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© IGD 2010
IGD RESEARCH 2010
© IGD 2010
About IGD
IGD is an International research and training organisation which has been
providing insight on the food and grocery industry for over 100 years
• Quality, detailed research based on primary research
– Board level links with retailers
– Regular face to face meetings and local store visits
– Team of 30 in-house analysts with industry experience
• Providing practical and actionable insight
– Retailing
– Supply Chain Optimisation
– Shopper Trends and Category Management
© IGD 2010
Track over 180 retailers…
© IGD 2010
and over 60 markets…
Argentina Australia Austria Belgium Bosnia & Herzegovina
Brazil Bulgaria Canada Chile
China Croatia Czech Republic Denmark Estonia Finland France Germany Greece
Hungary India Ireland Italy Japan Latvia Lithuania Luxembourg Malaysia
Mexico Netherlands New Zealand Norway Poland Portugal Romania Russia Saudi Arabia
Serbia Slovakia Slovenia South Africa South Korea Spain Sweden Switzerland Thailand
Turkey Ukraine UAE UK USA Vietnam
© IGD 2010
Insight on key issues…
© IGD 2010
THE LATEST INTERNATIONAL PRIVATE LABEL TRENDS
© IGD 2010
Grocery proven to be a relatively ‘Safe Harbour’ U
SA
Chin
a
Japa
n
Indi
a
Fran
ce
Braz
il
Russ
ia UK
Ger
man
y
Italy
Mex
ico
Spai
n
Indo
nesi
a
Cana
da
Turk
ey
Kore
a
Aust
ralia
Egyp
t
Switz
erla
nd
Paki
stan Ira
n
Pola
nd
Net
herla
nds
Belg
ium
Arge
ntina
0
100
200
300
400
500
600
700
-10%
-5%
0%
5%
10%
15%
20%
25%
625
470
345
236
208
167
167
164
162
130
102
97 92
65 63 61 53 38 36 35 35 35 34 34 33
2009 Grocery Retail Market Size (€bn) 2009 YOY Nominal Growth % in Local Currencies
Source: IGD Research
© IGD 2010
But growth will remain subdued in 2010
Spain
Greece
Italy
Hungary
France
Germ
any
Denm
ark
Ireland
Netherlands
Croatia
Norw
ay
Portugal
Finland
Estonia
Austria
Lithuania
Latvia
Switzerland
Belgium
UK
Slovenia
Sweden
Czech Republic
Poland
Romania
Bulgaria
Slovak Republic
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
-1.9%
-1.5%
-1.3%
-1.2%
-1.0%
-0.9%
-0.6%
-0.1%
-0.1%
0.2%
0.3%
0.4%
0.6%
0.8%
0.9%
1.0%
1.0%
1.0%
1.2%
1.5%
1.5%
2.0%
2.1%
3.0%
5.0%
5.4%
6.0%G
roce
ry m
arke
t gro
wth
*
Source: IGD Research *Excluding the impact of food price inflation
© IGD 2010
What’s in the pipeline?
