There is likely to be continued consolidation among private label suppliers, a new report from Rabobank’s food and agri research division has concluded.
Sebastiaan Schreijen, an associate director at Rabobank and author of the report Private Label vs Brands - An Inseparable Combination, told freshinfo: “Consolidation among private-label specialists is inevitable to achieve economies of scale and reduce the cost base. The ability to leverage on service levels, deliver on time and track and trace - for all of these it is better if you are bigger.”
Schreijen added that the UK multiples act as “role models” for food retailers nationwide. His report emphasised the importance of the premium own label offer. “There is a lot to gain for suppliers in telling a different story and making sure they differentiate themselves,” he said.
But there is also a word of warning for B-brands which could find themselves squeezed by the private label share - which is forecast to rise to 50 per cent in the non-fresh sector by 2025 - and the A brands.
There could be heavy competition on price between these smaller brands and the private label supply, but the ethical stance of some of the B brands in fresh produce could stand them in good stead to weather this storm. “With any consumer development, eg ethical or organic, suppliers have another chance to battle for their position if they can do that better than the retailer in claiming that ethical driver,” said Schreijen.
The report also said that the market needs brands so that consumers can benchmark the supermarket’s competitiveness on price.
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