olly abotorabi senior regional insights...

Olly Abotorabi

Senior Regional Insights Manager

July 2018

PRIVATE LABEL IN WESTERN ECONOMIES

IRI Special Report

© 2018 Information Resources Inc. (IRI). Confidential and Proprietary. 2

Executive Summary

1 | Market Context

2 | Market Performance

3 | How to Win

Agenda


Executive Summary

Despite improved economic conditions

Private Label wins ahead

• PL is in the ascendancy at a regional level. Share grew to

39.4% (+0.4pt yoy). Unit share increased to 48.2% (+0.1pt)

• Range and Price are key levers driving trade-out from Brand.

Greater acceptance and trust in PL prevails over recessionary

behaviour still evident in some EU countries

• Value share grew in UK, Germany, Italy, Spain. Brand price

war legacy negatively impacted share in France & Greece.

Netherlands saw no topline change yoy.

• In Europe share is highest in UK (52.5%) and Spain (42.6%),

lowest in Italy (18.1%) & Greece (16.3%).

• Price gap to Brand closed to 29% on average. Material cost

increases, PL premium range development are influential.

• % Promoted volume decreased in 5 of 7 EU countries as

retailers fought to offset price increases and focus on quality

• PL Premium & organic ranges win ahead in France & Italy yoy.

• In the US PL share grows yoy led by range, price and

shopper uptake ahead of Brand. Share at 14.9% however

remains lower vs EU countries.

Product and retail evolution

• From Private Label to Private Brand. Innovative,

consumer focussed ranges with a finely balanced price-

quality ratio bid to drive differentiation and loyalty.

• New concepts emerge; from dedicated stores to ‘Private

Brands’ capitalising on evolving shopper trends

• The retail landscape is broadening. Amazon and Google

drive the latest wave of channel disruption and provide

yet more opportunities for PL to grow.

• 37% of European shoppers look for cost savings online

2/3 of this consumer group making a saving.

• IRI US studies showcase PL’s loyalty credentials,

increasing purchase preferences across income levels

and age groups, with millennials leading the way.

• Consumer centric planning is key, as are multiple

external factors, from regulatory to environmental.

Gains across macro categories

• PL ‘EU’ share is highest in Frozen (47.1%) and

Chilled and Fresh (44.8%) lowest in Personal care

(16.2%) and Confectionery (15.6%)

• The highest levels of share growth yoy occurs in

Chilled (+0.8pt) Baby (+0.5pt) and Ambient (+0.4pt)

• Dairy price inflation and increased uptake in premium

ready meals drives growth in Chilled Retailers

embracing on the go savoury snacking trends gain a

better foothold in Ambient.

• PL gains in Baby led by quality products at everyday

lower prices helping sway shoppers from Brand.

• Biggest share in decline is in leading PL category

Frozen (-0.4%pt) yoy. Brands identify the recent

renaissance in category sales and innovate.

• US PL share strengthens across the majority of

macro categories, particularly in Frozen (ready meals,

meat) and Baby (wipes, food, accessories).


MARKET CONTEXT


From imitator to disruptor… Private Label (PL) virtues have come a long way

Source: IRI US Growth Summit 2018

1980 2018


Private Label to Private Brand

Innovative, consumer focussed ranges with a good price-quality ratio. PL is at the forefront of European retailer communications, bidding to

drive shopper loyalty and take retailer own products from supporting cast to lead performers.

Source: Retailer websites: Mercadona, Co-op Italia , The Grocer (UK) May / June 2018


New concepts…from dedicated stores to ‘Private Brands’ capitalise on evolving shopper trends

Healthy snacking on the go, affordable facial cosmetics, healthier food ranges characterise key retailer plays across Europe

Source: Retailer websites May / June 2018


The retail landscape broadening… and is ripe for further Private Label expansion

Spend saving opportunities, faster and more convenient deliveries, more variety sponsored by big, up and upcoming Private Label players…

New competitor products across categories

covering both ends of the PL spectrum

New partnerships, new distribution

opportunities

Market entry and expansion

continues for hard discounters Specalised store banners with own

product focus


Cost savings are high on the agenda of online shoppers in Europe…an opportunity for PL

Source: IRI European Shopper Survey 2017


In the US Private Label builds momentum across all income groups in the US

Purchasing of PL products grows across all age groups…..Millenials show the most inclination, retirees and seniors less so.

Source: IRI US Growth Summit 2018


Doing the right thing…

• Governing bodies and shoppers scrutinise ethical business practices

more than ever. New regulations, health and lifestyle changes,

competitive market conditions and sustainability have been influential in

shaping products on our shelves and screens.

