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The Power of Private Label 2005

A Review of GrowthTrends Around the World

Executive News Report from ACNielsen Global Services

September 2005 1

THE POWER OF PRIVATE LABEL 2005

A Review of Growth Trends Around the World

TABLE OF CONTENTS

Executive Summary 2

Geographic Insights 9

Category Insights 13

Pricing Trends 17

Private Label Consumers 22

Methodology 28

The information contained in this report has been collected from ACNielsen in 38 countries around the world. For questions or to obtain more detailed information by country please contact your local ACNielsen Global Services representative or contact either of the authors, Clare Nishikawa at [email protected] or Jane Perrin at [email protected]. The information contained in this report is not to be used with sources outside of your company without the express written permission of ACNielsen Global Services.

Copyright © 2005 ACNielsen. All rights reserved. ACNielsen and ACNielsen with globe design are trademarks or registered trademarks of AC Nielsen (US), Inc. Other brand and product names are trademarks or registered trademarks of their respective companies.


September 2005 2



EXECUTIVE SUMMARY How big is the Private Label market globally? Why is Switzerland the largest market? Could the Private Label business become as big in the United States as it is in Switzerland? What’s happening in the developing markets? Looking across categories, where is Private Label most prevalent? Is Private Label expanding into new categories? The Power of Private Label starts to answer these questions by looking at the latest Private Label information from across the globe. Alongside a review of current trends in 38 countries and 80 categories, this study looks at the market dynamics that have created a haven for Private Label development across countries. Such factors as retailer concentration and the presence of discounters have played a significant role in the development of these products. The growing level of sophistication among retailers in marketing and product development, along with the added resources they are putting into cultivating their own brands are other contributing factors. In this study we have also included a look at the history and development of a couple of very successful Private Label brands. In addition to looking at sales in retail stores, we have included consumer panel data from 14 countries. The Power of Private Label closely examines the people that buy Private Label:

Who are they? How often do they purchase Private Label? How much do they spend on Private Label? Do they purchase the same way across countries?

THIRTY-EIGHT COUNTRIES AND 80 CATEGORIES The Power of Private Label reviews the level of development and growth of Private Label products in 38 countries around the world. From a channel coverage perspective, sales within supermarkets, hypermarkets and mass merchandisers are generally included (although coverage varies dependent on the market). In a number of countries, convenience stores and drug stores are included as well. For the most part, department stores and cash and carry outlets, as well as wholesalers and food service outlets are generally excluded. To illustrate the overall impact of Private Label activity, we have examined sales across 80 distinct categories and 14 different product areas. In addition, we have taken a look at a couple of smaller, more dynamic categories (identified in ACNielsen’s 2004 series of What’s Hot reports as the fastest growing categories globally) to see if Private Label has made any significant in-roads into these growth areas. It is important to note that coverage of categories within markets depends on data availability within each country. (Details of the number of countries included for each category can be found in the methodology section at the end of the report.) Due to differences in volumetric measures across countries, value sales were used in the analysis and then converted to US dollars for comparison purposes.


September 2005 3


A Review of Growth Trends Around the World TOP FIVE PRIVATE LABEL COUNTRIES LOCATED IN EUROPE Across the 38 countries and 80 categories included in this study Private Label sales accounted for 17% of the value sales over the 12 months ending the first quarter of 2005. In comparison to year ago, Private Label sales grew by 5%. Europe maintained its position as the most developed Private Label region with an aggregated Private Label share in value sales of 23% for the 17 European countries included in the study. As with our 2003 study, the European countries of Switzerland, Germany, Great Britain, Spain and Belgium were the five countries with the highest Private Label shares. North America, which ranked second in regional Private Label shares, saw a significant growth of Private Label sales, up 7%. The share of Private Label in this region is currently at 16%. Although starting from a smaller base, Private Label in the Emerging Markets saw the fastest growth over the last year, up 11%. Private Label now holds a 6% share of sales in the Emerging Markets. This growth was primarily driven by the increasing strength of the modern trade (where Private Label goods are more prevalent), as well as the entry of Private Label products into new categories.

SHARE AND GROWTH RATES OF PRIVATE LABEL BY REGION (BASED ON VALUE SALES)

17%

23%

16%

6%

4%

2%

0% 5% 10% 15% 20% 25%

Global

Europe

North America

EmergingMarkets

Asia Pacific

Latin America

5%

4%

7%

11%

5%

5%

0% 2% 4% 6% 8% 10% 12%

Global

Europe

North America

EmergingMarkets

Asia Pacific

Latin America

PL SHARE PL GROWTH


September 2005 4


A Review of Growth Trends Around the World EUROPEAN PRIVATE LABEL SALES EXPERIENCED GREATEST MARKET SHARE GAIN In comparison to year ago, global Private Label sales grew by 5%, outpacing manufacturer brands (growing by only 2%). The result was a global gain of 0.4 share points for Private Label versus the previous year. In fact, growth in Private Label sales outpaced manufacturer brands in every region except for Latin America. (In general, Latin America continues to be a far less developed Private Label market than the rest of the world.) The result was that Private Label in Latin America lost 0.1 points versus manufacturer brands. Interestingly, the region with the most developed Private Label market saw the greatest gain in share points. Private Label sales grew in Europe by 4%, while aggregated sales of manufacturer brands remained flat. The result was a gain of 0.7 share points for Private Label. This growth is illustrative of the fact that sales of Private Label have not peaked…even within the largest Private Label markets. REFRIGERATED FOOD HAD THE HIGHEST SHARE OF PRIVATE LABEL Across product areas, Paper Products, Plastic Bags & Wraps has traditionally been the strongest product area for Private Label sales (as seen in our 1998 and 2003 studies). Although Private Label shares in this product area are still strong, now at 31%, and continue to experience growth, Private Label Refrigerated Food now tops the list, with an aggregated share of value sales of 32%. The most significant share of Private Label sales within this area was seen within the Refrigerated Complete Ready Meals category (Private Label had a value share of 47%). Retailer development of Private Label brands to meet the needs of their shoppers for convenient meal alternatives has resulted in the growth of this category. As seen in our previous studies, Private Label shares within the areas of Personal Care, Cosmetics and Baby Food were the smallest at less than 5%.

PRIVATE LABEL SHARES AND GROWTH RATES BY PRODUCT AREA (BASED ON VALUE SALES)

PRODUCT AREA PL SHARE PL

GROWTH PRODUCT AREA PL SHARE PL

GROWTH

1 Refrigerated Food 32% 9% 8 Non-Alcoholic Beverages 12% 3%

2 Paper, Plastic & Wraps (PPW) 31% 2% 9 Home Care 10% 2%

3 Frozen Food 25% 3% 10 Snacks & Confectionery 9% 8%

4 Pet Food 21% 11% 11 Alcoholic Beverages 6% 3%

5 Shelf-Stable Food 19% 5% 12 Personal Care 5% 3%

6 Diapers & Feminine Hygiene 14% -1% 13 Cosmetics 2% 23%

7 Health Care 14% 3% 14 Baby Food 2% 13%


September 2005 5


A Review of Growth Trends Around the World PRIVATE LABEL BRANDS PRICED A THIRD LOWER THAN MANUFACTURER BRANDS On a global basis, across all of the 38 countries and 80 categories studied, Private Label products were priced, on average, 31% lower than their manufacturer counterparts. The variance across regions ranged from 40% lower in the Emerging Markets to 25% lower in Latin America and Asia Pacific. It is interesting to note that the two least developed regions (from a Private Label perspective), also had the smallest price differential versus manufacturer brands. On a category basis, the average price differential ranged from Private Label being priced 46% lower in Personal Care products to just 16% lower for Refrigerated Food. At the individual country/category level, however, there were a number of examples where Private Label products had an average price that was actually higher than the manufacturer brands. One reason for this was the presence of ‘premium’ Private Label products. In addition, several countries cited intense promotional price “wars” among manufacturers as a contributing factor to lower manufacturer price points. It is interesting to note that there is not a direct correlation between lower price and largest share. Of the five product areas with the smallest price differential in comparison to manufacturer brands, three had the largest share of Private Label and two had the smallest. PRIVATE LABEL PRICE DIFFERENTIAL VERSUS MANUFACTURER BRANDS