• Economic recovery but fitful, inconsistent growth• A more restrictive regulatory environment• Fresh waves of unemployment• Inflation and greater volatility in commodity prices • Possible further price falls in housing markets• Potentially brittle consumer confidence
© IGD 2010
PL growth when the economy is challenging
1988 1989 1990 1991 1992 1993 2000 2001 2002 2003 2007 2008 2009 (Q1)
-6%
-4%
-2%
0%
2%
4%
6%
-5%
0%
5%
10%
15%
20%
25%
30%4%
4%
2%
-2%
3%3%
4%
1%2%
3%
2%
-1%
-6%
15%
18% 18%
18% 18%
20%
20%21% 21% 21% 21%
22%24%
GDP Growth (left scale) PL Unit Share (right scale)
US
GPD
Gro
wth
(%
)
Pri
vate
Lab
el U
nit
Sh
are
(%
)
1988 – 1993
PL share increased from 15% to 20%
2000 - 2003
PL share from 20% to 21%
2007 – 2009 (Q1)
PL share from 21% to 24%
Source: US Department of Commerce, Nielsen
© IGD 2010
Price is at the forefront of product choice
Drivers of product choice
1. Price
2. Know all ingredients
3. Fat content
4. Brand name
2008 2010
Source: IGD Research
1. Brand name
2. Know all ingredients
3. Fat content
4. Price
© IGD 2010
Two opposing views of the impact of recession
Swinging Pendulum Total Shift
“Once the recession is over, I think consumers will continue to up-trade
again…consumers will go back to their historic purchasing behaviour”
Chief Executive A
“I think once people discover value for money they will stay with it,
and why shouldn’t they?” Chief Executive B
© IGD 2010
This is what shoppers have just told us
Source: IGD Shopper Trends 2010. Arrows denote changes since March 2009
20%
6%
26%
48%
Changed for good - made changes and will stick with them
Changed for now - expect to go back to normal
Expect to cut back if it gets worse
As normal and don’t expect to change
77% of those who have made changes expect to stick with them
+8%
-5%
© IGD 2010
A consistent situation across Europe
Series1
14% 16% 21% 23%8% 7%
7% 10%24%
33%31% 25%
54%44% 40% 43%
No change now or later
No change for now
Changed for now
Changed for good
Source: IGD Research Base: All main shoppers (excluding don’t know) in Great Britain, France, Germany and Spain
Least change
Most change
© IGD 2010
A growing challenge for manufacturer brands
0%
10%
20%
30%
40%
50%
60%
...as a driver of product choice
Source: IGD Shopper Trends 2010
0%
10%
20%
30%
40%
50%
60%
…as a driver of product choice
0%
10%
20%
30%
40%
50%
60%
…as something worth pay-ing a bit extra for
Price Brand name Well know brands20
06
2010
2006
2010
2005
2010
2007
© IGD 2010
Change in brand and private label purchasing by 2012
8%
8%
11%
20%
15%
7%
Less More
Lowest price supermarket own brands
Premium supermarketown brands
Well known brands
Source: Shoppers in 2012: Is your business Ready for Them?
© IGD 2010
Change in ethical shopping by 2012
3%
4%
5%
11%
37%
34%
31%
15%
Less More
Local or regional foods
Foods with high animal welfare claims
Fairtrade foods
Organic foods
Source: Shoppers in 2012: Is your business Ready for Them?
© IGD 2010
United States 31%
Shoppers are buying more private label…
Great Britain
France
Germany
Spain
5%
4%
4%
8%
5%
More brands More private label
33%
33%
26%
37%
Total 31%
Source: IGD Research, 2009
© IGD 2010
Focus on private label is being maintained in US
Retailers are emphasising not only the price advantage of their private labels but are also focusing on the quality
aspect
Source: IGD Research, 2009
© IGD 2010
• 31% of shoppers are buying more store brand products
• 57% of shoppers frequently purchase store brand products
• 90% agree that store brands are as good as national brands
• 91% do not plan to stop buying PL when the recession is over
• 94% of first time purchasers find their purchase favourable
Source: PLMA / GfK 2009
Attitudes of US shoppers
© IGD 2010
Is it all because of the downturn?
Source: IGD Research, 2009
Private Label
Discounters28%
28%
31% 28%
Buying more Begun to make changes to save money in recession
© IGD 2010
Is it all because of the downturn?
Buying more Begun to make changes to save money in recession
Both
14%14% 13%
15%16% 12%Private Label
Discounters
Source: IGD Research, 2009
© IGD 2010
Recession is accelerating existing shopper trends
Private Label
Discounters
“Slowly, over time you gradually try different [private label] products and find the ones you like. But with the economic climate and everything, you find you’re doing it more.”
“We’ve been gradually drifting away from the big superstores.”
Source: IGD Research, 2009
© IGD 2010
…and are buying more at discount stores
Source: IGD Research 2009
Great Britain
France
Germany
Spain
5%
5%
5%
5%
5%
Less from discounters More from discounters
26%
29%
28%
31%
Total 28%
© IGD 2010
What are the triggers for buying more PL?
Buying a bit more to save money• “I am probably buying just a little more own brands as I am starting to count the pennies a
bit.”
Trial and error• “I‘ve bought a private label product and not liked it at all but when I bought another one it
was absolutely fine.”
