Aldi and Lidl’s rapid growth means the UK is bucking a downward trend in own label that is hitting the rest of Europe, according to a new report from IRI.
In the UK, own label’s share of the total fmcg market was up 0.4 points year on year to 51.8% in 2015, as measured by Kantar Worldpanel UK, which includes discounters and big own label food retailers such as M&S.
In contrast, own label’s market share across European fmcg fell 0.6 points to 38.3%, the study revealed today (22 June).
Of six European countries analysed by the report, the UK’s own label sector was the only showing growth last year, and it now has a “substantial lead” over its European counterparts in terms of market share, the study found.
Own label is losing ground across Europe because retailers and manufacturers are struggling to cope with challenging market conditions, IRI claimed, with national brands “pumping large amounts of money into promotions”.
In the UK, own label products accounted for 30.6% of total volume sales on promotion in 2015, which is significantly higher than the rest of Europe.
Tim Eales, IRI’s director of strategic insight, said it was difficult to pinpoint the exact reason for the performance of the UK’s own label sector, but a logical assumption would be the country’s relatively “young and developing” discounter sector.
Within the UK supermarket sector alone, excluding the discounters and M&S, own label was down 0.4 value share points year on year, suggesting the ‘big five’ are still losing own label sales to Aldi and Lidl.
Looking ahead, the discounters are set to increase their share of grocery spend, which will inevitably continue to affect own-label sales in the major mults, IRI warned.
Own-label sales could also suffer if the UK economy continues to recover, because shoppers will feel they have more to spend on brands, it noted.
A further challenge to own label is the mindset of UK consumers, who tend to equate the ‘economy’ varieties with low quality, said Eales. But he added premium private label was growing. “This is where retailers should be focusing their attention in order to win shoppers hearts’ and minds.”
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