-46%

-42%

-37% -36%-34%

-32%

-27% -26% -26%-24% -24%

-20% -20%

-16%

-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Pers

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Car

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Pet F

ood

Hea

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are

Hom

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Non

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Shel

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Snac

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Con

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Bab

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Pape

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Cos

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Froz

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Ref

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ated

Foo

d


September 2005 6


A Review of Growth Trends Around the World RETAILER CONCENTRATION A KEY FACTOR IN PRIVATE LABEL DEVELOPMENT In order to study the impact of retailer concentration on the development of Private Label, we looked at the share of total country value sales held by the leading five retailers within each country. Interestingly, there is significant variation in this measure around the world. For example, in the European countries of Sweden and Finland the top five retailers account for nearly 100% of total country sales, whereas in the Asian countries of South Korea and Japan, the leading retailers hold only 12% of total sales. Not surprisingly, the level of retailer concentration was closely aligned with the level of Private Label development. Of the top ten countries (ranked by share of Private Label), nine countries had retailer concentration of over 60%. The only exception in this group was the United States whose retail environment was far more fragmented. Ranking 10th in share of Private Label sales, the United States ranked 30th in retailer concentration. The top five retailers in the United States accounted for only 36% of total country sales. The majority of other countries with such a fragmented retailer landscape had a far less developed Private Label market. DISCOUNTERS CONTINUED TO PLAY A SIGNIFICANT ROLE A contributing factor to Private Label growth, particularly in Europe, was the growing presence of Hard Discounters. Hard Discounters sell a very limited selection of products (primarily shelf stable food) at a very low price. More importantly (for this study), hard discounters mostly sell Private Label products. For example, within Aldi, Private Label products account for approximately 95% of sales. Hard Discounters such as Aldi and Lidl are present in every European country and are expanding this presence. As hard discounters continue to grow and gain share, with more stores and wider consumer acceptance, so does Private Label. RETAILERS CREATE POWERFUL BRANDS THAT MEET CONSUMER NEEDS The approach of retailers to Private Label, particularly in the more developed markets, has advanced far beyond simply meeting the consumer’s need for lower priced products (the more traditionally perceived role of the Private Label brand). Retailers such as Tesco in Great Britain and Loblaws in Canada, for example, have both added new private label offerings to their mix. In addition to continuing to offer a ‘value’ or ‘no frills’ option, they also now offer healthy Private Label lines for both adults and kids.


September 2005 7


A Review of Growth Trends Around the World CONSUMERS – WHO REALLY BUYS PRIVATE LABEL? NEARLY EVERYONE…Looking at consumer panel data from 14 countries, it was found that the penetration of Private Label was significant. In fact, in nine of the 14 countries, 100% of households had purchased Private Label products over the past year. Penetration was the smallest in Singapore, but even there, 77% of households purchased at least some Private Label products within the last year. EIGHTY-TWO PERCENT OF BRITISH SHOPPING TRIPS INCLUDED PRIVATE LABEL PRODUCTS Frequency of purchase was found to be a key driver of Private Label share. Looking across countries, consumers purchased Private Label products at varying degrees. Those countries with the highest Private Label share were found to purchase Private Label goods most often. Consumers in Great Britain (with a Private Label share of 28%), were found to have Private Label products in their basket on 82% of their shopping trips. Private Label consumers in less developed markets generally purchased Private Label products on only 16% of their shopping trips. PRIVATE LABEL CONSUMERS RANGE FROM THE YOUNG TO THE OLD, THE RICH TO THE POOR AND FROM SINGLES TO LARGE FAMILIES Looking across consumers and households, Private Label purchasing varied based on demographic composition. Income: The share of spend allocated to Private Label products was generally higher in those households with a lower household income. Household Size: Households with more family members allocated a higher share of their total spend to Private Label products. Age: On trying to identify the ‘typical’ age of the Private Label consumer, there was no clear trend that held true across regions. HOW BIG WILL PRIVATE LABEL GROW? The limits of Private Label are currently undetermined but it seems almost certain that they have not been reached. In a number of countries, category penetration of Private Label is still significantly underdeveloped. As Private Label offerings are expanding into new markets and categories, global share will of course grow. For example, in Switzerland, where 97% of all the categories tracked in this study had Private Label entries, the total Private Label share was high at 45%. In the Philippines, however, where only 26% of the categories tracked had a Private Label presence, the share for Private Label was less than a percentage point.


September 2005 8


A Review of Growth Trends Around the World How big will it grow? Today, Private Label has a 17% share of market globally and it is still growing. Even in the most developed market of Switzerland, Private Label continues to extend its reach. (In the last year, Private Label in Switzerland gained yet another share point). The differential between the 17% global share and Switzerland’s high of 45% is a good place to begin our predictions for the future. Somewhere in between these two percentages is the answer but it is important to note that as the share in Switzerland grows so does the upper boundary of this range. As retailers with strong Private Label offerings expand their reach across categories and countries, Private Label will continue to challenge the position of branded products in the minds of the consumers. How high they will grow is yet to be determined.


September 2005 9



DETAILED FINDINGS GEOGRAPHIC INSIGHTS The Power of Private Label looked at retail sales across 38 countries (encompassing Europe, North America, Asia Pacific, the Emerging Markets and Latin America) and 80 categories. Private Label value sales and share across these markets and categories grew, with 17 dollars out of every 100 being spent on Private Label products. In 2003, Private Label share was found to be only 15%. As seen in the table below, the strength of Private Label varied widely across the countries included in the study, from Switzerland (with a Private Label share of 45%), to the Philippines (where Private Label sales hold an insignificant share of total country sales).