• Retailers and manufacturers are fast to put the shopper at the heart of

range development

• These factors need to remain at the core of retailer product development

with an openness to tackling new high profile challenges…


MARKET PERFORMANCE IRI EU MARKETS


• This report contains data gathered from France, Germany, Italy, Spain, Netherlands , Greece, UK and the USA. The data has been sourced from IRI Infoscan® MAT p/e

Dec 2017 (ITA p/e Feb 2017), IRI Market Advantage MAT p/e Dec 2017) IRI EU Price elasticity benchmarks 2018, IRI US Growth Summit 2018, IRI European Shopper

Survey 2017

• The market channels used for each country in this report are as follows:

Other key notes for readers:

• Data availability, coding and segmentation varies by IRI country. 10 Macro Category definitions used to provide a consistent grouping of comparable products.

• Macro Categories analysed: Chilled and Fresh, Ambient , Frozen food, non-alcoholic drinks (including tea and coffee), Household, Personal care (Beauty + OTC) Baby

(food and accessories), Confectionery, Pet (food and accessories), Alcoholic drinks.

• Packaged and random weight fresh produce included for Italy in this report.

Resources

Country Channels used

UK IRI Infoscan: hypermarkets and supermarkets, convenience, specialist, forecourts

Germany IRI Infoscan: hypermarkets, supermarkets, discounters

Netherlands IRI Infoscan: hypermarkets and supermarkets

Italy IRI Infoscan: hypermarkets, supermarkets, small traditionals, discounters and drugstores

France IRI Infoscan: hypermarkets and supermarkets, convenience, discounters, ecommerce

Spain IRI Infoscan: hypermarkets and supermarkets, including Canary Islands

Greece IRI Infoscan: Hypermarkets and Supermarkets

USA IRI Market Advantage: Total Store Multi-outlets and Convenience


20,8

4,4

16,5

11

9,1

3,5

4,2 (-0.4pt)

(-0.4pt)

(-0.8pt)

(-0.7pt)

(-1pt)

(-2pt)

(-2.6pt)

Positive movements across the region with GDP in growth and unemployment reducing

1,8

3,2

3,1

1,5

2,2

2,2

1,8

Euro zone (19): Down from

9.6% to 8.7% in Dec 2016

Euro zone (19) GDP

+2.4% for 2017

Source: Eurostat GDP 2017 full year vs 2016, Unemployment Dec 2017 vs Dec 2016

GDP change and Unemployment rate% vs 2016


FMCG in Europe full year 2017

Price increases support industry growth in UK and France, good underlying unit growth in Germany, Spain , Italy and Greece

-1,6

1,6

0,3

1,9 2,1

0,3

3,1

1,7

4,3

1,5

2,9 2,7 3,1

2,3

Total FMCG change% | 2017 vs 2016 | IRI EU countries

VALUE

UNITS

Source: IRI UK Hypers, Supers, Convenience, IRI France Hypers, Supers, Convenience, Discounters, e-commerce. IRI

Germany Grocery and Discounters IRI Spain, Italy, Netherlands, Greece Hypers and Supers


Private Label (PL) outperforms vs National Brands in UK, Germany, Italy, Spain

+4.3%

+1.7% +5.8%

+4.3%

+0.7%

+2.3%

+3.6%

+2.1%

-1%

+1%

+4%

+2.9%

+2.7%

+2.7%

P/L vs National Brand performance | MAT value sales YoY%

Total IRI Region

P/L +4.3%

Brand +2%

Source: IRI UK Hypers, Supers, Convenience, IRI France Hypers, Supers, Convenience, Discounters, e-commerce. IRI

Germany Grocery and Discounters IRI Spain, Italy, Netherlands, Greece Hypers and Supers

Outperformance vs PL

Underperformance vs PL


PL share for the region grows, supported by range expansion retail price inflation

Value share% Unit share% Assortment share% % of PL Volume on

Promo

% PL share of

promoted volume Unit price index: PL

vs NB

39.4% +0.4pt

48.2% +0.1pt

27.2% +0.1pt

13.1% -1.5pt

22.9% -2.2pt

71.5pt +0.6pt

PL Share and explanatory KPI’s | MAT and Change YoY% | IRI EU countries

Source: IRI UK Hypers, Supers, Convenience, (Kantar for UK value & unit shares) IRI France Hypers, Supers, Convenience,

Discounters, e-commerce. Germany Grocery and Discounters Spain, Italy, Netherlands, Greece Hypers and Supers

Premium tier development across countries helps to sway savvy shoppers from Brand into PL


PL share highest and growing most in the UK, share is lowest in Greece

52,5

40,1

32,9

18,1

42,6

29,2

16,3

PL MAT value share and pt change vs a year ago | IRI EU countries

+0.2pt +0.6pt +1.0pt 0.0pt -0.3pt -0.7pt +0.5pt

Source: UK Kantar Worldpanel, IRI France Hypers, Supers, Convenience, Discounters, e-commerce.

