ECONOMY

Market share growth of private label products hits a ceiling

At the end of the day, it appears that Greek consumers have remained faithful to their favorite “name” brands to an extent only seen on the US and Italy. Although private label products sold by supermarkets have recorded significant growth rates in the last three years, reaching an 22 percent market share, it appears that they have hit a ceiling and are now in decline in several categories.

Besides the characteristics of Greek consumer behavior, one of the main factors impeding private label products’ growth has been the narrowing of the price difference with popular brands, thanks to the latter’s extensive offers. Figures show that as soon as a well-known brand reduces the price of a product, its market share grows, even if the difference in price compared to the private label equivalent is more than 50 percent.

Data from market research experts IRI show that the market share of private label olive oil stood at 26.6 percent in August 2013, with name brands accounting for 73.4 percent. One year later popular brands had reached 75.5 percent by reducing their prices by an average of 1.34 percent, while the supermarket brands only attained 24.5 percent.

Domestic cleaning products by famous brands had a market share of 80.7 percent in August 2013, but this year they have added by 6 percentage points by cutting their prices by 2 percent. UHT milk by name brands saw its market share rise 1.2 percent in a year this August, before milk prices started decreasing after the summer. The fresh juice and bubble bath categories show a similar picture.

Private label products are cheaper as they have lower packaging costs and are not advertised. However, in the case of food products, the companies that produce them usually have their own brand, and choose to use different recipes for the commodities that bear supermarket logos.

A senior official at a well-known dairy company in northern Greece which produces yogurt for almost all major retail chains told Kathimerini that the private label products it makes do not lag its own brand in quality but do have a different taste.