VALUE SHARES OF PRIVATE LABEL BY COUNTRY

COUNTRY REGION PL SHARE COUNTRY REGION PL SHARE

1 Switzerland Europe 45% 20 Norway Europe 8%

2 Germany Europe 30% 21 Ireland Europe 7%

3 Great Britain Europe 28% 22 Czech Republic Emerging Markets 7%

4 Spain Europe 26% 23 Hong Kong Asia Pacific 4%

5 Belgium Europe 25% 24 Brazil Latin America 4%

6 France Europe 24% 25 Greece Europe 4%

7 Netherlands Europe 22% 26 South Africa Emerging Markets 4%

8 Canada North America 19% 27 Puerto Rico Latin America 4%

9 Denmark Europe 17% 28 Japan Asia Pacific 4%

10 United States North America 16% 29 Israel Europe 3%

11 Sweden Europe 14% 30 Singapore Asia Pacific 3%

12 Austria Europe 14% 31 Chile Latin America 3%

13 New Zealand Asia Pacific 12% 32 Argentina Latin America 3%

14 Italy Europe 11% 33 Colombia Latin America 2%

15 Portugal Europe 11% 34 Croatia Emerging Markets 2%

16 Hungary Emerging Markets 10% 35 Thailand Asia Pacific 1%

17 Slovakia Emerging Markets 10% 36 Mexico Latin America 1%

18 Finland Europe 10% 37 South Korea Asia Pacific 1%

19 Australia Asia Pacific 9% 38 Philippines Asia Pacific <0.5%


September 2005 10


A Review of Growth Trends Around the World As in our 2003 study, the Emerging Markets, Asia Pacific and Latin America were again found to have less developed Private Label markets than Europe and North America. In the Emerging Markets, the strongest Private Label development was seen in Hungary and Slovakia where Private Label sales accounted for 10% of total country sales. When looking across Asia Pacific, the Pacific countries of New Zealand and Australia had far more developed Private Label markets than the Asian countries. New Zealand’s Private Label share was 12% and Australia’s was 9%. The Asian countries all had much smaller Private Label markets, accounting for 4% or less of total country sales. The highest ranking country in Latin America was Brazil, where only 4% of sales were for Private Label products. Europe maintained its position as the most developed Private Label region. In fact, when the 38 countries were ranked, based on Private Label share, eight of the top 10 highest-ranking countries were in Europe. The other two were in North America. Both the United States and Canada were amongst the most developed countries in terms of Private Label share. EUROPE’S HIGH LEVEL OF RETAILER CONCENTRATION CORRELATES WITH STRONG PRIVATE LABEL DEVELOPMENT Retailer concentration was measured as the share of sales held by the top five retailers within each country. Of the ten most developed Private Label countries, nine had retailer concentrations over 60%. The United States was the only exception among this group - despite a more fragmented marketplace (with a retailer concentration of only 36%), its share of Private Label was still among the top ten countries. Generally, across the countries, when retailer concentration was low, the share of Private Label was also low.

RETAILER CONCENTRATION OF THE MOST DEVELOPED PRIVATE LABEL MARKETS

COUNTRY REGION PRIVATE LABEL

SHARE RETAILER

CONCENTRATION

1 Switzerland Europe 45% 86%

2 Germany Europe 30% 65%

3 Great Britain Europe 28% 65%

4 Spain Europe 26% 60%

5 Belgium Europe 25% 80%

6 France Europe 24% 81%

7 Netherlands Europe 22% 64%

8 Canada North America 19% 62%

9 Denmark Europe 17% 89%

10 United States North America 16% 36%


September 2005 11


A Review of Growth Trends Around the World PRIVATE LABEL GROWTH SEEN ACROSS ALL REGIONS At the global level, aggregated Private Label sales for the last 12 months grew at 5%. At the regional level, the Emerging Markets saw the fastest growth of Private Label – up 11% since last year (albeit from a small base). This growth was attributed to the increasing strength of the modern trade (where Private Label products are far more prevalent), as well as the presence of Private Label products in an increasing number of categories. At an individual country level, the ten countries experiencing the fastest growth of private label were drawn from a number of regions including the Emerging Markets, Europe, Asia Pacific and Latin America. The most surprising presence in the list below is that of Spain. Being a large developed country in terms of total packaged goods sales and already having a Private Label share of 26%, Spain still ranked among the top ten in Private Label growth. This strong growth was attributable to a number of factors including: the expanded availability of Private Label products (as stores with a focus on Private Label opened more outlets), as well as further development and innovation of Private Label offerings (such as anti-wrinkling products within face care).

TOP TEN FASTEST GROWING PRIVATE LABEL MARKETS

COUNTRY REGION PL GROWTHMANUFACTURER

GROWTH PL SHARE

1 Croatia Emerging Markets 77% 0% 2%

2 Greece Europe 24% 2% 4%

3 Thailand Asia Pacific 18% 8% 1%

4 Argentina Latin America 18% 22% 3%

5 South Korea Asia Pacific 17% 1% 1%

6 Finland Europe 16% -3% 10%

7 Spain Europe 16% 6% 26%

8 Singapore Asia Pacific 16% 1% 3%

9 Colombia Latin America 15% 6% 2%

10 Hungary Emerging Markets 15% 5% 10%


September 2005 12


A Review of Growth Trends Around the World PRIVATE LABEL CONTINUED TO GAIN SHARE…MOST SIGNIFICANTLY IN EUROPE The growth of Private Label brands over the last 12 months again outpaced that of manufacturer brands. As mentioned previously, aggregated Private Label sales for the last 12 months grew globally at 5%, with manufacturer brands growing by only 2%. The result was a gain in Private Label share across the 38 countries of 0.4 share points. In two-thirds of the countries studied (26 out of 38), Private Label brands were growing at a faster rate than their manufacturer counterparts. The most significant share gains for Private Label were in the developed Private Label region of Europe. Private Label sales grew in Europe by 4%, while aggregated sales of manufacturer brands remained flat. The result was a gain of 0.7 share points for Private Label. The share gains within Europe were driven by a number of countries. Looking globally at the ten countries with the largest Private Label share gains, seven were in Europe. For five of those seven countries, the growth rate of manufacturer brands was actually negative. In Spain, value sales for both manufacturer brands and Private Label brands were growing but Private Label growth was at twice the pace…the result was a gain of 1.8 share points for Private Label.

TOP TEN PRIVATE LABEL MARKETS BASED ON SHARE POINT GAIN

COUNTRY REGION

PL GROWTH

RATE

MANU GROWTH

RATE

PL SHARE POINT GAIN

1 Spain Europe 16% 6% 1.8

2 Slovakia Emerging Markets 14% -6% 1.6

3 Netherlands Europe 8% -2% 1.6

4 Finland Europe 16% -3% 1.5

5 Sweden Europe 10% -2% 1.4

6 France Europe 3% -2% 1.0

7 Germany Europe 3% -2% 1.0

8 Croatia Emerging Markets 77% 0% 0.8

9 Hungary Emerging Markets 15% 5% 0.8

10 Norway Europe 14% 1% 0.8 A contributing factor to Private Label growth, particularly in Europe, was the growing presence of Hard Discounters. Hard Discounters sell a very limited selection of products (primarily shelf stable food) at a very low price. More importantly (for this study), hard discounters mostly sell Private Label products. For example, within Aldi, Private Label products account for approximately 95% of sales. Hard Discounters such as Aldi and Lidl are present in every European country and are expanding this presence. As hard discounters continue to grow and gain share, with more stores and wider consumer acceptance, so does Private Label.


September 2005 13



CATEGORY INSIGHTS In order to provide a fair representation of the role of Private Label across a wide range of product areas, we chose a selection of 80 different categories within 14 different product areas. For example, within the larger product area of Refrigerated Food, six categories were chosen to provide a perspective on this area:

• Milk • Yogurt • Butter/Margarine • Cheese • Complete Ready Meals • Meat/Poultry/Game

REFRIGERATED FOOD TAKES THE LEAD AS THE MOST DEVELOPED PRIVATE LABEL PRODUCT AREA Refrigerated Food, represented by the six categories cited above, had the highest overall share of Private Label in the study, with an aggregated value share of 32% (see chart included in the Executive Summary). Within this area, the Complete Ready Meals category had the highest Private Label share, with nearly half of the category sales (47%) made up of Private Label products. The most significant Private Label shares for this category were found in Europe. In Great Britain, for example, 97% of sales in the Refrigerated Complete Ready Meals category were for Private Label brands. Another significant Private Label category in Refrigerated Food was Milk, with 43% of sales accounted for by Private Label brands. In addition to Refrigerated Food, Frozen Food and Shelf-Stable Food also had a number of entries in the top Private Label categories when ranked on share. In aggregated sales, each of these product areas had over 20% of sales accounted for by Private Label brands. As identified in the 2003 study, the Private Label stronghold in Paper Products, Plastic Bags & Wraps (PPW) was still evident. This product area ranked second in Private Label share at 31%. Furthermore, looking globally across all of the 80 categories studied, the category of Aluminum Foil (a part of PPW) had the highest Private Label share at 49%. Penetration of Private Label in this area across all of the countries was a significant contributor to share, with five of the six categories in this product area having Private Label products present in every country.


