Lockdown lets private labels stick it to the rest
By Philippa Larkin
JOHANNESBURG - Private label (PL) products saw double-digit growth during the initial period of the lockdown as consumers sought value for money, according to Nielsen’s latest “State of Private Label Report” released on Wednesday.
The report found that the lockdown had played a significant role in accelerating South Africans’ embrace of no-name brands.
During March, sales soared by a massive 27.2 percent amid pre-lockdown stockpiling, compared with the same month last year.
Shoppers embarked on panic buying after President Cyril Ramaphosa declared a national state of disaster in March. This led to shelves being left empty at major retailers as shoppers bought canned foods, hygiene products and toilet paper.
The report found that this positive performance continued throughout April (19.3 percent), May (18.5 percent) and June (18.2 percent), with broader year-on-year sales growth of 10.5 percent up to February 2020.
No-name brands’ annual share of the fast-moving consumer goods basket rose 20.4 percent at the end of June, with a particularly strong result in the second quarter, at 23.5 percent.
The PL sector now commanded R63 billion in annual consumer goods sales, up from R55.4bn last year, the report found. However, named brands still dominated, with R245bn in annual sales.
Gareth Paterson, the director retail vertical for Nielsen, said: “It is the value-for-money proposition, as well as the availability of quality PL 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.
“There’s no doubt that the gains made by PL during the lockdown will continue based on the increased consumer exposure to quality retailer-owned brands. This will drive longer-term adoption for PL in many instances, as, once consumers trial these products, they appreciate the quality and price competitiveness of these goods.”
The Nielsen report found an average of 486 PL brands per retail store in South Africa.
The report said that in the 13 weeks of the lockdown, there was an average of 54 more PL items on the shelves.
Paterson said: “These increased numbers reflect the investment that retailers continue to make into expanding their PL repertoires, which has driven innovation, product choice for consumers and, ultimately, sales.”
Frozen and canned groceries emerged as the PL winners, with 61 percent of consumers saying they were buying more frozen and chilled foods than they did 12 months ago. Fifty-four percent of consumers were buying more PL personal-care products, such as shampoo, soap and body cleansers, and 51 percent were buying more PL canned and packaged groceries.
Ready-to-eat bread rolls showed the biggest PL increase over the past year, with year-on-year sales growth of 32 percent, while desserts, cakes and sweet products and refrigerated dinners were the same in third and fourth place.
Paterson said: “The quality of PL goods is no longer seen in a negative light. South African consumers now consider these products as worthy alternatives, even though this is one of the most trying and financially testing times they have ever experienced. Based on this deepening relationship, we expect a continued upward trend in the purchase of PL products and will see these items taking a greater share of consumer baskets.”