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Brand Loyalty in Food and Drink and Irish Consumers' Growing Fondness for Own-label - Ireland - August 2010

A thriving market that has advanced far from its initial niche as a vehicle for bargain basement products and entry level staples, own-label sales now account for around a third of all grocery sales in Ireland.

The recession and the seemingly positive experience of own-label products have led many Irish consumers to question and re-evaluate the value of brands, and in particular, whether brands are worth a premium. For many, the answer is no. Own-label is able to offer high quality at low prices, extensive product lines, sophisticated own-label portfolios with different positioning responding to consumer needs and impressive innovation (on occasion), and there is much to suggest that, even when the recession ends and consumers’ personal circumstances improve, there will be no going back for many Irish consumers.

This report assesses how Irish consumers have reassessed and altered their shopping habits with respect to own-label and branded products. It also examines the viability of a long-term ‘altered consumer’ in the post-recession era.

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Table of contents

  1. Introduction

      • Key themes
        • Definitions
          • Consumer research
            • Abbreviations
            • Insights and Opportunities

              • Bringing men into the own-label fold
                • It’s not all about price – quality matters too
                  • Retaining consumers after the recession
                  • Market in Brief

                    • Own-label accounts for one third of total food retail sales
                      • All-Ireland own-label sales valued at €5.2 billion in 2010
                        • Demographic changes challenge own-label growth
                          • Shopping and spending altered by recession
                            • Special offers and low prices on consumers’ minds
                              • Food and drink prices: Rising in NI, falling in RoI
                                • Half of consumers reconsidering brand value
                                  • Opportunity to grow own-label alcohol sales, but stigma persists
                                    • Tesco the dominant retailer across Ireland
                                      • Fruit and vegetables top own-label purchases
                                        • Own-label products now mass market and mainstream
                                          • Overall, view of own-label is positive
                                          • Fast Forward Trends

                                              • Trend 1: Ego Is All
                                                • What’s it about?
                                                  • What we’ve seen
                                                    • What next?
                                                      • Trend 2: Extreme Living
                                                        • What’s it about?
                                                          • What we’ve seen
                                                            • What next?
                                                            • Internal Market Environment

                                                              • Key points
                                                                • Food and drink prices: Rising in NI, falling in RoI
                                                                  • Food price inflation eases for NI consumers – but prices still rising
                                                                    • Figure 1: Consumer price index, overall index and ‘food & non-alcoholic beverages’ sub-index, % change on previous year, UK (including NI), May 2010
                                                                    • Figure 2: Consumer Price Index, by product/service category, % change during 12 months to May 2010, UK (Including NI), May 2010
                                                                  • Increasing food prices hit NI households hardest
                                                                    • Figure 3: Average weekly household expenditure, NI and UK, 2009
                                                                    • Figure 4: Percentage of average weekly household expenditure allocated to food & non-alcoholic drinks, UK, 2009
                                                                  • RoI food prices down over 6% in last 12 months
                                                                    • Figure 5: Consumer Price Index (All Items), RoI, 2007-10
                                                                    • Figure 6: Consumer Price Commodity group indices, % change year-on-year, May 2010
                                                                  • RoI food price deflation the highest in Europe
                                                                    • Figure 7: Harmonised indices of consumer prices, food & non-alcoholic drinks, annual % changes, selected European countries, April 2010
                                                                  • ... but RoI prices still remain among Europe’s highest
                                                                    • Figure 8: Comparative price level indices, food and non-alcoholic drinks (and sub-categories), RoI, UK and EU27, 2009
                                                                  • Media focus on own-label not flattering
                                                                    • Pressure for ethical sourcing
                                                                      • Do Irish consumers care what’s in their food?
                                                                        • Figure 9: Agreement with statement ‘I read the labels on food to see what additives are in it’, NI and RoI, 2004-09
                                                                        • Figure 10: Agreement with statement ‘I always check the nutritional content of food’, by gender and socio-economic background, NI and RoI, 2009
                                                                        • Figure 11: Agreement with statement ‘I am prepared to pay more for foods that do not contain artificial additives’, NI and RoI, 2005-09
                                                                      • Own-label fares well in quality/taste comparisons
                                                                        • Europe-wide trend towards own-label
                                                                          • Figure 12: Private-label share of total sales (volume), by country, 2009
                                                                        • Own-label alcohol: Stigma persists but opportunities exist
                                                                            • Figure 13: Attitudes towards alcohol when purchasing from supermarket/off-licence to consume at home, NI and RoI, April 2010
                                                                          • Brands must “invest and engage” to remain relevant
                                                                            • Own-label pushing brands from supermarket shelves
                                                                              • Retailers increasing ad spend, while brands cut back
                                                                                  • Figure 14: Advertising expenditure, retailers and brands, RoI, January-October 2009
                                                                                • Shopping and spending altered by recession
                                                                                    • Figure 15: Agreement with shopping/spending-related statements pertaining to impact of recession, NI and RoI, 2009
                                                                                  • Special offers and low prices on consumers’ minds
                                                                                    • Figure 16: Agreement with selected statements pertaining to shopping, NI and RoI, 2009
                                                                                  • Above all else, ‘value for money’ matters most
                                                                                    • Figure 17: Most important factors (top four) when grocery shopping, NI and RoI, January 2009
                                                                                  • RoI bargain hunters obstructed in efforts to compare
                                                                                  • Broader Market Environment