September 2005 14



VALUE SHARES OF PRIVATE LABEL BY CATEGORY

CATEGORY PRODUCT AREA PL

SHARE CATEGORY PRODUCT AREA PL

SHARE 1 Aluminum Foil PPW 49% 41 Fabric Softeners Home Care 13%

2 Complete Ready Meals Refrigerated 47% 42 Mouthwash Personal Care 13%

3 Milk Refrigerated 43% 43 Pain Relief Health Care 13%

4 Garbage/Refuse Bags PPW 40% 44 Wine Alcoholic Bev 12%

5 Meat/Poultry/Game Frozen 39% 45 Mayonnaise Shelf-Stable 12%

6 Fish/ Shellfish/ Seafood Frozen 39% 46 Wet Soup Shelf-Stable 12%

7 Vegetables Frozen 38% 47 Breakfast Cereals - RTE Shelf-Stable 11%

8 Vegetables Shelf-Stable 36% 48 Whisky Alcoholic Bev 11%

9 Kitchen Paper/Towel PPW 33% 49 Cleansing - Bath/Shower Personal Care 10%

10 Cheese Refrigerated 33% 50 Household Cleaners Home Care 10%

11 Potato Fries Frozen 32% 51 Feminine Personal Hygiene Diapers/Fem Hyg 10%

12 Plastic Wrap/Rolls PPW 31% 52 Savory/Neutral Crackers Shelf-Stable 9%

13 Cooking Oil Shelf-Stable 30% 53 Cereal/Fruit/Muesli Bars Snacks/Conf 9%

14 Toilet Tissue PPW 30% 54 Drinking Yogurt Non-Alco Bev 9%

15 Jam/Jelly/Marmalade Shelf-Stable 28% 55 Toothbrushes Personal Care 9%

16 Meat/Poultry/Game Refrigerated 28% 56 Skin Tanning (Protection) Personal Care 9%

17 Rice Shelf-Stable 26% 58 Laundry Detergent Home Care 8%

18 Facial Tissue PPW 24% 57 Chips/Crisps Snacks/Conf 8%

19 Dry Pasta Shelf-Stable 23% 59 Carbonated Beverages Non-Alco Bev 8%

20 Dog Food Pet Food 22% 60 Dry Soup Shelf-Stable 7%

21 Butter/Margarine Refrigerated 21% 61 Chocolate Snacks/Conf 7%

22 Cat Food Pet Food 20% 62 Facial Cleansing Personal Care 6%

23 Vodka Alcoholic Bev 19% 63 Body Moisturizers Personal Care 6%

24 Auto Dish Detergent Home Care 19% 64 Disposable Razors Personal Care 6%

25 Juices/Juice-Based Drinks Non-Alco Bev 19% 65 Fresheners/Deodorizers Home Care 6%

26 Ice Cream/Frozen Yogurt Frozen 18% 66 Sports Energy Drinks Non-Alco Bev 5%

27 Pizza Frozen 17% 67 Hair Styling Personal Care 5%

28 Disposable Baby Diapers Diapers/Fem Hyg 17% 68 Toilet Soap Personal Care 4%

29 Toilet Care Home Care 17% 69 Eye Shadow Cosmetics 4%

30 Complete Ready Meals Frozen 16% 70 After Shave Preps Personal Care 3%

31 Ketchup - Tomato Based Shelf-Stable 16% 71 Face Moisturizers Personal Care 3%

32 Sweet Biscuits (Cookies) Snacks/Conf 16% 72 Shampoo Personal Care 3%

33 Flavored Milk Drinks Non-Alco Bev 16% 73 Insect Control Home Care 3%

34 Self-Adhesive Dressings Health Care 16% 74 Beer/Lager/Ales Alcoholic Bev 3%

35 Yogurt Refrigerated 15% 75 Deodorants Personal Care 3%

36 Water Non-Alco Bev 14% 76 Toothpaste Personal Care 3%

37 Cold Remedies Health Care 14% 77 Baby Formula Baby Food 2%

38 Tea Non-Alco Bev 14% 78 Lip Stick/Gloss Cosmetics 2%

39 Coffee Non-Alco Bev 13% 79 Baby Food Baby Food 1%

40 Hand Dish Detergent Home Care 13% 80 Chewing Gum Snacks/Conf 1%


September 2005 15


A Review of Growth Trends Around the World As with the Power of Private Label study released in 2003, the lowest level of Private Label development was seen primarily in three product areas: Personal Care, Cosmetics and Baby Food. Interestingly, Personal Care Private Label products were available in most countries, but the Private Label share was still only at 5% of value sales. For example, Shampoo Private Label products were available in 37 of the 38 countries measured, but Private Label market share in this category was limited to 3%. For Cosmetics, however, availability of Private Label products did limit the value share. Lip Stick/Gloss and Eye Shadow Private Label brands were only available in half of the countries measured. Similarly in the product area of Baby Food, only 15 of the 33 countries measured had Private Label Baby Food sales and only six of 32 had Private Label Baby Formula. FASTEST GROWING CATEGORIES NOT ALWAYS THE SMALLEST CATEGORIES It is not surprising that a number of the categories that experienced the fastest growth in Private Label sales over the last year were the smaller, less developed Private Label categories. For example, Eye Shadow, ranked 69th in Private Label share, but was the fastest growing category, growing by 34%. Similarly, Chewing Gum, the category with the smallest Private Label share, saw a 23% growth in Private Label sales. Interestingly, however, the Private Label category with the second largest share, Complete Ready Meals, was also one the fastest growing categories. Complete Ready Meals grew by 14% in the last year. Similarly, other larger Private Label categories, including Chocolate, Water and Dog Food, also experienced strong growth

TOP TEN FASTEST GROWING PRIVATE LABEL CATEGORIES

CATEGORY PRODUCT AREA PL

GROWTH MANU

GROWTH PL

SHARE

1 Eye Shadow Cosmetics 34% 3% 4%

2 Drinking Yogurt Non-Alco Bev 28% 18% 9%

3 Chewing Gum Snacks/Conf 23% 4% 1%

4 Baby Food Baby Food 20% 3% 1%

5 Lip Stick/Gloss Cosmetics 16% -3% 2%

6 Complete Ready Meals Refrigerated 14% 7% 47%

7 Chocolate Snacks/Conf 13% 2% 7%

8 Face Moisturizers Personal Care 13% 7% 3%

9 Water Non-Alco Bev 13% 1% 14%

10 Dog Food Pet Food 12% 5% 22%


September 2005 16


A Review of Growth Trends Around the World PRIVATE LABEL GAINED SHARE ACROSS A NUMBER OF CATEGORIES In 60 of the 80 categories measured, Private Label brands outpaced the growth of manufacturer brands resulting in share gains. In the categories of Refrigerated Complete Ready Meals and Frozen Fish/Shellfish/Seafood, the share gain for Private Label was more than one and a half share points. (A number of other categories actually experienced higher Private Label growth but because of the small Private Label sales value in the category, the share gains were minimal and not included in the top ten.) In the category of Toilet Care, the gain in share for Private Label was not so much due to the large growth in Private Label but rather a decline in manufacturer sales over year ago.