Germany Grocery and Discounters Spain, Italy, Netherlands, Greece Hypers and Supers

MAT share

change

YoY%


Reduced volumes sold on deal across the majority of countries

19,7

11,1

8,1

18,8

10,1 9,4

8,1

PL % volume sold on promotion and pt change vs a year ago | IRI EU countries

-1.2pt -1.1pt -6.7pt +1.8pt -0.7pt +0.7pt -2.3pt

Source: IRI Hypers and Supers (UK, France, Italy, Spain, Netherlands, Greece)

Germany Grocery and Discounters

* %Value sold

on deal for

Greece

MAT volume on

promo change

YoY%


PL price index: Gap between PL and Brand closes across the majority of countries

PL price increases but behind the rate of Brands in the UK. Conversely PL price declines ahead in Greece yoy in response to aggressive

Brand price cuts. The greatest differentials are in France, Germany, least in Italy where PL share is one of the lowest.

78,1

63,5 61,3

83,7

74,9

65,9 67,2

Private Label vs National Brands | PL Unit Price Index 2017 vs 2016 | IRI EU countries

+0.9pt +2.1pt -1.3pt +0.8pt -0.1pt +0.8pt +0.8pt

Source: UK Kantar Worldpanel, France Hypers, Supers, Convenience, Discounters, e-commerce.


MAT price

index change

YoY%


Price Elasticity for FMCG in the region is -0.89, with several countries quite inelastic

IRI studies suggest relative inelasticity for EU FMCG markets at a regional level…..yet elasticity contrasts across key EU markets,

categories and by Brand. Understanding this lever in bespoke detail is critical to positioning your Brand.

-0.89

Average Price Elasticity

in EU

Average

Price

Elasticity

in Italy is…

Source: IRI Price elasticity index, analyses with modelling period 2015 – 2017

…in

France -0.72

-1.27


PL ‘EU’ share is highest in Frozen and Chilled, where growth is highest at regional level

7 of 10 macro categories boost their standing across the region yoy. Only Alcohol, Frozen and Soft Drinks lose out. Biggest gains in Chilled

and Baby.

18,1

35,0

21,9

44,8

15,6

47,1

37,6

16,2

33,0

23,5

Alcohol Ambient Baby Chilled Confectionery Frozen Homecare Personal Care Pet Soft Drinks

-0.1pt +0.4pt +0.5pt +0.8pt 0.0pt -0.4pt +0.1pt +0.2pt +1.1pt -0.1pt MAT share

change

YoY%

Macro Categories | MAT Value share% and ppt change yoy| Total IRI EU Countries

Source: IRI UK Hypers, Supers, Convenience, IRI France Hypers, Supers, Convenience, Discounters, e-commerce.



-8

-1,2

11,2

Premium and Organic PL forges ahead in France & Italy, while retailer rationalisation sees

mainstream PL outperform in the Netherlands

/

-2,4

3,9

-3,2

-8,2

2,3

10,8

Source: IRI France Hypermarkets, Supermarkets, Convenience, E-commerce, Discount, IRI Italy and

Netherlands Hypermarkets and Supermarkets. 5% of Italy PL uncoded

Value YoY% Share of

total PL%

Share of

total PL% Value YoY% Value YoY%

12.6 (-0.6pt)

Share of

total PL%

82.4 (+1pt)

5.0 (-0.3pts)

4 (-0.7pt)

75.1 (-0.4pt)

17 (+0.3pts)

6 (-0.5pt)

83 (-0.6pt)

11 (+1.1pts)

PL Tiers including Organic | MAT Value change yoy% and value share% |


UK


P/L growth led by price inflation, premium range development & trade-down from Brand

Stronger Brand Price inflation ahead of PL increases price gap

Value share% Unit share% Assortment share% % of P/L Volume on

Promo

% P/L share of

promoted volume Unit price index: PL vs

NB

52.5% +1pt

58.7% +1.4pt

29.4% +0.1pt

19.7% -6.7pt

22.7% -7.7pt

78.1pt -1.3pt

PL Share and Explanatory KPI’s | MAT and Change YoY% | UK

Source: Kantar Worldpanel for share and price, IRI Major Multiples for assortment and promo


PL stable to growing across all Macro Categories

Recessionary behaviour is evident as consumer price increases rise ahead of wages inside the latest year. Reduced levels of Brand and P/L

promotions make the latter a more attractive option Share is strongest in Chilled, Frozen and Ambient, lowest in Confectionery.

17,5

32,1

17,4

60,0

8,4

44,6

29,5

11,4 20,9 19,7


+0.7pt +1.4pt 0pt +0.4pt 0pt 0pt +1.5pt +0.6pt +1.1pt +0.1pt MAT Share

Change

YoY%

Source: IRI UK total market

IRI EU Macro Categories | PL MAT Value share% and ppt change yoy | UK


PL Insights: UK

• PL share grows for a 4th consecutive year, partially due to consumer switching as prices

rise but also as premium ranges showcase quality credentials and are expanded further.

