Private label now accounts for a 21.1% share of the South African grocery market, up from 20% in 2017, according to a new report from research firm Nielsen.
Nielsen’s State of Private Label in South Africa report found that sales of private-label products now equate to around R49.3 billion (€3.18 billion) annually, with a growing number of specialty private-label ranges emerging across South Africa’s retail landscape.
Upward Trend
“Recent years have shown an upward trend in the private-label category in South Africa, with improving consumer perceptions around their quality and value, driven by a greater focus from retailers to develop value-for-money offerings, resulting in increased innovation and differentiation within this space,” commented Nielsen South Africa retail lead Gareth Paterson.
“Private label currently over-indexes in terms of sales in perishables and dry groceries, with almost 70% of private-label sales coming through these supergroups.
“Overall, however, the biggest contribution to incremental growth in private label is coming from perishables, with products like prepared convenience meals, chicken, and pre-packed cheese driving this growth,” added Paterson.
The leading category in which private label accounts for market share is long-life milk, followed by fresh chicken and prepared foods.
Butter (fourth) and sugar (fifth) are also categories with high private-label penetration, and with price increases in both categories, consumers are switching to own-brand varieties, the study found.
Strong Growth
In some categories, such as baby care, personal care and confectionery, private label is outperforming brands quite considerably, which “shows the trust that consumers are now showing towards private-label products and their willingness to use them in categories that were previously reserved for trusted brand names, which included categories like diapers and pet food,” said Paterson.
Some 77% of South African shoppers claim to compare the prices of store brands with leading manufacturer brands, and the majority of consumers say that they buy private-label products because they are cheaper.
Looking ahead, Nielsen reported that it expects private label to continue to ‘carve a healthy share of retail sales’ over the next five years, bolstered by a growing middle class and a wider range of modern retail outlets.
“Overall, there is a clear focus from retailers to up private label’s share of their sales, with an enhanced focus on the development of premium and niche private-label products and enhanced labelling, all of which bodes well for the rapid evolution of this sector,” said Paterson.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