TOP TEN PRIVATE LABEL CATEGORIES IN SHARE GAIN

CATEGORY PRODUCT AREA PL GROWTH MANU

GROWTH PL SHARE POINT

GAIN

1 Complete Ready Meals Refrigerated 14% 7% 1.6

2 Fish/Shellfish/Seafood Frozen 7% 1% 1.5

3 Cooking Oil Shelf Stable 12% 4% 1.4

4 Water Non-Alco Bev 13% 1% 1.3

5 Butter/Margarine Refrigerated 10% 1% 1.3

6 Dog Food Pet Food 12% 5% 1.2

7 Toilet Care PPW 7% -1% 1.1

8 Plastic Wrap/Rolls PPW -2% -6% 1.0

9 Milk Refrigerated 8% 4% 0.9

10 Meat/Poultry/Game Refrigerated 9% 4% 0.9

PRIVATE LABEL ACTIVE IN THE ‘HOTTEST’ OF CATEGORIES In addition to the 80 categories studied, we looked at the top categories from our What’s Hot in Food & Beverages and Personal Care studies published in 2004. In the What’s Hot in Food & Beverages study, ACNielsen had identified Soy Based Flavored Drinks as the fastest growing category, growing by 30%. In this study we looked at a more comprehensive category definition, the aggregate of Soy Based Drinks and Milks (both flavored and unflavored products). The value sales for this category grew by 26% over the last 12 months, with Private Label products having a small but expanded presence. In 2005, Private Label brands captured a 5% share of aggregated value sales within the category, with value sales growth of 45% over year ago. Similarly, the 2004 What’s Hot in Personal Care study identified Tooth Stain Removers and Whiteners as the fastest growing category. Unlike 2004, the total category did not show growth in 2005 (declining in sales by 25% over last year), however, Private Label brands held a 5% share of the value sales and experienced 66% growth.


September 2005 17



PRICING TRENDS The average price per category was calculated for each country by dividing the total dollar sales by the total volume sold. Given the variances in units of measurement across the 38 countries and 80 categories, it was not possible to compare the actual price per unit. Within each country, however, the unit of measurement for a category was consistent, making it possible to compare the average price difference between manufacturer brands and Private Label products on a category-by-category basis.

PRICE DIFFERENTIAL BETWEEN PRIVATE LABEL AND MANUFACTURER BRANDS BY COUNTRY

COUNTRY REGION PL PRICE

DIFFERENTIAL COUNTRY REGION PL PRICE

DIFFERENTIAL

1 Greece Europe -48% 20 Philippines Asia Pacific -32%

2 Australia Asia Pacific -47% 21 South Korea Asia Pacific -31%

3 Germany Europe -46% 22 Mexico Latin America -28%

4 Belgium Europe -45% 23 South Africa Emerging Markets -28%

5 Czech Rep Emerging Markets -44% 24 US North America -28%

6 Spain Europe -44% 25 Switzerland Europe -27%

7 Hungary Emerging Markets -43% 26 Canada North America -27%

8 Ireland Europe -42% 27 Denmark Europe -27%

9 Portugal Europe -42% 28 Italy Europe -26%

10 France Europe -40% 29 Chile Latin America -26%

11 Austria Europe -40% 30 Netherlands Europe -26%

12 Slovakia Emerging Markets -38% 31 Japan Asia Pacific -25%

13 Sweden Europe -38% 32 Israel Europe -23%

14 Croatia Emerging Markets -37% 33 Brazil Latin America -20%

15 Finland Europe -36% 34 Puerto Rico Latin America -19%

16 UK Europe -36% 35 Colombia Latin America -19%

17 Argentina Latin America -35% 36 Singapore Asia Pacific -13%

18 Norway Europe -34% 37 Hong Kong Asia Pacific -10%

19 New Zealand Asia Pacific -33% 38 Thailand Asia Pacific -10%


September 2005 18


A Review of Growth Trends Around the World PRIVATE LABEL PRODUCT PRICED A THIRD LOWER THAN MANUFACTURER BRANDS On a global basis, looking at the cumulated figures for all 80 categories, Private Label products were found to offer consumers, on average, savings of 31% over manufacturer brands. These are similar to the price differences seen in both the 1998 and 2003 studies. Regionally, the Emerging Markets had the greatest discount on Private Label products, 40% lower than the manufacturer brands. European countries also experienced some of the largest price differentials, with the average differential for Europe at 37%. Looking at the previous chart, the countries with the highest price differential were primarily in one of these two regions, with the exception of Australia (ranking number two with a price difference of 47%). Greece had the largest differential, with Private Label products sold at half the price of their manufacturer counterparts. This did differ, however, across categories. For example, Private Label Hair Styling and Auto Dish products in Greece were actually priced two-thirds lower than manufacturer brands. At the other end of the spectrum, Thailand and Hong Kong both experienced only a 10% price reduction for Private Label brands. This limited price difference was closely related to the pricing approach of the retail formats that offered Private Label (i.e., Modern Trade as compared to the more traditional shops). Similarly, the Modern Trade also introduced more “premium” Private Label products into the market, thus lowering the price differential with manufacturer brands.

PERSONAL CARE PRIVATE LABEL PRODUCTS PRICED WITH THE LARGEST DISCOUNT Looking at the pricing trends across the product areas included in the study, Personal Care products had the widest differential between Private Label and the corresponding manufacturer brands. Private Label products in this product area were, on average, priced 45% lower than manufacturer brands. The following chart shows the Personal Care categories that demonstrated this trend. Private Label products within the categories of After-Shave Preps, Mouthwash and Shampoo were all priced at less than half the price of the manufacturer brands on a global basis (a differential of over 50%). One reason for this large difference is that the type of private label products available in the Personal Care area are of the more basic variety with few added features or benefits. Two Health Care categories, Pain Relief and Cold Remedies, and the Non-Alcoholic Beverage category of Sports Energy Drinks, saw a similar difference in price (Private Label products priced at half that of manufacturer brands). Interestingly, Private Label products in the Chewing Gum category were priced at a premium when compared to manufacturer brands. This trend was seen in seven of the 18 countries where Private Label brands were available. The reasons for this trend differed across countries, but a number of countries related the higher price to the fact that these products offered added benefits (e.g., coated gum) and were, therefore, priced at a premium.