• Retailer range cuts continued in a bid to reduce complexity and cost, however Brands are

being culled ahead of PL ranges.

• Promotional support decreased for both PL and Brands in a bid to offset rising material costs,

benefitting the topline.

• Brexit continues to generate uncertainty. While full implications are still to be realised, a

weaker pound has led to hikes in ingredient costs. International businesses within FMCG and

beyond are reluctant to invest inwardly, others continue to weigh up and implement plans to

move production away from the UK. Downward revisions in economic growth, pressures on

income lead to reduced consumer confidence and cautious shopper spending.

• Brand ‘shrinkflation’ exercised by FMCG manufacturers in the wake of the referendum has

not been lost upon consumers and has partly helped to trigger trade out from Brand in to PL.

• Looking forward the continued FMCG incursion led by online retailers Amazon and Google

into FMCG markets signals a new wave of disruption, adding to the challenges posed by hard

discounters that helped drive acceptance of PL to this point. New distribution opportunities for

Brand and PL are opening up, but if the retailers expansion plans in other countries are a

blueprint, the opportunity could be greater for the latter to continue an upward trajectory.

• Homecare - delivers the most notable share gain from PL as shopper

recessionary behaviours extend to household products. PL wins ahead of Brand in

dishwash kitchen roll, toilet paper and air freshners yoy.

• Personal care - mirrors homecare, PL benefits from trade-down into equivalent

products, particularly within OTC health, hair care products and toiletry gift packs.

• Ambient sees the second biggest value share increase in this UK Macro category

yoy. Retailer range expansion within on trend categories such as savoury and

sweet snacking is evident. Crisps, Nuts, Popcorn and Biscuits are all specific

segments in which P/L outperformed and evolved premium tier products yoy.

• Alcohol – PL value grew despite the dynamic growth of Branded premium beers

and spirits yoy. P/L wins ahead in wines, sparkling wines yoy as well as the

emerging ready to drink mixes segment.


GERMANY


Topline share growth led by food price inflation and assortment growth


Promo

% P/L share of


vs NB

40.1% +0.6pt

51.4% -0.3pt

28.8% +0.7pt

11.1% -1.1pt

27.2% -2.7pt

63.5pt +2.1pt

PL Share and Explanatory KPI’s | PL MAT and Change YoY% | Germany

Source: IRI Germany infoscan total market including hard discounters for share and price. Grocery

and drugstores for promotions


PL wins ahead in food categories

26,0

43,1

25,4

54,1

20,7

55,2 45,0

21,0

54,2

31,0


-0.3pt +0.5pt +0.3pt +1.6pt 0.0pt -0.2pt -0.9pt -0.4pt -0.3pt -0.6pt MAT Share

Change

YoY%

IRI EU Macro Categories | PL MAT Value share% and ppt change yoy| Germany

Source: IRI Germany Grocery and Discounters

Hike in Dairy prices drives up Chilled & Fresh and total P/L share in Germany. Non-food categories continue to be impacted by

increased Brand listings in hard discounters, placing PL ranges under pressure


PL insights: Germany

• PL share passes 40% in the latest year, growing strongly in value ahead of Brands

against the backdrop of a more buoyant economy.

• PL price index in Germany sees the biggest change, closing the gap to Brand by

+2.1pts in the latest year. PL products are on average are 36.5% lower. High price

inflation in dairy combined with retailers investing in quality and more premium tier

products are key factors.

• Range is growing at the expense of Brands within food generally yoy and quality is

improving particularly in Frozen and Chilled categories. This overshadows the

growing acceptance and influx of Brands into discounters, which has a negative

bearing on underlying unit share.

• Hard discounters promote PL in Germany for the first time, helping push up %

volume sold on promo from a traditionally low base.

• Opportunities - On shelf availability is often an issue amongst local retailers, one

which could provide an opportunity for PL which is less impacted by conditional

battles between manufacturer and retailer. The continued expansion of online retail

amongst leading players provides a platform for PL to build it’s profile.

.

• Chilled – sees the biggest increase in PL share (+1.6pts yoy). Shelf space is

tight, making it harder for Brand to gain a foothold. Dairy categories continue to

witness high levels of price inflation, helping push up value share

• Frozen – PL share is highest here at 55.2% as hard discounters dominate.

Innovation from PL has been key to maintaining a stronghold. Fish however lost

to stronger performing Brands in the latest year causing some erosion.

• Ambient - Pre-baked goods, Coffee, Oil and Nuts each grow well for P/L yoy.

Canned foods with a traditionally strong P/L share grow value, partly due to

packaging innovation

• Soft drinks - Poor summer ’17 weather, Brand premiumisation in soft drinks,

including tonics, as well as downsizing in packs and increased listings in hard

discounters continue to tip the scale heavily in favour of Brands.