Recession has accelerated an ongoing process• “Slowly, over time you gradually try different [private label] products and find the ones you
like. But with the economic climate and everything, you find you’re doing it more.”
Recommendation• “We do shopping for an elderly gentleman who lives near us. He started having the basic
products and said they were better than he thought. So there was one item we tried and it was fine.”
Satisfied with the quality• “I used to tease my sister for buying private label then I bought one once and it was alright.”
© IGD 2010
Strengths of private label
Cheaper than brands for equivalent quality
Regularly on promotion
Consistent level of quality
Can trust the supermarket
Used in recipes provided by supermarket
Best quality available
At the forefront of new ideas, tastes and flavours
Source: IGD Research 2009
69
42
24
18
12
6
5
67
41
37
34
7
14
13
77
31
48
50
10
26
7
73
31
22
19
4
3
2
© IGD 2010
Just as good as the alternative brands
Has improved over the last few years
Some stores are better than others
52% 66% 52%
61% 57% 54%
69% 73% 36%
67% 57% 52%
Private label quality perceptions by market
Source: IGD Research 2009
© IGD 2010
39
38
27
42
19
26
16
11
12
7
44
28
29
18
27
16
14
8
10
3
Reliable Quality
Specialist
Wide distribution
Trust companies
Heritage
Best Available
Special offers
Innovation
International
Image
49
29
40
23
17
18
13
20
10
5
37
35
21
20
9
11
17
5
6
1
All mentions (%)
Shoppers’ views on the key strengths of brands
Source: IGD Research 2009
© IGD 2010
Strength of private label and brands compared
Reliable taste/quality 1
Specialist 2
Wide distribution 3
Heritage 4
Trust famous companies 5
Best quality available 6
Special offers 7
International 8
Forefront of innovation 9
Image 10
Arrows connect comparable factors between private label and brandsSource: IGD Research, 2009
1 Cheaper/same quality
2 Special offers
3 Consistent quality by category
4 Trust supermarket involvement
5 Used in supermarket recipes
6 Best quality available
7 Forefront of innovation
Private label Brands
© IGD 2010
Do shopper attitudes differ by category?
• % of British shoppers who would reject private label
37% 21% 10%
Open to buying private label across
whole store
Rejects only 1 category
Rejects 2-3
categories
Rejects 4-5
categories
23% 9%
Rejects 6+ categories
81% of shoppers would buy private label in all but three or less
categoriesSource: IGD Research, 2009
© IGD 2010
Shoppers private label preferences by category
% of British shoppers who would not choose to buy private labels by category
Categories private label is most likely to be rejected for
18%
16%
15%
14%
14%
14%
Alcohol
Breakfast cereal
Laundry & household cleaning
Hot drinks
Frozen ready meals & meat
Bread
6%
6%
7%
7%
8%
8%
8%
Canned & packet
Household paper
Biscuits & cakes
Desserts & ice cream
Confectionery
Dairy products
Jams, preserves & sauces
Categories private label is least likely to be rejected for
Source: IGD Research, 2009
© IGD 2010
The balance is already about right
Rather there be more supermarket private label productsRather there be
more branded products
70%10% 15%
5% don’t know
Most shoppers see the balance about right
Source: IGD 2009
© IGD 2010
Do shoppers have enough private label choice?
39%
31%
43%
39%
50%
63%
50%
53%
The choice of different types of supermarket private label products is more than I need
I like having a wide choice of different types of supermarket
private label products
Source: IGD Research, 2009
© IGD 2010
Predicting future investment trends
Premium
Co Brands
Standard
DiscountLines
EntryLevel
Ethical Entry Level
IGD predicts that investment will be channelled at both ends of the private label spectrum; value and premium, driven by a broadening of the offer, product reformulations and the introduction of new
own label tiers
Quality
Good Better Best
Roll-out of restaurant quality premium ranges e.g. Tesco Finest Collection
Reformulation of value ranges to incorporate ethical credentials e.g. Sainsbury’s Basics
Launch of new discounter brands e.g. Tesco Co-branded products e.g.