September 2005 19



PRICE DIFFERENTIAL OF PRIVATE LABEL BY CATEGORY

CATEGORY PRODUCT AREA PL PRICE

DIFFERENTIAL CATEGORY PRODUCT AREA PL PRICE

DIFFERENTIAL 1 After Shave Preps Personal Care -55% 41 Toothpaste Personal Care -31%

2 Sports Energy Drinks Non-Alco Bev -52% 42 Vodka Alcoholic Bev -31%

3 Mouthwash Personal Care -51% 43 Drinking Yogurt Non-Alco Bev -30%

4 Shampoo Personal Care -51% 44 Ketchup - Tomato Based Shelf-Stable -30%

5 Pain Relief Health Care -50% 45 Flavored Milk Drinks Non-Alco Bev -29%

6 Cold Remedies Health Care -50% 46 Beer/Lager/Ales Alcoholic Bev -28%

7 Disposable Razors Personal Care -49% 47 Rice Shelf-Stable -28%

8 Fresheners/Deodorizers Home Care -44% 48 Whisky Alcoholic Bev -28%

9 Carbonated Beverages Non-Alco Bev -43% 49 Savory/Neutral Crackers Shelf-Stable -28%

10 Body Moisturizers Personal Care -43% 50 Juices/Juice-Based Drinks Non-Alco Bev -28%

11 Toothbrushes Personal Care -43% 51 Potato Fries Frozen -27%

12 Cleansing - Bath/Shower Personal Care -43% 52 Dry Pasta Shelf-Stable -27%

13 Dog Food Pet Food -43% 53 Coffee Non-Alco Bev -27%

14 Skin Tanning (Protection) Personal Care -42% 54 Plastic Wrap/Rolls PPW -26%

15 Face Moisturizers Personal Care -42% 55 Kitchen Paper/Towel PPW -25%

16 Feminine Personal Hygiene Diapers/Fem Hyg -42% 56 Disposable Baby Diapers Diapers/Fem Hyg -25%

17 Hair Styling Personal Care -41% 58 Baby Food Baby Food -24%

18 Deodorants Personal Care -41% 57 Lip Stick/Gloss Cosmetics -24%

19 Fabric Softeners Home Care -41% 59 Eye Shadow Cosmetics -24%

20 Breakfast Cereals - RTE Shelf-Stable -40% 60 Aluminum Foil PPW -24%

21 Household Cleaners Home Care -39% 61 Vegetables Shelf-Stable -23%

22 Cat Food Pet Food -39% 62 Chocolate Snacks/Conf -22%

23 Wine Alcoholic Bev -38% 63 Vegetables Frozen -22%

24 Tea Non-Alco Bev -37% 64 Garbage/Refuse Bags PPW -22%

25 Auto Dish Detergent Home Care -37% 65 Butter/Margarine Refrigerated -21%

26 Self-Adhesive Dressings Health Care -36% 66 Milk Refrigerated -17%

27 Hand Dish Detergent Home Care -35% 67 Yogurt Refrigerated -17%

28 Water Non-Alco Bev -34% 68 Meat/Poultry/Game Refrigerated -16%

29 Laundry Detergent Home Care -34% 69 Cheese Refrigerated -16%

30 Jam/Jelly/Marmalade Shelf-Stable -34% 70 Toilet Tissue PPW -13%

31 Toilet Soap Personal Care -33% 71 Dry Soup Shelf-Stable -12%

32 Mayonnaise Shelf-Stable -33% 72 Complete Ready Meals Refrigerated -11%

33 Chips/Crisps Snacks/Conf -33% 73 Pizza Frozen -11%

34 Facial Cleansing Personal Care -33% 74 Fish/Shellfish/Seafood Frozen -11%

35 Cereal/Fruit/Muesli Bars Snacks/Conf -33% 75 Insect Control Home Care -9%

36 Toilet Care Home Care -32% 76 Baby Formula Baby Food -6%

37 Ice Cream/Frozen Yogurt Frozen -32% 77 Complete Ready Meals Frozen -5%

38 Cooking Oil Shelf-Stable -31% 78 Meat/Poultry/Game Frozen -2%

39 Sweet Biscuits (Cookies) Snacks/Conf -31% 79 Wet Soup Shelf-Stable 0%

40 Facial Tissue PPW -31% 80 Chewing Gum Snacks/Conf 7%


September 2005 20


A Review of Growth Trends Around the World PRIVATE LABEL BRANDS MEET CONSUMER NEEDS BEYOND A LOW PRICE As we saw in the case of the added value products in Chewing Gum, Private Label products are not always competing with manufacturer brands simply on price. In a number of the more developed markets, retailers are developing their own lines to respond to growing consumer needs. Alongside a general improvement in the quality of products, Private Label offerings now also include products specifically focused on providing healthy alternatives. In addition, retailers have used the strength of their Private Label brand to develop other services such as mobile phones and financial services. A CLOSER LOOK AT TWO KEY BRANDS TESCO The Tesco brand, launched in Great Britain in 1924, was one of the earliest Private Label brands sold. Today, alongside the Tesco Value brand (usually depicted by blue and white stripes), Tesco have a premium quality brand, Tesco Finest, which also spans most product areas in the store. Overall, Tesco has been responsive to consumers and cultivated their store brands to respond to a variety of consumer needs and beliefs.

• Tesco Organics was launched over a decade ago to provide consumers with a variety of organic foods from cookies to sausages.

• In response to the growing share of the population with allergies or intolerances, Tesco Free From includes over 150 products which are gluten, wheat or milk free.

• The Tesco Healthy Living range includes over 500 products which have reduced fat, sugar and sodium for consumers who prefer a healthier alternative.

• Similarly, Tesco Carb Control was specifically developed to make it easier and more convenient for consumers to follow a low carb eating program.

• On a more ethical note, Tesco Fair Trade products are fair trade certified which means producers and small suppliers in the developing world are guaranteed to receive a fair price for their produce contained in these products.

• Finally, Tesco Kids includes products from toothbrushes to fun size apples designed to cater specifically to the next generation.

Furthermore, Tesco has also used its brand equity to expand into personal finance, insurance and the telecommunication industry.


September 2005 21


A Review of Growth Trends Around the World PRESIDENT’S CHOICE With the launch of the first President’s Choice (PC) products in Loblaws in 1984, the aim was to offer better value to Canadian consumers. Today, the brand has expanded beyond a price-point focus to offer quality, health-focused alternatives to consumers in Canada as well as the United States, the Caribbean, Hong Kong and Israel.

• PC Blue Menu is aimed at the growing demands of health-conscious consumers. Focusing on nutrition, PC Blue Menu provides healthier options including low fat, low calorie and high fiber products.

• Similarly, as a result of consumer demand for organic foods, PC Organics offers a range of organic foods including organic juices, cereals, produce and baby food.

• PC Mini Chefs extends the range of President’s Choice products to provide parents with a healthy option for their children as well.

President’s Choice has now expanded its product offerings from food products to non-food items including household and beauty products, pet food, lawn and garden and general merchandise and more recently financial services and telecommunications. AND THE TREND CONTINUES… On a similar, more news-breaking note, 7-Eleven has just responded to a growing consumer need for healthy foods by introducing a line of Private Label functional foods and beverages under its Formula 7 name.


September 2005 22



PRIVATE LABEL CONSUMERS To supplement the retail measurement data, ACNielsen collected consumer panel data from 14 of the 38 countries, encompassing four of the five regions:

• Australia, Hong Kong and Singapore in Asia Pacific • Finland, France, Germany, Great Britain, Italy, Spain and Switzerland in Europe • Chile and Colombia in Latin America • Canada and United States in North America

Consumer panel data allowed us to look at the shopping behaviors and demographics of Private Label consumers around the world. PRIVATE LABEL PRODUCTS WERE PURCHASED BY NEARLY ALL CONSUMERS WITHIN THESE COUNTRIES In nine of the 14 countries studied, 100% of households had purchased Private Label products over the past year. Penetration was most limited in Singapore, but even in Singapore 77% of households purchased at least some Private Label products over the last 12 months. The other countries where Private Label was not purchased by every household included Italy (98% penetration), Hong Kong (96%), Chile (94%) and Colombia (80%).

