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The Power of

Private Label 2005

A Review of Growth
Trends Around the World

The world’s leading marketing information company


THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

TABLE OF CONTENTS

¾ Executive Summary 2

¾ Geographic Insights 9

¾ Category Insights 13

¾ Pricing Trends 17

¾ Private Label Consumers 22

¾ 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
clare.nishikawa@acnielsen.ca or Jane Perrin at jane.perrin@acnielsen.com.

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.

Executive News Report from ACNielsen Global Services


September 2005
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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

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.

Executive News Report from ACNielsen Global Services


September 2005
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THE POWER OF PRIVATE LABEL 2005
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)

PL SHARE PL GROWTH

Global 17% Global 5%

Europe 23% Europe 4%

North America 16% North America 7%

Emerging Emerging
6% 11%
Markets Markets

Asia Pacific 4% Asia Pacific 5%

Latin America 2% Latin America 5%

0% 5% 10% 15% 20% 25% 0% 2% 4% 6% 8% 10% 12%

Executive News Report from ACNielsen Global Services


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THE POWER OF PRIVATE LABEL 2005
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)

PL PL
PRODUCT AREA PL SHARE GROWTH PRODUCT AREA PL SHARE 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%

Executive News Report from ACNielsen Global Services


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THE POWER OF PRIVATE LABEL 2005
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

Refrigerated Food
Feminine Hygiene

Shelf-Stable Food

Paper, Plastic &


Non-Alcoholic

Confectionery
Personal Care

Diapers &

Frozen Food
Beverages

Snacks &
Health Care

Wraps
Home Care

Baby Food
Beverages

Cosmetics
Alcoholic
Pet Food

0%

-5%

-10%

-15%
-16%
-20%
-20% -20%
-25% -24% -24%
-26% -26%
-30% -27%

-35% -32%
-34%
-36%
-40% -37%

-45% -42%

-46%
-50%

Executive News Report from ACNielsen Global Services


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THE POWER OF PRIVATE LABEL 2005
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.

Executive News Report from ACNielsen Global Services


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THE POWER OF PRIVATE LABEL 2005
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.

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THE POWER OF PRIVATE LABEL 2005
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.

Executive News Report from ACNielsen Global Services


September 2005
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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

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%

Executive News Report from ACNielsen Global Services


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THE POWER OF PRIVATE LABEL 2005
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

PRIVATE LABEL RETAILER


COUNTRY REGION SHARE 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%

Executive News Report from ACNielsen Global Services


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THE POWER OF PRIVATE LABEL 2005
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

MANUFACTURER
COUNTRY REGION PL GROWTH 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%

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THE POWER OF PRIVATE LABEL 2005
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

PL MANU PL SHARE
GROWTH GROWTH POINT
COUNTRY REGION RATE RATE 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.

Executive News Report from ACNielsen Global Services


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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

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.

Executive News Report from ACNielsen Global Services


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VALUE SHARES OF PRIVATE LABEL BY CATEGORY


PL PL
CATEGORY PRODUCT AREA SHARE CATEGORY PRODUCT AREA 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%

Executive News Report from ACNielsen Global Services


September 2005
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THE POWER OF PRIVATE LABEL 2005
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

PL MANU PL
CATEGORY PRODUCT AREA GROWTH GROWTH 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%

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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

MANU PL SHARE POINT


CATEGORY PRODUCT AREA PL GROWTH GROWTH 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.

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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

PL PRICE PL PRICE
COUNTRY REGION DIFFERENTIAL COUNTRY REGION 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%

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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.

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PRICE DIFFERENTIAL OF PRIVATE LABEL BY CATEGORY


PL PRICE PL PRICE
CATEGORY PRODUCT AREA DIFFERENTIAL CATEGORY PRODUCT AREA 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%

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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.

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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.

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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


Switzerland
Germany
Great Britain
Spain
France
Canada
US
Finland
Australia
Italy
Hong Kong
Chile
Colombia
Singapore

50% 70% 90%

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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

Share Switzerland 70%


Level
Germany 55%
high Average
Great Britain 82%
67%
Spain 54%

France 73%

Canada 44%

US 45%
med Average
Italy 26%
42%
Finland 34%

Australia 59%

Hong Kong 12%


low Singapore 11% Average
16%
Chile 23%

Colombia 18%

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

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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

Share of 50%
Spend
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Low Medium High Low Medium High Low Medium High Low Medium High

Europe North America Asia Pacific Latin America


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).

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THE POWER OF PRIVATE LABEL 2005
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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

Share of
50%
Spend
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Small Medium Large Small Medium Large Small Medium Large Small Medium Large

Europe North America Asia Pacific Latin America

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.