                                                                                    • Key points
                                                                                      • Economies improve, but consumers still struggle
                                                                                        • Figure 18: Economic outlook, RoI and NI, 2008-10
                                                                                      • Unemployment set to worsen
                                                                                        • Figure 19: ILO unemployment, Q3 2009
                                                                                      • Low interest rates provide some respite to consumers
                                                                                        • Confidence returning in RoI, diminishing in UK
                                                                                          • Figure 20: Consumer Sentiment/Confidence Index, Jan 2005-May 2010
                                                                                        • RoI
                                                                                          • NI
                                                                                            • Consumer spending still in decline
                                                                                              • RoI
                                                                                                • NI
                                                                                                  • Growth in male population a challenge for own-label
                                                                                                    • Figure 21: Population growth, by gender, RoI, 2006-20
                                                                                                    • Figure 22: Population growth, by gender, NI, 2006-20
                                                                                                  • Ageing of population puts emphasis on quality
                                                                                                    • Figure 23: Projected percentage change in population, by age, NI and RoI, 2008-20
                                                                                                    • Figure 24: Agreement with statement ‘On the whole, I think well-known brands are better than a shop’s own brand’, consumers aged 55+, NI and RoI, 2009
                                                                                                • Strengths and Weaknesses

                                                                                                  • Strengths
                                                                                                    • Weaknesses
                                                                                                    • Who’s Innovating?

                                                                                                      • Key points
                                                                                                        • Own-label premium ranges: An innovation in itself
                                                                                                          • NPD emphasis reverting to premium in 2010
                                                                                                            • Figure 25: Value/economy and premium launches’ respective % share of total private-label product launches, UK & Ireland, 2008-10*
                                                                                                            • Figure 26: Total number of value/economy and premium private-label product launches, UK & Ireland, 2008-10*
                                                                                                          • Tesco leads the way in own-label product launches
                                                                                                              • Figure 27: Own-label new product launches, leading retailers’ % share of total own-label product launches, UK & Ireland, 2008-10*
                                                                                                            • Ready meals the main focus of own-brand NPD
                                                                                                              • Figure 28: Own-brand new product launches, sub-categories, total number, UK & Ireland, 2009-10*
                                                                                                          • Market Value and Forecast

