Financial instability is a favourable environment for private label development. Premium private label, while niche, offers scope to add value and increase loyalty to retailers. It also makes added-value products accessible for price-sensitive consumers. While typically small, premium private label brands can grow into powerful brands and open new business directions via innovation. Premium private label has significant growth potential as a powerful lever to increase revenues.
This report comes in PPT.
The world is facing high inflation, with Eastern Europe suffering the most, due to the war in Ukraine. As consumers lose confidence and real incomes decrease, this sets the stage for anti-crisis solutions. Private label, in particular, has proved its effectiveness during previous recessions. In 2022, consumers lagged in reaction to rising inflation, even increasing so-called “revenge consumption” after the mobility restrictions enforced by the global pandemic. However, entering 2023, private label is on a growth trajectory.
Premium private label can be a powerful tool to expand the range of products a retailer distributes. Mixing promotions and building both economy and premium private label segmentation within a category can result in increased revenues and help to build trust and maintain loyalty. Premium private label’s share must be carefully managed, with retailers balancing it with budget and standard private label, along with margin considerations, to avoid cannibalisation.
Consumers are setting new expectations for beverages, and retailers are eager and flexible regarding creating “new” added-value. New layers and need-states are emerging within premium private label in accordance with changing consumer demand. The perception of private label as merely a cheap alternative is changing, with a new array of functional high-quality premium private label options, not simply “gourmet” or nicely packaged.
Modern retail chains will adopt multi-price tier strategies for their private label brands. Premium private label will constitute a small but essential share aimed to support the strong image of store brands and help manoeuvre within a changing environment. Premium private label will increasingly penetrate specific category niches and provide retailers with competitive levers. Consumers will appreciate the opportunity to enter a higher value zone without compromising their budget or convenience.
This is the aggregation of the following categories; Carbonates, Fruit/vegetable juice, Bottled water, Functional drinks, Concentrates, RTD tea, RTD coffee and Asian speciality drinks.
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