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THE POWER OF PRIVATE LABEL 2005
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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

Share of 50%
Spend
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Young Middle Old Young Middle Old Young Middle Old Young Middle Old
Aged Aged Aged Aged
Europe North America Asia Pacific Latin America

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.

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THE POWER OF PRIVATE LABEL 2005
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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.

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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 ASIA PACIFIC


Austria Australia
Belgium Hong Kong
Denmark Japan
Finland New Zealand
France Philippines
Germany Singapore
Great Britain South Korea
Greece Thailand
Ireland
Israel EMERGING MARKETS
Italy Croatia
Netherlands Czech Republic
Norway Hungary
Portugal Slovakia
Spain South Africa
Sweden
Switzerland LATIN AMERICA
Argentina
Brazil
NORTH AMERICA Chile
Canada Colombia
United States Mexico
Puerto Rico

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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


Wal-Mart; Soriana; HEB; Gigante;
Croatia Kaufland Mexico 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

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CATEGORY COVERAGE (Number of Countries Included)

ALCOHOLIC BEVERAGES BABY FOOD


Beer/Lager/Ales (35) Baby Food (33)
Wine (23) Baby Formula (32)
Vodka (26)
Whisky (27)
SNACKS & CONFECTIONERY NON-ALCOHOLIC BEVERAGES
Chocolate (37) Coffee (38)
Chewing Gum (34) Tea (31)
Chips/Crisps (38) Carbonated Beverages (37)
Cereal/Fruit/Muesli Bars (30) Juices/Juice-Based Drinks – Ready To Drink (37)
Sweet Biscuits (Cookies) (36) Sports Energy Drinks (33)
Flavored Milk Drinks (31)
Drinking Yogurt (28)
Water (38)
SHELF-STABLE FOOD PERSONAL CARE
Breakfast Cereals – Ready To Eat (38) Cleansing - Bath/Shower (36)
Dry Pasta (31) Deodorants (37)
Rice (30) Shampoo (38)
Savory/Neutral Crackers (33) Hair Styling (34)
Dry Soup (35) Mouthwash (30)
Wet Soup (24) Toothpaste (38)
Containered Vegetables (25) Toothbrushes (Manual) (38)
Cooking Oil (32) Toilet Soap (37)
Mayonnaise (37) Skin Tanning (Protection) (28)
Ketchup - Tomato Based (36) Disposable Razors (36)
Jam/Jelly/Marmalade (25) Facial Cleansing (35)
Face Moisturizers (34)
Body Moisturizers (33)
After Shave Preps (25)
FROZEN FOOD HOME CARE
Ice Cream/Frozen Yogurt (34) Hand Dish Detergent (37)
Potato Fries (28) Auto Dish Detergent (29)
Vegetables (27) Fresheners/Deodorizers (37)
Meat/Poultry/Game (23) Household Cleaners (37)
Fish/ Shellfish/ Seafood (25) Toilet Care (36)
Pizza (30) Insect Control (31)
Complete Ready Meals (26) Laundry Detergent (38)
Fabric Softeners (36)
REFRIGERATED FOOD PAPER PRODUCTS, PLASTIC BAGS & WRAPS (PPW)
Milk (31) Aluminum Foil (21)
Yogurt (35) Plastic Wrap/Rolls (23)
Butter/Margarine (33) Garbage/Refuse Bags (22)
Cheese (35) Kitchen Paper/Towel (33)
Complete Ready Meals (16) Toilet Tissue (34)
Meat/Poultry/Game (14) Facial Tissue (36)
DIAPERS & FEMININE HYGIENE COSMETICS
Disposable Baby Diapers (38) Eye Shadow (15)
Feminine Personal Hygiene (38) Lip Stick/Gloss (19)
HEALTH CARE PET FOOD
Pain Relief (22) Cat Food (33)
Self-Adhesive Dressings (21) Dog Food (34)
Cold Remedies (17)

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THE POWER OF PRIVATE LABEL 2005
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 ASIA PACIFIC


Finland Australia
France Hong Kong
Germany Singapore
Great Britain
Italy LATIN AMERICA
Spain Chile
Switzerland Colombia

NORTH AMERICA
Canada
United States

Executive News Report from ACNielsen Global Services


September 2005
31
THE POWER OF PRIVATE LABEL 2005
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.

Executive News Report from ACNielsen Global Services


September 2005
32
THE POWER OF PRIVATE LABEL 2005
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, Euro
0.80
Ireland, Italy, Netherlands,
Portugal, Spain
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

Executive News Report from ACNielsen Global Services


September 2005
33