                                                                                                            • Key points
                                                                                                              • Own-label accounts for one third of total food retail sales
                                                                                                                • Own-label sales up 60% during 2004-09 period
                                                                                                                  • Figure 29: Own-label retail sales, all of Ireland, RoI and NI, 2004-14
                                                                                                                • Own-label sales to reach almost €5.5 billion by 2014
                                                                                                                  • All-Ireland own-label sales valued at €5.2 billion in 2010
                                                                                                                    • Figure 30: All food retail sales, all of Ireland, RoI and NI, 2004-14
                                                                                                                  • Declining convenience stores’ sales could boost own-label
                                                                                                                  • Competitive Context

                                                                                                                    • Key points
                                                                                                                      • Irish consumers well-disposed towards own-label brands
                                                                                                                        • Figure 31: Agreement with statement ‘On the whole, I think well-known brands are better than a shop’s own brand’, GB, RoI and NI, 2009
                                                                                                                        • Figure 32: Agreement with statement ‘On the whole, I think well-known brands are better than a shop’s own brand’, by gender and age, NI and RoI, 2009
                                                                                                                      • Brand loyalty an obstacle to increased own-label sales
                                                                                                                        • Figure 33: Agreement with statement ‘When I see a new brand, I often try it to see what it’s like’, NI and RoI, 2005-09
                                                                                                                        • Figure 34: Agreement with statements related to brand loyalty, NI and RoI, 2009
                                                                                                                    • Companies and Products

                                                                                                                      • Key points
                                                                                                                          • Figure 35: Retailers profiled, 2010
                                                                                                                        • Aldi
                                                                                                                          • Asda
                                                                                                                            • Co-op
                                                                                                                              • Dunnes
                                                                                                                                • Iceland
                                                                                                                                  • Lidl
                                                                                                                                    • Marks & Spencer
                                                                                                                                      • Sainsbury’s
                                                                                                                                        • SuperQuinn
                                                                                                                                          • Supervalu
                                                                                                                                            • Tesco
                                                                                                                                            • Where Irish Consumers Shop

                                                                                                                                              • Key points
                                                                                                                                                  • Figure 36: Retailers shopped in by consumers on a regular basis (once a month or more), NI and RoI, May 2010
                                                                                                                                                • Tesco dominates through its all-Ireland reach
                                                                                                                                                  • Consumers have easy access to own-labels
                                                                                                                                                  • Type of Own-Label Range Purchased

                                                                                                                                                    • Key points
                                                                                                                                                        • Figure 37: Types of own-label ranges bought in the last 12 months, NI and RoI, May 2010
                                                                                                                                                      • Own-label products now mass market and mainstream
                                                                                                                                                        • Consumers shopping across price-brackets and segments
                                                                                                                                                          • Preference for ‘Standard’ shouldn’t be a surprise
                                                                                                                                                            • Figure 38: Type of price-based own-label categories purchased from in last 12 months, % share of purchasing activity, NI and RoI, May 2010
                                                                                                                                                          • ABC1s and 25-49 opting for ‘premium’ own-labels
                                                                                                                                                            • NI consumers keener on ‘value’ own-label products
                                                                                                                                                              • ‘Value’ ranges appeal to women and families
                                                                                                                                                                • Fairtrade, organic and healthy own-label holding own
                                                                                                                                                                  • Figure 39: Rank in order of preference, own-label sub-categories, NI and RoI, May 2010
                                                                                                                                                                • Fairtrade tops non-price-based own-label sub-categories
                                                                                                                                                                  • Figure 40: Type of non-price-based own-label products purchased in the last 12 months, % share of purchasing activity, NI and RoI, May 2010
                                                                                                                                                                • Women and ABC1s buying fairtrade...
                                                                                                                                                                  • Figure 41: Have purchased fairtrade own-label products in the last 12 months, by gender and socio-economic background, NI and RoI, May 2010
                                                                                                                                                                • ‘Better-for-you’ own-label embraced by NI consumers
                                                                                                                                                                  • Women, ABC1s and urban consumers going for healthy own-label options
                                                                                                                                                                    • Figure 42: Consumers who have purchased ‘better-for-you’ own-label products in the last 12 months, NI and RoI, May 2010
                                                                                                                                                                  • Organic appealing most to women and C2DEs
                                                                                                                                                                    • Figure 43: Agreement that ‘It’s worth paying more for organic food’, NI and RoI, 2005-09
                                                                                                                                                                • Own-Label Products Purchased