PRIVATE LABEL PENETRATION BY COUNTRY

50% 70% 90%

Singapore

Colombia

Chile

Hong Kong

Italy

Australia

Finland

US

Canada

France

Spain

Great Britain

Germany

Switzerland


September 2005 23


A Review of Growth Trends Around the World EIGHTY-TWO PERCENT OF BRITISH SHOPPING TRIPS INCLUDED PRIVATE LABEL PRODUCTS Frequency of purchase was found to be a key driver of Private Label share. Across countries, consumers purchased Private Label products at varying degrees. Those countries with the highest Private Label share were found to purchase Private Label goods most often. Consumers in Great Britain (with a Private Label share of 28%), were found to have Private Label products in their basket on 82% of their shopping trips. Private Label consumers in less developed markets generally purchased Private Label products on only 16% of their shopping trips.

SHARE OF SHOPPING TRIPS INCLUDING PRIVATE LABEL

18%

23%

11%

12%

59%

34%

26%

45%

44%

73%

54%

82%

55%

70%

0% 20% 40% 60% 80% 100%

Colombia

Chile

Singapore

Hong Kong

Australia

Finland

Italy

US

Canada

France

Spain

Great Britain

Germany

Switzerland

low

med

high

Share Level

Average 67%

Average 42%

Average 16%


September 2005 24


A Review of Growth Trends Around the World PRIVATE LABEL CONSUMERS RANGE FROM THE YOUNG TO THE OLD, THE RICH TO THE POOR AND FROM SINGLES TO LARGE FAMILIES Looking across consumers and households, Private Label purchasing varied based on demographic composition. Income The share of spend allocated to Private Label products was generally higher in those households with a lower household income.

PRIVATE LABEL SHARE OF SPEND SEGMENTED BY INCOME LEVEL

Interestingly, a handful of countries, namely, Singapore, Great Britain, Italy and Colombia, experienced the reverse trend. Within these four countries, it was the high income households that allocated the greatest share of their total spend to Private Label products. Reasons for this were related to two very different situations. In some countries the premium products offered by retailers attracted a significant number of households with higher incomes, thus raising the share of spend on Private Label. In Colombia, however, the reason was quite different. Lower income families, relying on public transportation, had limited access to Private Label brands due to the fact that stores selling Private Label were further away from their homes (particularly when compared to their corner stores).

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Europe North America Asia Pacific Latin America

Share of Spend

Low Medium High Low Medium High Low Medium High Low Medium High

Income Level


September 2005 25


A Review of Growth Trends Around the World Household Size Overall, households with larger families allocated a higher share of their total spend to Private Label products than households with smaller families.

PRIVATE LABEL SHARE OF SPEND SEGMENTED BY HOUSEHOLD SIZE

It is worth noting that, although Great Britain followed the general trend, whereby the larger households allocated the greatest share of spend to Private Label products (42%), small families in Britain also allocated a considerable share of total sales to Private Label brands (41%). The only country where this trend was reversed was Italy. Surprisingly, in Italy, households with only one or two family members, allocated a greater share of their total spend to Private Label than did larger households.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Europe North America Asia Pacific Latin AmericaSmall Medium Large Small Medium Large Small Medium Large Small Medium Large

Share of Spend

Household Size


September 2005 26


A Review of Growth Trends Around the World Age The ‘typical’ age of the Private Label consumer varied across regions as well as by local country within the regions.

PRIVATE LABEL SHARE OF SPEND SEGMENTED BY AGE OF HOUSEHOLD

Within both Latin America and North America, it was generally found that the younger households allocated a greater share of their total spend to Private Label brands. Within Asia Pacific, it was the older consumers that allocated a greater share of spend to Private Label. Within Europe, overall, the middle aged consumers were the ones that gave the greatest share of total spend to Private Label; however, the trend in Spain and Great Britain differed from this. In Spain the greatest share to Private Label was allocated by the younger consumers and in Great Britain by the middle aged consumers.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Europe North America Asia Pacific Latin America

Young Middle Old Aged




Share of Spend

Age of Household


September 2005 27



IN SUMMARY…. Private Label continues to grow. In over two-thirds of the markets studied, Private Label grew faster than its manufacturer counterparts. Europe continues to be the region with the highest share of Private Label. Switzerland maintained its position as the number one Private Label country, growing to a 45% value share of market. With the growth of the modern trade, the Emerging Markets experienced the largest growth rate for Private Label, albeit from a small base. Refrigerated Food was found to be the product area with the largest Private Label share (replacing Paper, Plastic & Wraps – formerly number one). This is primarily due to the increased development of Private Label in the Complete Ready Meals category. Globally, the price of Private Label brands was, on average, a third lower than manufacturer brands. This price differential differed by country and category. Retailer concentration continues to be a contributing factor in the development of Private Label. The more concentrated the market…the greater the share of Private Label. As Hard Discounters expand their stores and enter new markets, the share of Private Label will grow. Around the world, almost all consumers, to some degree, use Private Label. The share of Private Label was highest among larger families and those with lower incomes. Frequency of purchase was found to be a key driving factor. The growth of Private Label will continue. Private Label products today are being introduced into both new markets and categories. The introduction of more premium Private Label lines has changed both the shape and perception of what a “store brand” can be. How far Private Label will grow is yet to be determined.


September 2005 28



METHODOLOGY UNDERSTANDING THE STUDY PARAMETERS EIGHTY CATEGORIES REVIEWED ACROSS 38 COUNTRIES In preparing this report, retail measurement data was collected by ACNielsen from 38 countries, covering five regions – Europe, North America, the Emerging Market Asia Pacific and Latin America. In total, these 38 countries represent over 60% of the world’s Gross Domestic Product (GDP). The 38 countries studied were chosen as areas where there was an established Private Label presence. COUNTRIES INCLUDED IN THE STUDY EUROPE Austria Belgium Denmark Finland France Germany Great Britain Greece Ireland Israel Italy Netherlands Norway Portugal Spain Sweden Switzerland NORTH AMERICA Canada United States

ASIA PACIFIC Australia Hong Kong Japan New Zealand Philippines Singapore South Korea Thailand EMERGING MARKETS Croatia Czech Republic Hungary Slovakia South Africa LATIN AMERICA Argentina Brazil Chile Colombia Mexico Puerto Rico


September 2005 29


A Review of Growth Trends Around the World PERIODS INCLUDED Information was collected for the years ending April 2004 and 2005. CATEGORY COVERAGE REPRESENTED A WIDE CROSS-SECTION OF PRODUCT AREAS To provide a wide perspective on Private Label trends, the retail measurement data includes views of 80 different categories within 14 larger product areas - Alcoholic Beverages; Non-Alcoholic Beverages; Snacks & Confectionery; Baby Food; Shelf-Stable Food; Refrigerated Food; Frozen Food; Home Care; Paper Products, Plastic Bags & Wraps (PPW); Diapers & Feminine Hygiene; Personal Care; Cosmetics; Health Care; and Pet Food. The actual categories chosen were not necessarily those with the highest Private Label share, but rather represented a varied cross-section of consumer products. Due to the fact that category coverage can differ across countries, we have cited in our findings the actual number of countries included in this study for each category. Where products were segmented into different categories across markets, we have reconstructed the categories in order to have the most consistent view available. Channel coverage varied from country to country but generally included supermarkets, hypermarkets and mass merchandisers. The data from some countries also includes convenience stores and drug stores. Department stores, cash and carry stores, wholesalers and food service outlets are generally excluded. On looking specifically at the coverage of Private Label activity, certain exclusions should be noted that may have affected the country specific trends observed. For example, data from the hard discounters Lidl and Aldi was not included for the following countries: Lidl: Czech Republic, Slovakia, Austria, Finland, France, Greece, Ireland, Netherlands, Norway, Portugal and Sweden. Aldi: Australia (liquor), Denmark, Ireland, France, Netherlands (Private Label products), United States.

