RETAILER BRANDS SERVING CONSUMERS, SMES AND INNOVATION Christel Delberghe European Parliament, 19 April 2016 Retailer brands’ contribution to the market Retailer brands market share (%) (value) 50.0 45.0 40.0 35.0 30.0 25.0 2012 20.0 2013 2014 15.0 10.0 5.0 0.0 2 Consumers like retailer brands, trust them and buy them regularly Source: IGD ShopperVista, March 2015 In Europe, 70% of consumers consider that retailer brands are good value for money, 69% agree that their quality is as good as name brands. 3 Price is consumers’ # 1 priority Consumers compare and switch Source: “The future of grocery”, Nielsen, 2015 Source: Nielsen “consumers have more shopping choices than ever, and as channels proliferate, protecting and building store loyalty is no easy task” Nielsen 4 A-Brands play an important role and continue to dominate importance parts of the market Water Soft Drinks Beers Nestlé 32,70% Coca Cola 51,40% Heineken 37,10% Danone 26,20% Suntory Or-Schw 20,30% Carlsberg 30,10% Alma 22,60% Retailer Brand 9,80% Anheuse 14,60% Retailer Brands 13% Pepsico 6,90% Retailer Brands 4,90% Tea Herbal tea Chocolate powder Unilever Lipton 41,20% Unilever 33,10% Nestlé 41,80% ABF Twinings 25,60% ABF 16,40% Mondelez 25,90% Retailer Brands 8,70% Retailer Brands 15,60% Retailer Brands 13% Roasted coffee Coffee pads Soluble coffee Mondelez 45,90% Douwe Egberts 35,90% Nestlé 59,10% Douwe Egberts 12,90% Mondelez 29,70% Mondelez 18,10% Retailer Brands 19,70% Nestlé 15,50% Retailer Brands 18,10% Retailer Brands 11,60% Source: FCD, IRI, 2014 Example: in France, over a 5 years period, the market share of the top 50 brands has remained stable 5 Retailer brands’ performance depends on country and product category Key factors: • national consumer preferences matter • Retailer brands market share is different across countries • Other factors –e.g. social acceptance, trust or health concerns 6 Many innovations in Consumer Packaged Goods have a limited impact on the market • The vast majority of packaged goods introduced every year fail before one year of their launch date • And a lot of innovation has little impact on the market Source: Nielsen, breakthrough innovation report, 2014 7 Retailer brands innovate differently • Innovation is quicker and less costly to bring to market Manufacturer and retailer work more closely together Brands invest in marketing & advertising campaigns Retailers innovate incrementally –ie. start small and expand through their network • Retailer brands respond quicker to consumer demand 8 Innovation through retailer brands • Responding to consumer needs • Examples • Simplifying consumer choice Convenience: Ready made meals, pre-packaged salads Benchmark within the category Product reformulation (sugar, salt E.g. use of « umbrella » concepts reduction…) that span across categories Special dietary needs (eg. free • Quality standards from) Third party audits (IFS, BRC, ISO, Organic, fair trade MSC, etc.) • Supporting government initiatives Nutrition labelling, promotion of healthy diets, etc. 9 Retailer brands support SMEs and local producers • SMEs make about 80% of Retailer Brands products • Many long term partnerships • Benefits for SMEs and local producers Specialisation, innovation, flexibility Differenciation, local Joint product development No marketing costs Access to markets 10 To summarise • Consumers like retailer brands, trust them and buy them regularly • Convenience: consumers want choice and that choice to be easy to make; they compare and switch shops and channels • A-Brands play an important role and continue to dominate importance parts of the market • Retailer brands’ performance depends on individual countries and product categories • Many innovations in the Consumer Packaged Goods sector have a limited impact on the market • Retailer brands innovate differently; it is easier and quicker to bring to market; it is more reponsive to consumer trends and inclusive • Retailer brands support SMEs and local producers 11 Conclusion • Retailer brands are here to stay: they bring choice and value to consumers; they bring innovation; they support networks of small producers and processors. • Any measure limiting their development will deprive consumers from access to high- quality products at an affordable price. • We ask policy makers to encourage competition on the market and recognise retailer brands as a powerful driver of consumer choice and innovation. 12.