                                                                                                                                                                  • Key points
                                                                                                                                                                      • Figure 44: Type of own-label products bought in the last 12 months, NI and RoI, May 2010
                                                                                                                                                                    • More than two thirds buy fresh fruit & vegetables
                                                                                                                                                                        • Figure 45: Consumers who have purchased own-label fresh fruit and vegetables in the last 12 months, by gender and age, NI and RoI, May 2010
                                                                                                                                                                      • RoI consumers opting for own-label dairy products
                                                                                                                                                                          • Figure 46: Consumers who have purchased own-label dairy products in the last 12 months, by socio-economic background, NI and RoI, May 2010
                                                                                                                                                                        • Price-driven products popular own-label choices
                                                                                                                                                                          • Foods with added value more resistant to own-label
                                                                                                                                                                            • Foods for special occasions less likely to be own-label
                                                                                                                                                                            • Attitudes Towards Own-Label Products in the Recession

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Figure 47: Agreement with statements relating to own-label products in the context of the recession, NI and RoI, May 2010
                                                                                                                                                                              • Almost half thinking twice about brand value
                                                                                                                                                                                • Figure 48: Consumers with above-average tendency to agree that ‘the recession has made me consider whether or not branded goods are worth paying more for’, NI and RoI, May 2010
                                                                                                                                                                              • Similar number buying more own-label products
                                                                                                                                                                                • Figure 49: Agreement with statement ‘the recession has encouraged me to try more own-label products’, by gender and age, NI and RoI, May 2010
                                                                                                                                                                              • No going back for consumers who have switched
                                                                                                                                                                                • Figure 50: Agreement with statement ‘I intend to keep buying own-label products when the recession ends’, NI and RoI, by gender and socio-economic background, NI and RoI, May 2010
                                                                                                                                                                            • Comparing Own-Label and Brands

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Figure 51: Agreement with statements relating to how own-label products compare with brands, NI and RoI, May 2010
                                                                                                                                                                              • Brands still of importance to consumers
                                                                                                                                                                                  • Figure 52: Consumers with above-average response to own-label/brand-related statements, NI and RoI, May 2010
                                                                                                                                                                                • Own-label a constant presence in shopping baskets
                                                                                                                                                                                  • Figure 53: Agreement with statement ‘I have been buying own-label products for years’, by socio-economic background, NI and RoI, May 2010
                                                                                                                                                                                • Premium own-label just as good as branded products
                                                                                                                                                                                  • Figure 54: Agreement with statements relating to quality of own-label products, NI and RoI, May 2010
                                                                                                                                                                              • Word Association: Own-Label Products

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Figure 55: Words associated with own-label products, NI and RoI, May 2010
                                                                                                                                                                                • Overall, view of own-label is positive
                                                                                                                                                                                  • Figure 56: Average response associating own-label products with ‘positive’ and ‘negative’ words/terms, respectively, NI and RoI, May 2010
                                                                                                                                                                                • Own-label most strongly identified in terms of cost
                                                                                                                                                                                  • Is own-label suffering from a ‘personality deficit’?
                                                                                                                                                                                  • Consumer Target Groups