• Homecare, Personal Care, Pet lose out yoy, led by hard discounters listing

more Brands impacting PL sales of Heavy Duty Detergents, Toilet Cleaners and

Dishwash. The same dynamic negatively impacts PL in Personal care and Pet.


FRANCE


Brand price war legacy and reduced assortment impact PL performance


Promo

% P/L share of


vs NB

32.9% -0.7pt

44.4% -1pt

26.5% -0.2pt

8.1% +0.7pt

22% +1.7pt

61.3pt +0.8pt

PL Share and Explanatory KPI’s | PL MAT and Change YoY% | France

Source: IRI France Hypermarkets & Supermarkets Convenience and Discounters, Ecommerce for

value, unit shares and price, Hypermarkets and Supermarkets for range and promo


Multiple categories lose out in France long-term influenced by Brand price wars

Share is strongest but declining most in both Frozen, Chilled categories . Homecare, lowest in Confectionery

10,6

29,1 23,2

34,6

9,6

40,0

30,2

9,9

22,2 19,3


-0.7pt -0.4pt +1.3pt -0.9pt -0.1pt -1.6pt -0.3pt 0.0pt -1.1pt -0.1pt MAT Share

Change

YoY%

Source: IRI France Hypermarkets & Supermarkets, Convenience and Discounters, Ecommerce

IRI EU Macro Categories | MAT value share% and ppt change yoy | France


PL Insights: France

• P/L share declines consistently during the last 4 years due to price war led by National

Brands. In 2017 this trend slowed to an extent, as key retailers outline intentions to

reverse this trend through greater PL investment.

• Price gap vs Brand closes yoy thanks to enhanced focus on premium product ranges,

which grow +9% in total yoy.

• Development of organic PL ranges signals a switch in emphasis and retailers better

meeting changing consumer habits. Over 50% of P/L launches in the latest year are

organic, leading to high annual growth of +15% yoy.

• Evolution across channels is visible, value ranges gain some traction within ‘Drive’ e-

commerce yoy, while new concepts such as Carrefour’s ‘Bon App’ urban convenience

stores stock a large range of P/L Snacks tailored to on-the-go consumers. Leading

retailers such a Leclerc and System U move to focus on more premium, indulgent and

healthier lines respectively.

• Legislation change – will restrict the aggressive nature of Brand price cuts locally and

push retailers to re-focus on new ways to win a share of transaction.

• Opportunities to diversify retailer ranges with more focus on organic and healthier

products will be essential to retailer portfolios to limit negative campaigns around food

quality, win shoppers and drive store loyalty as tougher sanctions on price take shape.

• Chilled & Fresh sees the most notable decrease in P/L share yoy. Heavy

decline in milk, foie grois and other chilled meats drive. Brands win ahead in

ready meals, sandwiches and fresh salads

• Alcohol’s rise is led by Branded premium beers and spirits, which impacts

PL share negatively yoy. This is typified by big label companies riding the

trend toward craft beers and modern spirits such as gin, whisky and vodka.

• Pet category share declines for PL yoy as Brands win ahead with more

premium priced products within cat food in particular.

• Baby is the one category in which P/L wins value share yoy. This is largely

due to sales gained from Brand in nappies and to a lesser extent infant milk


ITALY


Price inflation and shopper trading up support topline PL growth in Italy


Promo

% P/L share of


vs NB

18.1% +0.2pt

20.9% +0.1pt

24.1% -0.2pt

20% -1.2pt

22% 0pt

83.7pt +0.9pt

PL Share and Explanatory KPI’s | MAT and Change YoY% | Italy

Source: IRI Italy Hypermarkets and Supermarkets


PL strongest in Frozen, Chilled, Homecare. Growth coming mainly from food categories

5,0

18,3

9,2

25,2

5,1

28,1 23,4

7,6

20,5

9,9


-0.1pt +0.2pt +0.5pt +0.8pt +0.2pt -0.2pt -0.3pt -0.2pt 0.0pt -0.1pt MAT Share

Change

YoY%

IRI EU Macro Categories | PL MAT Value share and ppt change yoy| Italy

Source: IRI Italy Hypermarkets and Supermarkets


PL Insights: Italy

• P/L share grew favourably in 2017 thanks to trading up across ranges while consumers

maintain a perceived continued focus on value for money. This led to the highest value

share point since 2013. Gains mostly came from food and drink segments, overshadowing

erosion in home care.

• Price increases yoy across macro food and drink categories also paint a comparatively

positive picture as non-food departments came under price pressure.

• New product development is instrumental in boosting PL position. Top retailers Co-op

Italia, Conad, Esselunga, Selex, Auchan and Carrefour have all moved to improve product

relevance and quality. Though range grows behind Brand it has generated more consumer

buy-in across top retailers Co-op Italia, Conad, Esselunga, Selex, Auchan and Carrefour

• Challenges and opportunities – Brands promote more aggressively yoy, so retailers will

need to maintain innovation and segment expansion which has seen perceptions of PL

improve significantly. Though at it’s highest point for 4 years, share is still comparably low

vs other countries, leaving opportunity for retailers to gain more of a foothold

• Aldi entered the market in March 2018 and will surely challenge the current market

complexion, with a compelling mix of low prices and quality PL products.

