Private Labels Increasingly Influential

Australia's organised food retail sector is largely dominated by two companies : Coles (owned by Westfarmers ) and Woolworths . One of the key themes in the food retailing sector over the past few years has to do with private label products, which have become increasingly influential. Greater investment from the leading players , and relatively new entrants such as Germany's Aldi , has brought private label products to the fore - a trend that is not likely to disappear in our opinion. From what we have seen over the past few years in developed retail markets, even when consumer spending starts to look a lot better as confidence improves, those that actively buy private label products do not usually switch back to branded goods as a matter of course.

Solid Outlook
Australia Supermarket Sales (AUDbn) - Historic & Forecast

Private label retailing is the means through which modern grocery retailers (MGRs) manufacture, market and sell produce under their own retail brand name throughout their stores. In line with BMI 's view that private labels will extend their reach into higher-value food and drink (F&D) sub-sectors and brand-label strongholds such as confectionery and alcoholic beverages, which is buoyed by growing consumer familiarity, the likes of Coles and Woolworths' are likely to push harder. Woolworths' has traditionally been more upscale than its rivals and it has also been investing in private label products to remain competitive in this area. There will of course be other opportunities including in the online space which may well grow in importance over the next few years.

This article is tagged to:
Sector: Food & Drink
Geography: Australia, Australia, Australia, Australia

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