According to food manufacturers, the top three demand drivers for private label products globally are “better price”, “better value for money” and “better quality.” Beverage manufacturers also identify “better price,” “better value for money” and “convenient package sizes” as important demand drivers. Global food and beverage industry buyers consider that their customers prefer private label products over branded products as they are generally available at a lower cost. Overall, global food and beverage manufacturers and suppliers identified “product quality,” “lower cost,” “customer demand” and “long term partnership with retailers” to be important prerequisites to engage in successful private label agreements.
‘Strategic partnerships with retailers’, ‘lower costs of production’ and ‘reduced promotional costs’ are key advantages of private labels to manufacturers
According to survey results, “strategic partnerships with retailers,” “lower costs of production” and “reduced promotional costs” are identified by global food and beverage manufacturers as key advantages of private labels to manufacturers. To compete with branded labels and for survival needs, private label manufacturers have entered into long term strategic partnerships with retailers. The partnerships with retailers help manufacturers to decide the pricing component of private label products to compete with leading brands. Some of the key concerns of private label manufacturers as identified by global food and beverage manufacturer respondents include “competition with national brands,” “declining margins,” and “efforts to lower production costs.” Even though private label manufacturers have grown over the recent years to increase their market share in terms of price, quality and brand loyalty, competition with national brands still remains a key concern.
Demand for private label product is expected to be high in the US, the UK and Canada
Overall, global food and beverage companies have identified the US, the UK and Canada as markets with the most demand for private label products in 2012. The US is expected to be one of the fastest-growing markets and is anticipated to record increased demand for private label products over the next 12 months, with products such as low salt and unsaturated variants, natural cheese, canned vegetables and nutritional products becoming significant. Survey results shows that 39% of respondents identified “Canada” as one of the leading markets projected to demonstrate an increased demand for private label products. Overall, various steps taken by retail supermarkets such as increasing shelf space for increasing ethnic customer division, refocusing on promotional efforts of private label products and enhancing customer loyalty programs are expected to increase sales margins.
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