Warc, 15 August 2013
SYDNEY: Private-label products are set to take off in Asian
grocery markets and to reach European levels of market share over the next
15-20 years, a new report has predicted.
Rabobank, the Dutch bank, pointed to the experience of
eastern Europe as it emerged from the communist period. This showed that
private-label growth was likely to accelerate when private-label market share
reached a critical level of between 5% and 8%.
India, said Rabobank, was nearing this threshold in modern
food retail, as was China.
Rabobank analyst Sebastiaan Schreijen noted the shrinking
time spans in the development of private label in different countries. It had
taken 50-60 years to reach a market share of over 40% in the UK, while the
Czech Republic and Hungary had taken 20 years to reach half that level.
He argued that as modern retail markets matured in India and
China, all the criteria for private-label growth would be met.
"The question is not whether private label in Asia will
catch up with European levels, but when," he said in comments reported by
Inside Retail Asia.
"Currently, we anticipate it will only take 15-20 years
for countries such as India and China to catch up with the standard European
private-label penetration rate of 28%," he added.
Although China appears better placed to see this
development, having a well-advanced roll-out of modern food retail, Rabobank
expected private-label to gain the most in India in the coming years, with few
bottlenecks and market reforms speeding the process.
The rise of private label is likely to be pushed by
retailers themselves, rather than being demanded by consumers, primarily as a
tool support themselves in price negotiations with branded suppliers.
Other criteria Rabobank identified for private-label success
included the need for a competitive cost and a degree of consumer acceptance.
Data sourced from Inside Retail Asia; additional content by
Warc staff
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