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More Australian consumers choosing private label

More Australian consumers choosing private label

The majority of Australian consumers are open to purchasing private label products according to new research from IRI.

IRI’s 2018 New Product Pacesetters report found 60% of respondents agreed that own label products are a good alternative to branded products.

Of the 265 New Product Pacesetters this year, 10% were private label brands, generating 19% of all growth from new brands.

Liquor and beauty saw the biggest increases, but there has also been a noticeable increase within grocery.

Overall, the New Product Pacesetters identified by IRI added $1.4 billion to the Australian FMCG sector value in 2018. 

“Over a quarter of this year’s New Product Pacesetters were launched in the Snacking and Wine categories,”  IRI Channel Insights Consultant Mairead McElvanna said. 

“This year’s list of New Product Pacesetters highlights ongoing demand for premium products. For many consumers, the notion of premium is changing. Shoppers are changing how they buy into premium products, reducing the link between the concept of premium and price. 

“Almost half of IRI Shopper Panel households say they are not willing to pay a premium price for better quality, highlighting that consumer expectations for new products are shifting upwards and superior is the new norm. 

“Consumers are also seeing attributes such as local manufacturing using quality local ingredients and an indication of high quality, which is good for Australian suppliers drawing on Australian made and Australian produced resources."

Private label sales up 30% for Metcash

Metcash announced this week that its liquor sales increased 6.7% to $1.75 billion in the six months ended October 31. The company noted there had been significant success as it continued to evolve its private label range.

The company spent the period focussing on in-store execution to engage shoppers and grow the category, plus increase basket size and returns.

It also increased the number of SKUs to 70 across wine, beer and spirits, with sales growth of 30% (1H19 v 1H18).

A recent triumph was Kollaras & Co's Two Truths wine range - created for IBA - winning New Wine Product Of The Year at the 2018 LSA Retail Liquor Industry Awards for Excellence Awards, beating out finalists including 19 Crimes, McGuigan Single Batch Project and Squealing Pig.

Private label growth insights from the US

According to IRI Consumer Connect survey results released last month, 49% of US consumers are making sacrifices to make ends meet.

And they're frequently relying on private label products to stretch their dollars. In fact, the IRI Private Label 2018 report revealed that eight in 10 Americans buy private label products frequently or occasionally in order to save money.

Private label products are quite popular with younger consumers, who tend to be driven more by product benefits than by brand name. Ninety-two percent of millennials are turning to private label products to save money, compared to 86% of Generation Xers, 81% of baby boomers and 77% of seniors.

“The increased likelihood of younger consumers turning to private labels really bodes well for the retail brand sector of the industry,” said Susan Viamari, vice president of Thought Leadership for IRI. “It’s truly a testament to the success private label innovators have had in bringing to market the solutions that fulfill high-demand shoppers’ needs and wants.”

Consumers continue to embrace private label products even though the economy has stabilised. Sixty-nine percent say private label quality is as good as national brands, and 68% say private labels offer better value than national brands.

Millennials, in particular, have very favorable views of private labels, with 76% saying the quality is as good, and 73% saying the value is better.

These viewpoints are making a positive impact on private label dollar sales, which increased 5.8% compared to 1.5% for national brands during the past year. In addition, private label unit sales increased 3.8% compared to national brand unit sales decreases of 0.2% during the past year.

And it doesn’t stop at quality and value; consumers are selecting which stores they will shop in based heavily on the assortment of private label products offered