NEW YORK, Oct. 11, 2012 /PRNewswire/ -- Rabobank forecasts that U.S. retailer food brands, i.e. private label brands, are on track to achieve market penetration of between 25% and 30% in the next decade, up from their current market share of under 20%. This projected growth, which would put the U.S. retail brand segment on par with Europe in terms of market penetration, translates as one in every three food product purchases in the U.S. being a retailer branded product by the year 2025.
In a new report titled "What Would Apple Do? How Can U.S. Branded Food Companies Withstand the Retailer Brand Onslaught?", Rabobank's Food & Agribusiness Research and Advisory group looks at drivers behind the rising power of U.S. retailer brands – that is, brands developed and sold by supermarkets and other food retailers. The report also proposes strategies for consumer packaged goods companies to defend their national brands and/or to compensate for the loss of market share to retail brands.
"Many national brand owners need to be bolder in their thinking and strategizing," says Nicholas Fereday, Rabobank analyst and author of the report. "Instead of opting for low cost, low risk, conservative solutions, they need to think and act more like the Apples of the world, innovating new game-changing food products and entering new categories. Alternatively, national brand owners should consider downsizing brand-building efforts and diversifying their manufacturing into B2B activities."
No Longer "Cheap and Cheerless", Retailer Brands Are Powerful Competitors
Retailer brands have grown 6% over the past five years, compared with the sales of national branded packaged food manufacturers which have grown just 2%.
Rabobank says the increasing competitive strength of retailer brands reflects a power shift from consumer packaged goods companies (CPGs) to food retailers, as well as the growing trust and loyalty consumers have to today's innovative and high quality retailer brands.
"Retailer brands have matured from their original positioning as 'cheap and cheerless' generic products," says Nicholas Fereday, Rabobank analyst and author of the report, "into a more diverse range of national brand equivalents and, more recently, highly innovative premium products. On grocery shelves around the U.S., from convenience stores to upscale supermarkets, retail brands now compete successfully and often win against national brands, earning consumer trust in terms of pricing, quality, image and value."
Rising Consumer Acceptance and Loyalty for Retailer Brands
Fereday points to several factors driving retailer brand momentum:
Survival Strategies for National Brands and Consumer Food Manufacturers
All national brands are feeling the retailer brand squeeze, to varying degrees. Besides traditional avenues to shore up brand strength (ad spend, for example), two other options appear promising for consumer packaged goods companies in the U.S. market:
The Rabobank report on the rising power of U.S. retailer brands is available to media upon request.
Rabobank Group is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries, and is among the highest rated private banks by S&P and Moody's. In North America, Rabobank is a premier bank to the food, beverage and agribusiness industry. Rabobank's Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture. www.Rabobank.com