Private label drinks products,
such as own brand ranges from supermarkets, are known for low prices at the
expense of quality. However, more and more private label drinks products can be
found in supermarket aisles reserved for ‘premium’ name brands, a new report by
Canadean finds.
According to the report, private
label soft drinks are seeing notable success in the Western European premium
market, with ready-to-drink iced coffee drinks forecast to grow by 8% in 2014.
Michael Wiggins, analyst at Canadean, says: “Ready-to-drink coffees were
traditionally considered to be premium and therefore private labels used to
struggle to achieve the same sales numbers as branded products. This is largely
due to the image that private label products are of lower quality which made it
difficult to attract consumers who would be willing to try the drinks.”
Shift to premium to do with pricing
Canadean‘s report further reveals
that this trend is caused by retailers realising that the soft drink market can
be approached by up-scaled product ranges. Wiggins adds: "The trend
towards premium private label drink products has a lot to do with pricing.
Consumers expect private label drinks ranges to be lower in quality because of
the low price point. However, once the price and packaging of private label
ranges are up-scaled, consumers feel that the quality gap between branded and
private label products decreases. The appeal of entering the premium market to
retailers is undeniable, given the higher profit opportunities these products
offer."
Evolving super-premium market
As Canadean reported recently, it
will not be too long before first products will be personalised to consumers’
unique needs. This means that there will be a brand new super-premium end to
markets which will allow the price of all products to drift upward as the price
frame of the market is changing. Wiggins adds: “Over the longer term it will be
interesting to see the effects of these trends on private labels. On the one
hand this will allow private label producers to gain a larger price advantage,
but, on the other hand, it may be harder to achieve that initial push in
convincing consumers of the product’s quality.”
