Private Label Success: Don’t blame the category!

Posted by Oliver Koll on Jun 17, 2014



Confronted with high Private Label (PL) shares in their category, brand manufacturers often blame increasing commoditization as if it was a law of nature. Comparing category PL success across 13 countries questions the validity of this excuse.

The figure shows the variation of category PL shares around their respective country average. For example, ice cream on average has a PL share 7% higher than the country average. However, in one country manufacturers have managed to keep its share 3% below the country average, whereas in another it is 26% higher.

The average range of category PL shares around the country mean (36%) indicates substantial leeway for brand manufacturers in their fight against PL. Such differences must, at least partly, be due to smart (or not) branding activities by manufacturers leading to more (less) successful differentiation versus Private Label.

Our research program BG20 identifies the most important drivers of manufacturer brands’ success and how individual brands perform on these drivers.