Private label brands are better positioned to respond to trending categories such as health & wellness than A-brands and continue to penetrate global markets at high rates. This is according to Brian Sharoff, President of the Private Label Manufacturer’s Association (PLMA), who spoke to FoodIngredientsFirst at the recent PLMA show in Amsterdam. This featured several on-trend products operating under key innovation platforms such as organic, vegan, sustainable, convenience and free from.

PLMA 2019 featured manufacturers and suppliers of private label fast moving consumer goods (FMCG) food and non-food products from more than 70 countries, touting nearly 2,700 exhibiting companies. New regional pavillions for 2019 included Dubai, Israel, Latvia, Canada and South Africa.

Brian Sharoff, President of the Private Label Manufacturer’s Association (PLMA).This diverse group reflects the growing market share for private label. This increased in 2017 in 12 of the 19 countries tracked for the PLMA 2018 International Private Label Yearbook (based on Nielsen data), and stood at 30 percent or above in 17 countries in 2018. Market share for retailer brands also climbed in the UK, Germany, Belgium and Portugal last year, wher the share was more than 40 percent. According to this year’s data, the market share by volume for the UK stands at 47 percent, 31 percent for France, 45 percent for Germany, 51 percent for Spain and 49 percent for Switzerland.

Sharoff reiterates that European private label is particularly strong, wher most countries have three to five dominant retailers, lending them the power to shape the grocery market through robust private label NPD. 

A “natural transition” for the industry
The industry is going through a transition due to the growth of natural organic, health and wellness and convenience, says Sharoff. These categories are dominating what consumers want to buy and what retailers find profitable to sell. Notably, private label brands are becoming better positioned than A-brands to respond to consumer demand in these categories, leading to a proliferation of NPD, he explains.

“Private label is better positioned than A-brands for these new categories and trends. The retailer is the key to private label and can respond to consumers faster, with more products,” he explains. “They can also track local changes more efficiently, and also trial products and if they don’t work, pull it from the shelves. A-brands are stuck with this concept of mass marketing, the product they make has to sell globally,” he adds.

Enforcing this viewpoint at the show was Alexander Lichter, VP Sales EMEA at flavors supplier Symrise, who shared that private label brands are at the forefront of innovation and diversification, with retailers able to explore interesting concepts and get them onto their shelves in a short time frame.

“One thing is clear. What private label has been before – copying the big brands and offering ‘me toos’ on a lower price layer – has completely changed,” Lichter tells FoodIngredientsFirst during the show. “Agile operators are allowing private label brands to operate at the forefront of innovation and diversification. The root to the shelf is by far shorter than if you were a brand manufacturer who has to conduct consumer studies, etc., and it can take a few years before its released, and then you need to go to the retailer to sell it. Retailers can explore interesting concepts and get them onto their shelves in a short time frame,” he says.

Meat alternatives featured heavily across stands.One sub-category that was clearly trending on the show floor were meat and dairy alternatives, with plant-based patties and milk drinks featuring heavily across stands, as well as innovative meat brands such as Moving Mountains attracting high volumes of visitors to its stand. This is also reflected in the wider market. A 2018 Innova Market Insights consumer survey found that one in five US consumers “have eaten less meat across the past year.” Meat substitutes accounted for 14 percent of global meat launches in the first nine months of 2018, up from six percent in 2013, according to the market researcher. 

“Meat alternatives and plant-based are an excellent example of the industry trying to find alternatives for what consumers want. Now, we still don’t know if it will it spread from niche to mass appeal. It’s still in the early stages and it is still niche,” explains Sharoff. 

There is still some way to go for true mainstreaming, he suggests. “only a quarter of consumers are probably aware of these products, and five percent are engaging with them. It also depends on which groups you look at. The under 35’s, for example, might engage more with this category. Of course, if people under the age of 35 aren’t going to be innovative; there’s no future for the rest of us,” Sharoff adds.

The private label space is well suited for NPD within a niche, yet growing, category and exploration across this space was clear on the show floor.

To illustrate this growth, a non-dairy, vegan yogurt nabbed the first prize in PLMA’s Salute to Excellence Award for the Dairy & Non-Dairy category in an eye-opening win. The product, a coconut milk fermented with yogurt cultures, came from K-Take it Veggie from Germany. A wide variety of meal kits were on show, ranging from soups to curries and noodles.

A further trend at the show, particularly noticeable in the Ideas Supermarket section, was the synbiotic nature of trends. For example, global flavors are widely being injected into the plant-based, meat-alternatives space for further differentiation and consumer appeal. The winner of the Vegan category in the Salute to Excellence Award, for example, was Thai inspired vegetable burgers from Aldi in Ireland. The burgers are made with sweet potato, coriander, lime leaf and coconut and are infused with “Thai inspired” spices.

The growing nature of meal kits was also highlighted, conveying the important expansion of NPD with convenience in mind. A wide variety is being offered to consumers, from frittatas to Thai curry and Moroccan couscous. 

As the private label space continues to be at the forefront of innovation, further exploration of health and wellness platforms, as well as global flavors, can be expected to flourish.

“In the consumers’ mind, a brand is a brand. Whether it says Nestlé or Tesco, its a brand. As long as products meet this concept of brands, they will continue to sell,” concludes Sharoff.

By Laxmi Haigh