• Chilled & Fresh sees the biggest increase in PL share yoy. Increased focus on healthy

eating and snacking drives Fruit and vegetables upward . Interestingly, convenience wins

through too, despite a local preference for fresh, ready to eat meals experience high

double digit growth yoy, with Private Label at the forefront. Lastly, high price inflation in

dairy, particularly on Butter further strengthens value share.

• Frozen Brands increase dominance helped by more promotions and increased presence in

Frozen fish and Ice Cream categories. Consequently they benefit from the trend toward

buying more frozen, particularly the latter sub-category benefitting from a warm Summer ’17

• Baby – PL steals share yoy, owing to competitive positioning on products such as wipes,

nappies and to a lesser extent in infant milk


SPAIN


Trade out of Brand, price and strong range growth maintain PL gains


Promo

% P/L share of


vs NB

42.6% +0.4pt

49.9% +0.3pt

34.1% +0.6pt

10.1% -2.3pt

35.1% -3.9pt

74.9pt +0.5pt

P/L Share and Explanatory KPI’s | MAT and Change YoY% | Spain

Source: IRI Spain Hypermarkets and Supermarkets


Share growth across the majority of macro categories, excluding Alcohol, Baby, Frozen

Frozen and Homecare are dominated by retailers, with almost 60% share of value but experience contrasting fortunes yoy

21,2

49,8

29,4

46,3

23,2

57,6 57,8

27,6

48,7

25,1


-0.4 pt +0.4pt -0.2pt +0.9pt +0.2pt -1.2pt +0.7pt +0.6pt +1.6pt +0.7pt MAT Share

Change

YoY%

Source: IRI Spain Hypermarkets and Supermarkets

IRI EU Macro Categories | PL MAT Value share% and ppt change yoy | Spain


PL Insights: Spain

• P/L share is the second highest across the region (42.6%) in Spain , accounting

for ½ of all consumer unit sales in 2017, and maintaining it’s upward trajectory

despite notably improved economic conditions in the last couple of years. Value

Share is above 40% in 5 of 10 key macro categories; strongest in Frozen and

Homecare, lowest in Confectionery and Alcohol

• Strong retail brand evolution – Leading retailer Mercadona drive shopper

loyalty and bridge the gap to national brands through trusted and continuously

evolving own brands such as Hacendado. Health, premium quality and

indulgence outline the spectrum of consumer trends catered for by Spain’s No.1.

• Challenges and opportunities – Consumer expectations are heigh with a need

for sustained low prices and a continuation of a strong retailer innovation

programme. Nevertheless growing credentials present opportunity to take further

share from Branded products

• Pet – sees the strongest PL share growth yoy aided by range development and

increased sales of more premium dog and cat food products.

• Chilled and Fresh – Gains comes from retailer ready meals, charcuterie and

yogurt based products.

• Ambient PL sales expansion is aligned to the on trend growth of savoury snack

products including nuts and seeds, aperitifs as well as canned goods including

tuna.

• Household – Domestic paper including toilet steals share from Brand in the latest

year.


NETHERLANDS


Recent growth plateaus as retailer own ranges are rationalised


Promo

% P/L share of


vs NB

29.2% +0.0pt

35.5% -0.3pt

21.1% -1pt

9.4% +1.8pt

29.8% +3.6pt

65.9pt +0.8pt

P/L Share and explanatory KPI’s | MAT and Change YoY% | Netherlands

Source: IRI Netherlands Hypemarkets and Supermarkets


Mixed performances with inflationary and deflationary pressures driving the biggest movers

14,6

36,8

20,6

40,6

15,2

34,6 29,9

11,2

27,5 25,2


-0.3pts -0.8pt +1.1pt +1.6pt -0.8pt -0.6pt -0.7pt +0.2pt -0.6pt +0.1pt MAT Share

Change

YoY%

Source: IRI Netherlands Hypermarkets and Supermarkets

IRI EU Macro Categories | PL MAT Value share% and ppt change yoy | Netherlands


PL Insights: Netherlands

• P/L share - After a period of long-term growth P/L sales and share are now

stabilising. There are 3 main reasons:

• Firstly assortment growth has plateaued,

• Secondly, retailers have rationalised, moving from 3 PL tiers to 1 good quality

product tier, priced competitively. Consequently mainstream PL products

continue to dominate, and growth of organic, premium as well as value ranges

are curtailed in the latest year.

• Lastly, the diminishing growth of hard discounters reduces the momentum of PL

sales growth from this channel .

