to Nicolas Ceron, an ana-lyst at Numis Securities. In addition to the sales decline, Unilever is cutting back on its manufacturing and R&D operations in Europe, announcing plant closings in the UK, France and The Netherlands.
Even Procter & Gamble, which has consistently downplayed competition from private label, is changing its message. “Do we see private label growth? Yes, we do in Western Europe and in the US,” A.G. Lafley, CEO, told analysts. He also suggested that P&G will be looking outside of Europe and the US for “trade up” opportunities. “Our center of gravity will shift to developing markets,” Lafley said, noting that most new plants will be opened in developing countries.
Market analysts believe the com-petitive situation in Europe is leading Abrands to become more aggressive. “It is no wonder that the likes of Unilever have been countering this turn of events with advertising campaigns highlighting the quality of their products versus the supermarkets’ own-label alternatives and thereby justifying their higher prices,” writes The Retail Bulletin.
Feb 18, 2009
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