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The Private Label Food Consumer - UK - November 2014

INTRODUCTION
Definitions
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: Retail value sales and forecast of private label food and drink, UK, 2009-19
Market factors
The squeeze on real incomes continues
Figure 2: Annual % change in average total earnings, consumer prices (CPI) and food RPI, January 2009-August 2014
A drop in food and non-alcoholic drink prices
A ‘savvy shopping’ mentality has become ingrained
Companies, brands and innovation
Brands overtook private label in NPD activity in 2013
Figure 3: New product launches in the UK food and non-alcoholic beverages markets, branded vs private label, 2010-14
A third of food and drink adspend is by the grocers
The consumer
85% of adults buy own-label
Figure 4: Purchasing of own-label and branded food and non-alcoholic drink, September 2014
A stark difference in taste perceptions between categories
Figure 5: Products perceived to be tastier, selected categories, brands versus own-label, September 2014
Figure 6: Consumers willing to pay more for branded products, by category, September 2014
Price and quality hold most sway
Figure 7: Factors which would encourage consumers to buy or to buy more own-label food and/or non-alcoholic drink instead of branded ones, September 2014
Copycat own-label products divide opinion
Figure 8: Attitudes towards own-label and branded food and non-alcoholic drink products, September 2014
What we think
ISSUES AND INSIGHTS
Opportunities for the development of own-label within chocolate to develop in through the impulse channel
The facts
The implications
Supermarkets can do more to engage with their shoppers in-store to give them an edge over brands
The facts
The implications
Brands need to prove their worth in order to benefit from the expected rise in consumer spending in the mid-term
The facts
The implications
TREND APPLICATION
Trend: Collective Intelligence
Trend: Experience is All
Trend: The Nouveau Poor
MARKET DRIVERS
Key points
The squeeze on real incomes continues
Figure 9: Annual % change in average total earnings, consumer prices (CPI) and food RPI, January 2009-August 2014
Special offers remain a key draw for shoppers
Figure 10: Grocery shopping habits people are doing more of this year than last year, September 2014
Does an improved economy bode well for brands?
Premium own-brand to benefit as spending gains momentum
Brands are under pressure to step up their game
Value ranges look set to suffer
Strong demand for eating out challenges ‘dine in’ products
WHO’S INNOVATING?
Key points
Brands overtook private label in NPD activity in 2013
Figure 11: New product launches in the UK food and non-alcoholic beverages markets, branded vs private label, 2010-14
A sharp contrast in private label NPD activity across categories
Figure 12: Share of private label in new product launches of food and non-alcoholic drink products in the UK, by product category, 2014*
Figure 13: Percentage point change in the share of private label in new food product launches, by product category, 2013-14*
Figure 14: Percentage point change in the share of private label in new non-alcoholic drink product launches, by product category, 2013-14*
Tesco stays at the top in terms of new launches
Figure 15: Share of private label launches in the food and non-alcoholic beverages markets, by company, 2010-14
M&S and Waitrose expand their range of ready meals
The discounters look to premiumisation
A drop in economy launches from own-label
Figure 16: Share of new product launches in the UK food and non-alcoholic drink market carrying premium and economy claims, own-label vs branded, 2010-14
MARKET SIZE AND FORECAST
Key points
Private label growth has an edge over brands
Figure 17: Index of UK retail value sales of private label and all food and drink, 2009-13
Steady value growth forecast
Figure 18: Retail value sales of private label food and non-alcoholic drink, at current and constant prices, 2009-19
Figure 19: Retail value sales and forecast of private label food and drink, UK, 2009-19
Methodology
SEGMENT PERFORMANCE
Key points
Milk is the only private label-dominated non-alcoholic drinks sector
Figure 20: Share of private label in sales of non-alcoholic drinks, by category, 2014*
Figure 21: Share of private label in sales of non-alcoholic drinks, by category, 2013 and 2014
Private label dominates milk as a commodity
