Private label products flourishing during the pandemic
Grocery retailers’ private label (PL) products have created much discussion in different countries. PL products suffered during the pandemic, which saw branded products grow their market share in different countries.
The Grocer published an interesting article about the growth of PL products. Grocer refers to Kantar figures stating that PL products accounted for 54,7% of sales and 62,6% of volume.
The real growth rockets of PL products in the UK have been the German discounters Aldi and Lidl. Both have seen Private Label growth of more than 25% over the last year. They rely mainly on Private Label products in their assortments (80% - 90% of total).
The Grocer states that Aldi is responsible for 14,7% of all PL sales in the UK (overall market share reached 10% during spring). Lidl had a PL market share of 10,1% (vs 6,2% overall market share).
Sainsbury’s has the biggest PL assortment of the big ”traditional” grocers, with more than 6 000 PL products. This represents more than double the entire assortment of Aldi or Lidl. Tesco has the biggest share of assortment in PL products: 26%.
Finland lagging in PL product penetration
Contrasting this to Finland, where the PL products have a much smaller share of assortment and revenue. Kesko states that there are approximately 2 600 Pirkka products (the oldest PL brand in Finland). This represents less than 10% of products in the assortment of a big K-Citymarket hypermarket.
The market share of PL products in Finland has been hovering between 23% and 25%. Significantly less than the share in the UK. On the other hand, the market structure also is very different in Finland compared to the UK. Finland’s two big grocers’ negotiation power differs from their UK peers.
Germany with big share, but smaller to UK
The Lebensmittel Zeitung reported that also in Germany has seen PL products outgrowing branded products. Unlike the UK, PL products do not account for the majority of revenue. Despite gaining market share by 2,6%-points from the branded products, PL products accounted for 43,2% of the market.
This is somewhat surprising, taking into account that Aldi and Lidl have big market shares in Germany.
Another curious aspect of the PL assortments in the Grocer article was that the mid-tier Private Label products represented 86,9 % of all PL products. Despite being perceived as the value-oriented choice, the low-tier PL products represented only 2,8% of PL product sales in the UK.