Now everyone wants once shunned no-name brands

There was a time when no-name brands were deemed to be cheap and tasteless – but oh my, how the tables have turned, with many households now embracing them as the product of choice.

According to Nielsen’s State of Private Label Report, private labels were local households’ favourite product of choice during the initial period of the lockdown – with ready-to-eat bread rolls proving most popular.

As a result, private-label products experienced double-digit growth in the initial stages of the lockdown.

This was particularly evident in March, with a massive 27.2% increase in sales taking place during pre-lockdown stockpiling versus the same month in 2019, according to the report.

Better quality products

Gareth Paterson, director of retail vertical at Nielsen, says this is due to the increased availability of more quality products among no-name brands.

“It is the value for money proposition as well as the availability of quality private label brands that ensured the growth of the sector during the lockdown period. This allowed it to build on the momentum and innovation it has displayed in previous years,” he says.

Paterson is confident that this momentum will continue to increase “based on the increased consumer exposure to quality retailer-owned brands”.

He adds: “This will drive longer-term adoption of private label products in many instances, as once consumers trial these products, they appreciate the quality and price competitiveness of these goods.”

Paterson attributes this primarily to innovation, which has been evident through product development and has led to enhanced consumer perceptions.

Positive trajectory

He notes that the positive trajectory is also evident in the sector’s annual share of the country’s fast-moving consumer goods (FMCG) basket, which stood at 20.4% at the end of June, with a particularly strong result for the second quarter at 23.5%.

He says it is important to distinguish between growth in market share and the increase in the rand value of these sales.

Private labels accounted for 20.4% of total FMCG sales to the end of June, up from 19.2% for the same period in 2019. In the second quarter, private labels had a 23.5% share of the market.

“That timeframe included pre-emptive stockpiling just prior to lockdown and the subsequent first few months of full lockdown,” says Paterson.

He says in terms of rand value, the private label sector now commands R63 billion in annual consumer goods sales (up from R55.4 billion in 2019) – but brand names continue to dominate with R245 billion in annual sales.

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