As the flavor and fragrance industry pursues private label customers around the world, a new Datamonitor (www.datamonitor.com) report takes note of the category’s increasing dominance. “The Impact of Private Labels on FMCG Companies in India” notes that while the value proposition of private labels initiates consumer interest, growing quality—often on par with major brands—retains that loyalty. “The increased scale of operations of retailers is shifting the bargaining power from fast-moving consumer goods (FMCG) companies to retailers,” says India market research director Vaibhav Khera. “The growing adoption of private labels can compel FMCG companies to reassess their trade margins or relationship with retailers.” As Indian retailers realize greater margins and bargaining power with national brands as a result of private label sales, private label brands will begin to resemble their national counterparts in terms of product claims and packaging. The report notes that so-called “low involvement” categories such as household care presents a lower barrier to entry compared to food and beverages and personal care, thus presenting the most immediate opportunity.
Private Labels Turning the Tables on National Brands
December 7, 2009
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Graph depicting range of private label penetration
An assessment of the relative threat of private labels to national brands.