Kettle and Kirkland at Costco
© IGD 2010
Shoppers are looking for value and values
Value Values
Heritage
Provenance
Pack size
Ethics
Sustainability
Performance
Promotions
Price
© IGD 2010
Value with Values
© IGD 2010
Aldi Hofer – Austria
The next frontier: carbon footprint labelling
Tesco – UK
Tesco – UK
© IGD 2010
Up to $10 in vouchers at Food Lion (US)
Heightened promotional activity
2 for 3 deal for brands and Pl at Carrefour (France)
10 for $10 Mix and Match at Safeway (US)
© IGD 2010
“Good” is getting “better”
Source: IGD
Delivering both ‘Value’ and ‘Values’, Sainsbury’s sales from its Basics range are up 50% on 2008
Having previously lacked a specific entry-level price label range, Waitrose is currently repositioning a significant part of its core private label offer to a single, unified value-focused brand
By September 2009, 1,400 SKU’s are included under the essential Waitrose brand which also delivers on ‘values’
© IGD 2010
Carrefour Discount – launched in 2009
Source: IGD
Carrefour Discount replaces the No.1 range in Carrefour’s French hypermarkets
except on a few specific lines
© IGD 2010
Bold communication in-store
Source: IGD
Rewe, Germany, Aug 09 Carrefour, France, June 09 Target, USA, June 09
© IGD 2010
Tesco has added a fourth tier
Source: IGD
Value
Standard
Finest
“Discount”(Launched September 2008)
The Discount Brands range is c. 20% cheaper than Tesco standard PL and approximately twice the
cost of Tesco Value
30% of Tesco shoppers are now regularly buying into the Discount Brands range
© IGD 2010
Discounter brands at Tesco
Source: IGD
© IGD 2010
“switch and save” campaigns drive PL growth
Loblaws – Canada
Publix - USA
Sainsbury’s – UK
© IGD 2010
Concepts emerging which cater for growing list of consumer trends
Convenience
Scratch cooking
Health
Value
Cook Asian at Marks & Spencer (UK)
Mein Frischemenu at Real (Germany)
Kies & Wok at Albert Heijn (Netherlands)
© IGD 2010
Value ranges re-engineered to boost credentialsBetter packaging and reformulation to improve the quality / value equation
© IGD 2010
Bundle deals now more important in private labelPrice and convenience with a focus on chilled ready-meals
Source: IGD
Kies & Kok at Albert Heijn
• Shoppers pick 4 different meal components: i) Meat ii) Side iii) Vegetables iv) Sauce
• Appeals to those looking for a quick meal solution, but still wanting to cook
• Flexed by store type
Sainsbury’sMetro Group - Real
© IGD 2010
In-store execution and merchandising
Shelf barkers to sign post shoppers to own label products at Auchan
(France)Pound shop concept
at Tesco (UK)
‘Wall of Value’ at Walmart (US)
Bold in-store displays at Carrefour (France)
Floor advertising at Target(US)
© IGD 2010
Shoppers also helping to refine ranges
© IGD 2010
…and communicating via social media
© IGD 2010
Key takeaways
• A ‘bumpy’ economic climate could be reality for some years
• It’s not just the economy that is driving change, broader trends are emerging in private label which need capitalising on
• Pay greater attention to shifting shopper behaviour
• Ensure the price advantage of private label is maintained – it is the most significant strength identified by shoppers
• Recognise the different levels of shopper expectations in the countries you operate in – one size does not fit all
• The perceived strengths of brands vary by market – tailor communication accordingly
• Long-term retailer relationships should be more important than ever; and shopper insights can provide an excellent platform
• New shopper communication and promotional mechanics are available, ensure you understand them and utilise where appropriate
© IGD 2010
How could IGD help you?
• Enter new markets and distribution channels• Engage your existing customers and prospective new clients• Train and develop your people• Improve your supply chain• Brief colleagues, senior management and investors• Track wider industry trends and developments• Engage with our people and industry network• How can they provide this?
• Access to online services: Retail Analysis and Supply Chain Analysis• Specific projects just for you
© IGD 2010
FOR MORE DETAILS Ian Weide, Senior Business [email protected] 0468 513 618