• Leading retailers like Albert Heijn are taking steps to improve quality and appeal of

everyday ranges, by reducing sugar content, or evolving fresh options for on-the-go

consumers. Number 2 player Jumbo is focussed on fulfilling the full food journey by

integrating foodservice labels within retail and expanding with the acquisition of Emté

• Opportunities remain to re-focus PL as a quality, differentiated range of products as

opposed to a cheaper alternative. The latest retailer initiatives can be a stepping stone

to building trust and driving future trade-up to more premium propositions.

• Chilled and Fresh PL growth is sustained due to high price inflation across dairy

categories, Milk prices in particular increasing as much as +12% yoy. This has

resulted in reduced consumption.

• Baby- Small scale growth in Baby food and babycare products boost share yoy.

• Ambient PL share trends downward due to increased pick-up of Branded Cereals,

Soups and savoury snacks yoy.

• Confectionery PL share squeezed yoy due to premiumisation and increased

promotions in Chocolate.

• Homecare – Increased ‘A’ Brand listing within discounters come at the expense of PL

and provide a more attractive price point to Grocery shoppers.


GREECE


Aggressive Brand price cuts and the exit of key Grocery chains stifle PL performance

Value share% Unit share% Assortment share% % of P/L Value on

Promo

% P/L share of

promoted value Unit price index: PL

vs NB

16.3% -0.3pt

20.9% -0.3pt

18.6% -0.7pt

11%(value)

0pt

8.1%(value)

-0.7pt

67.2pt -0.1pt

PL Share and Explanatory KPI’s | MAT and Change YoY% | Greece

Source: IRI Greece Hypermarkets and Supermarkets


P/L down across Categories as Brands trade aggressively to win share

13,8 12,9

20,8

10,7

31,1

19,1

32,2

19,2 24,3

6,8


+0.1 pt +0.1pt -1.4pt -0.1pt -0.1pt -1.9pt -0.6pt -0.1pt -3.3pt -1.3pt MAT Share

Change

YoY%

Source: IRI Greece Hypermarkets and Supermarkets

IRI EU Macro Categories | PL MAT Value share and ppt change yoy| Greece


PL Insights: Greece

• P/L share has suffered across macro categories during 2015 and 2016 and has only

lately showed signs of stabilising in 2017. This despite continued consumer demand

for low cost products. The pressure derives mainly from deep cut Brand promotions.

Add to this the exit of Grocery chain Carrefour / Marinopoulos, PL has been harder to

attain for shoppers in Greece.

• Assortment - Branded ranges increase faster resulting in a loss of share for PL.

• P/L price index gap to Brand increases in contrast to other countries in the region..

Retailers look to stay competitive and bring shoppers in.

• Challenges and opportunities exist to re-position PL both physically and mentally for

local consumers. Visibility on shelf positioning next to leading Brands on-shelf through

to tiering and developing quality value for money propositions. PL share is comparably

low vs other EU countries across core macro categories Frozen, Chilled and Ambient.

Could these be key focus areas from which equity can be built up?

• Branded manufacturers promoted aggressively in 2017 to win a share of transaction.

This won’t be sustainable, so the challenge of justifying higher price points and re-

building brand equity as conditions steadily recover, needs careful consideration.

• Pet – Heavyweight decline for PL as Brands win sales due to more frequent and

aggressive promotions on pet food yoy.

• Frozen is dominated by Brand in contrast to other countries in the region. PL share

decreases as Brands expand in key categories such as Vegetables and Pies.

• Baby- Strong category price deflation drives PL value share down ahead of Brand,

underlying demand for products does not improve as a result.

• Soft drinks - More frequent and aggressive Brand promotions take share away from

PL yoy.


USA


PL share increase led by premiumisation, increased range and uptake ahead of Brands

Value share% Unit share% Assortment share% % of P/L Units on

Promo

% P/L share of

promoted units Unit price index: PL

vs NB

14.9% +0.5pt

17.7% +0.6pt

12.3% +0.2pt

29% -1.5pt

15.6% +0.5pt

81.1pt -0.6pt

A strong year for PL with topline value sales growth of +4.3% vs Brand at +0.8%. PL price gap to Brand opens up. Average price

for the latter grows ahead yoy.

Source: IRI USA Total Store Multi-Outlets + Convenience

PL Share and Explanatory KPI’s | MAT and Change YoY% | USA


Share gains across the vast majority of US Macro categories, particularly Frozen & Baby

0,1

16,8 11,0

30,2

2,7

20,3

7,7

23,2 23,4

8,6


0.0 pt +0.4pt +1.2pt +0.8pt 0.0pt +1.1pt +0.2pt +0.5pt +0.8pt +0.5pt MAT Share

Change

YoY%

Source: IRI USA Total Store Multi-Outlets + Convenience

IRI EU Macro Categories | PL MAT Value share% and pt change yoy| USA


PL Insights: USA

• A positive year for PL as topline sales (+4.3% yo) and share outperform total FMCG

(+1.3%). Value share jumped by+0.5pt to 14.9% yoy. Retailers took a bigger

proportion of sales across 8 of 10 key macro categories

• Channel performance varies. Share is up in Club, with Frozen and Beverages showing

strength. Convenience also sees positive momentum, mainly in Chilled and Beauty.