Additionally, the following stores are also excluded from this study: Austria Hofer Philippines SM Supermarket

Croatia Kaufland Mexico

Wal-Mart; Soriana; HEB; Gigante; Commercial Mexicana;

Denmark Coop South Africa Woolworths France Hard Discounters South Korea E-Mart Great Britain Marks and Spencer Sweden Netto Greece Sklavenitis (some categories) Thailand Leader Price


September 2005 30


A Review of Growth Trends Around the World CATEGORY COVERAGE (Number of Countries Included)

ALCOHOLIC BEVERAGES Beer/Lager/Ales (35) Wine (23) Vodka (26) Whisky (27)

BABY FOOD Baby Food (33) Baby Formula (32)

SNACKS & CONFECTIONERY Chocolate (37) Chewing Gum (34) Chips/Crisps (38) Cereal/Fruit/Muesli Bars (30) Sweet Biscuits (Cookies) (36)

NON-ALCOHOLIC BEVERAGES Coffee (38) Tea (31) Carbonated Beverages (37) Juices/Juice-Based Drinks – Ready To Drink (37) Sports Energy Drinks (33) Flavored Milk Drinks (31) Drinking Yogurt (28) Water (38)

SHELF-STABLE FOOD Breakfast Cereals – Ready To Eat (38) Dry Pasta (31) Rice (30) Savory/Neutral Crackers (33) Dry Soup (35) Wet Soup (24) Containered Vegetables (25) Cooking Oil (32) Mayonnaise (37) Ketchup - Tomato Based (36) Jam/Jelly/Marmalade (25)

PERSONAL CARE Cleansing - Bath/Shower (36) Deodorants (37) Shampoo (38) Hair Styling (34) Mouthwash (30) Toothpaste (38) Toothbrushes (Manual) (38) Toilet Soap (37) Skin Tanning (Protection) (28) Disposable Razors (36) Facial Cleansing (35) Face Moisturizers (34) Body Moisturizers (33) After Shave Preps (25)

FROZEN FOOD Ice Cream/Frozen Yogurt (34) Potato Fries (28) Vegetables (27) Meat/Poultry/Game (23) Fish/ Shellfish/ Seafood (25) Pizza (30) Complete Ready Meals (26)

HOME CARE Hand Dish Detergent (37) Auto Dish Detergent (29) Fresheners/Deodorizers (37) Household Cleaners (37) Toilet Care (36) Insect Control (31) Laundry Detergent (38) Fabric Softeners (36)

REFRIGERATED FOOD Milk (31) Yogurt (35) Butter/Margarine (33) Cheese (35) Complete Ready Meals (16) Meat/Poultry/Game (14)

PAPER PRODUCTS, PLASTIC BAGS & WRAPS (PPW) Aluminum Foil (21) Plastic Wrap/Rolls (23) Garbage/Refuse Bags (22) Kitchen Paper/Towel (33) Toilet Tissue (34) Facial Tissue (36)

DIAPERS & FEMININE HYGIENE Disposable Baby Diapers (38) Feminine Personal Hygiene (38)

COSMETICS Eye Shadow (15) Lip Stick/Gloss (19)

HEALTH CARE Pain Relief (22) Self-Adhesive Dressings (21) Cold Remedies (17)

PET FOOD Cat Food (33) Dog Food (34)


September 2005 31


A Review of Growth Trends Around the World REPORT FOCUSED ON SALES VALUE AND PRICE PER VOLUME In analyzing the share and growth trends, our focus was on value sales as opposed to volume sales since the volume measurement units were significantly different across categories and countries. However, it should be recognized, that since Private Label products are often priced lower than their manufacturer counterparts, the value shares for Private Label are probably understated (in comparison to their volume share). In order to create accurate value comparisons, all local currency data was converted to US dollars using a constant exchange rate across the two-year period. When analyzing the pricing of Private Label compared to its branded counterparts, the average price per volume measure was compared for each category and country. Average percentage differences (compared to manufacturer branded products) were calculated to account for the variation between kilograms, liters or pieces and hence allow comparisons to be made across categories and countries. CONSUMER PANEL DATA REVIEWED ACROSS 14 COUNTRIES In preparing this report, consumer panel data was collected by ACNielsen from 14 countries covering four regions – Europe, North America, Asia Pacific and Latin America. Consumer data was collected from a sample of household panels in each country to reflect the total population of that country. EUROPE Finland France Germany Great Britain Italy Spain Switzerland NORTH AMERICA Canada United States

ASIA PACIFIC Australia Hong Kong Singapore LATIN AMERICA Chile Colombia


September 2005 32


A Review of Growth Trends Around the World CONSUMER PANEL DATA ESTABLISHED TO REFLECT RETAIL MEASUREMENT In order to align the data sources, consumer panel data from each country generally covered the same 80 categories included in the retail measurement data. For some countries not all categories were available; for others a wider selection of categories was included in the measurement of consumer behavior. DEMOGRAPHIC GROUPINGS ALIGNED ACROSS COUNTRIES To enable the comparison of consumer panel data across countries, the local segmentations within each demographic - Household Income, Household Size and Household Age - were consolidated to form three basic groups – low/medium/high, small/medium/large, young/middle aged/old. The actual income, age and size boundaries for these groups varied slightly across countries.


September 2005 33


A Review of Growth Trends Around the World EXCHANGE RATES USED To obtain a global perspective local currency was converted to US dollars using a constant exchange rate across the two-year period.

COUNTRY CURRENCY EXCHANGE RATE (PER US$) EUROPE Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain

Euro

0.80

Denmark Danish Krone 5.96 Great Britain British Pound 0.55 Israel Israeli Shekel 4.51 Norway Norwegian Krone 6.59 Sweden Swedish Krona 7.28 Switzerland Swiss Franc 1.21 EMERGING MARKETS Croatia Croatian Kuna 5.90 Czech Republic Czech Koruna 25.50 Hungary Hungarian Forint 218.52 Slovakia Slovakia Koruna 32.77 South Africa South African Rand 6.83 ASIA PACIFIC Australia Australian Dollar 1.42 Hong Kong Hong Kong Dollar 7.39 Japan Japanese Yen 105.26 South Korea South Korean Won 1143.84 New Zealand New Zealand Dollar 1.63 Philippines Philippines Peso 57.39 Singapore Singapore Dollar 1.62 Thailand Thai Baht 38.93 NORTH AMERICA Canada Canadian Dollar 1.31 LATIN AMERICA Argentina Argentine Peso 2.94 Brazil Brazil Real 3.03 Chile Chilean Peso 615.38 Colombia Colombian Peso 2867.38 Mexico Mexican Peso 11.69 Puerto Rico US Dollar 1.00

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The Power of Private Label 2005 - Fuqua School of Business · The Power of Private Label starts to answer these questions by looking at the latest Private ... Private Label goods