Brands lead in bottled water
Brands have a near-monopoly in CSDs
A strong lead for own-label in ready meals and dips
Figure 22: Share of private label in sales of food, by selected categories, 2013 and 2014
Own-label is almost non-existent in baby food and drink and gum
‘Treat’ purchases tend to be the domain of brands
COMPANIES AND PRODUCTS
Asda
Market positioning
Private label offering
Recent activity
Co-operative Group
Market positioning
Private label offering
Recent activity
Morrisons
Market positioning
Private label positioning
Recent activity
Sainsbury’s
Market positioning
Private label offering
Recent activity
Tesco
Market positioning
Private offering
Recent activity
Waitrose
Market positioning
Private label positioning
Recent activity
Marks & Spencer
Market positioning
Private label positioning
Recent activity
Discounters
Aldi
Lidl
BRAND RESEARCH
Brand map
Figure 23: Attitudes towards and usage of brands in the supermarket private label sector, August 2014
Correspondence analysis
Brand attitudes
Figure 24: Attitudes, by supermarket private label brand, August 2014
Brand personality
Figure 25: Supermarket private label brand personality – macro image, August 2014
Figure 26: Supermarket private label brand personality – micro image, August 2014
Brand experience
Figure 27: Supermarket private label brand usage, August 2014
Figure 28: Satisfaction with various supermarket private label brands, August 2014
Figure 29: Consideration of supermarket private label brands, August 2014
Brand recommendation
Figure 30: Recommendation of selected supermarket private label brands, August 2014
BRAND COMMUNICATION AND PROMOTION
Key points
A third of food and drink adspend is captured by the grocers
Figure 31: Main monitored media advertising expenditure on food and non-alcoholic drink, 2010-14
Tesco reclaimed its leadership in 2013
Figure 32: Main media advertising expenditure on food and non-alcoholic drinks, by selected retailers**, 2010-14
Figure 33: Share of main media advertising expenditure on food and non-alcoholic drinks, by selected retailers**, 2010-14
Morrisons, Aldi and Co-operative Food grew adspend significantly in 2013
Morrisons focuses on price 2014
Aldi
Co-op
Lidl unveils debut TV ad campaign
THE CONSUMER – USAGE OF OWN-LABEL AND BRANDS
Key points
85% of adults buy own-label
Figure 34: Purchasing of own-label and branded food and non-alcoholic drink, September 2014
Figure 35: Purchasing of own-label and branded food and non-alcoholic drink, September 2013 and September 2014
Over-55s and ABs most likely to buy premium own-label
Figure 36: Purchasing of premium-own-label and branded food/non-alcoholic drink products, by age and socio-economic group, September 2014
Tesco is the most popular supermarket for own-label
Figure 37: Retailers from which own-label food/non-alcoholic drink has been bought in the last three months, September 2014
THE CONSUMER – TASTE PERCEPTIONS OF BRANDS VERSUS OWN-LABEL
Key points
A stark difference in taste perceptions between categories
Figure 38: Products perceived to be tastier, selected categories, brands versus own-label, September 2014
Own-label has more positive taste perceptions in bread and baked goods and pasta
Chocolate is the only category most shoppers are happy to pay more for brands in
Figure 39: Consumers willing to pay more for branded products, by category, September 2014
THE CONSUMER – ENTICEMENTS
Key points
Price and quality hold most sway
Figure 40: Factors which would encourage consumers to buy or to buy more own-label food and/or non-alcoholic drink instead of branded ones, September 2014
Low price appeals but not at any cost
Quality chimes in particular with ABs
In-store tastings appeal to a third of shoppers
Choice and innovation can drive purchasing of own-label
Importance of recommendations from trusted sources
THE CONSUMER – ATTITUDES TOWARDS OWN-LABEL AND BRANDS
Key points
Copycat own-label products divide opinion
Figure 41: Attitudes towards own-label and branded food and non-alcoholic drink products, September 2014
Under-25s are most inclined to buy brands when treating themselves
Low cost enables trading up
Own-label has more sway over shopping habits than brands
Opportunities for the development of own-label in the convenience channel
APPENDIX – MARKET SIZE AND FORECAST
Figure 42: Best- and worst-case forecasts for private label, by value, 2014-19

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