• PL price index gap increases despite an upturn in average price yoy. Brand prices

increased faster. The differential is though small, PL products are only 20% cheaper

on average vs Brand in the US. Only Italy has a smaller price gap in the EU.

• All income groups show a marked uptick in PL sales, emphasising increased

relevance, quality and trust deployed across the spectrum amongst consumers

• Millennials lead the charge as PL sales grow across all US consumer generations.

• Opportunities for PL to gain a stronger foothold remains. Share in the US is

comparably low benchmarked vs 7 IRI EU countries. Consumers evidently are more

trusting, particularly younger generations. Confectionery, Alcohol in particular have low

PL equity, retailers could focus their attentions in the future to premium tiers here.

Discounter, specialist and online retailer expansion will give ample opportunity for a

continued rise in PL presence.

• Frozen growth is powered by strong gains in fresh seafood followed by ready meals,

Meat , Vegetables and Pizza categories.

• Chilled PL upturn stems from strength in Meat, Seafood, Pasta categories and high

growth in from lunch solutions.

• Pet share gains for PL are by way of premiumisation in pet treat and pet supplies,

where underlying pack sales are actually flat yoy.

• Baby category sales growth in wipes and food signal increased equity of retailer own

products , a trend mirrored by many EU countries. a platform that enables growth in new

sub-categories such as baby and gifts and toys

• Personal Care sees PL share benefit from explosive growth in facial cosmetics, hair

accessories, while in health growth ahead of Brand in anti-smoking, vitamins and adult

incontinence


HOW TO WIN


Key takeouts

So What?

Expect intense consumer scrutiny to continue and understand what value means to

the consumer. Bargain hunting is now a popular hobby.

Anticipate all possibilities in the event that markets become less stable.

PL is focussed on competitively priced innovation in a bid to keep shoppers. Brand

manufacturers need to stay close to the latest consumer trends, be clear on their

USP’s and justify their premium. Target ing is key, millennials in the USA for

instance are less Brand loyal and open to PL.

Close collaboration between Manufacturer producers and retailers is essential.

Price and promo planning can be the difference between success or failure, in an

increasingly complex FMCG suite of PL and Brand products.

Ensure you are positioned to assess new channel potential and how much to invest

in a bid to win or defend against an inevitable increase in competitor products.

Private Label to Private Brand

• It’s perhaps surprising to see PL in growth given improving economic prospects in the EU and

USA. However, consumers increased willingness to attain value for money, recognition of

enhanced product quality supported by more and differentiated products wins shopper spend.

• Similarly, PL decline against a tougher economic backdrop may seem unlikely. A spotlight on

Greece and France reveals aggressive Brand price cutting, diluting PL potential to win here.

• From imitator to disruptor and now leaders – positive results are visible across a variety of

macro categories. Conscious effort to differentiate and drive loyalty is clear and evidenced by

the growing importance of premium PL tiers across EU countries.

• Continued innovation, premium tiering and trusted value propositions will help foster loyalty.

• Establishing the precise balance between price and quality is key. IRI studies identify price

elasticity variations across key EU markets, categories and Brands.

• The retail landscape is expanding rapidly. Discounters, specialists and nowAmazon and Google

are driving a new wave of disruption within FMCG and provide a greater platform for PL to thrive


How to Win: 3 ways IRI can help you stay ahead of the game

Price & Promo Assortment Digital

Getting pricing and promotions right are

critical to the overall profitability of any brand.

IRI analysis shows that 40%+ of promotions

are ineffective at profitably driving sales.

Through identifying the price points that work,

along with the supporting promotional

mechanics, brands can effectively plan with

their retail partners to deliver sustainable,

profitable growth.

With the continuous influx of new product

offerings and with limited space to

accommodate everything, the fight for shelf

space has never been so intense.

Manufacturers & Retailers who can

demonstrate the category growth delivered by

their products will win.

IRI's range review tools help retailers optimise

their assortments, and help manufacturers

understand how to avoid the cull.

Media is becoming increasingly fragmented,

especially with Digital on the rise. Consumers are

becoming frustrated with irrelevant, out of context

advertising.

Trying to reach the right consumer, through the

right channel, at the right time is incredibly

complex and expensive.

IRI Media analytics help brands understand which

channels to invest in, and how much should be

invested in each channel.


THANK YOU

For More Information, Contact Us…

IRI International Headquarters

1 Arlington Square, Bracknell, Berkshire RG12 1WA,

United Kingdom

+44 1344 746 000

Follow us on Twitter: @IRIworldwide

olly abotorabi senior regional insights...

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