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • NI target groups
                                                                                                                                                                                        • Figure 57: Consumer typologies, NI, May 2010
                                                                                                                                                                                      • Firm Buyers
                                                                                                                                                                                        • Recession Buyers
                                                                                                                                                                                          • Limited Type
                                                                                                                                                                                            • Re-evaluators
                                                                                                                                                                                              • RoI target groups
                                                                                                                                                                                                • Figure 58: Consumer typologies, by demographics, RoI, May 2010
                                                                                                                                                                                              • Die Hards
                                                                                                                                                                                                • Picky Shoppers
                                                                                                                                                                                                  • Cost Motivated
                                                                                                                                                                                                    • Unengaged
                                                                                                                                                                                                    • Appendix

                                                                                                                                                                                                      • Internal Market Environment
                                                                                                                                                                                                        • Figure 59: Consumer Price Index, % change, ‘all items’ and ‘food and non-alcoholic beverages’, RoI, May 2010
                                                                                                                                                                                                        • Figure 60: Consumer Price Index, ‘all goods’ and ‘food & non-alcoholic beverages’, percentage change, UK (including NI), May 2010
                                                                                                                                                                                                      • Broader Market Environment
                                                                                                                                                                                                        • Figure 61: Population growth, by age, RoI, 2000-20
                                                                                                                                                                                                        • Figure 62: Population growth, by age, NI, 2000-20
                                                                                                                                                                                                      • Consumer data
                                                                                                                                                                                                        • Topline tables
                                                                                                                                                                                                          • Figure 63: Retailers shopped in by consumers on a regular basis (once a month or more), NI and RoI, May 2010
                                                                                                                                                                                                          • Figure 64: Types of own-label brands bought in the last 12 months, NI and RoI, May 2010
                                                                                                                                                                                                          • Figure 65: Types of own-label products bought in the last 12 months, NI and RoI, May 2010
                                                                                                                                                                                                          • Figure 66: Agreement with statements relating to own-label products, NI and RoI, May 2010
                                                                                                                                                                                                          • Figure 67: Words associated with own-label products, NI and RoI, May 2010
                                                                                                                                                                                                        • Demographic tables – Retailers used regularly by consumers
                                                                                                                                                                                                          • NI
                                                                                                                                                                                                            • Figure 68: Most popular retailers shopped in by consumers on a regular basis (once a month or more), by demographics, NI, May 2010
                                                                                                                                                                                                            • Figure 69: Next most popular retailers shopped in by consumers on a regular basis (once a month or more), by demographics, NI, May 2010
                                                                                                                                                                                                            • Figure 70: Next most popular retailers shopped in by consumers on a regular basis (once a month or more), by demographics, NI, May 2010
                                                                                                                                                                                                          • RoI
                                                                                                                                                                                                            • Figure 71: Most popular retailers shopped in by consumers on a regular basis (once a month or more), by demographics, RoI, May 2010
                                                                                                                                                                                                            • Figure 72: Next most popular retailers shopped in by consumers on a regular basis (once a month or more), by demographics, RoI, May 2010
                                                                                                                                                                                                          • Demographic tables – which of the following types of own-label brands have you bought in the last 12 months?
                                                                                                                                                                                                            • NI
                                                                                                                                                                                                              • Figure 73: Types of own-label brands bought in the last 12 months, by demographics, NI, May 2010
                                                                                                                                                                                                              • Figure 74: Types of own-label brands bought in the last 12 months, by demographics, NI, May 2010
                                                                                                                                                                                                            • RoI
                                                                                                                                                                                                              • Figure 75: Types of own-label brands bought in the last 12 months, by demographics, RoI, May 2010
                                                                                                                                                                                                              • Figure 76: Types of own-label brands bought in the last 12 months, by demographics, RoI, May 2010
                                                                                                                                                                                                            • Demographic tables – which of the following types of own-label products do you buy?
                                                                                                                                                                                                              • NI
                                                                                                                                                                                                                • Figure 77: Types of own-label products bought in the last 12 months, by demographics, NI, May 2010
                                                                                                                                                                                                                • Figure 78: Types of own-label products bought in the last 12 months, by demographics, NI, May 2010
                                                                                                                                                                                                                • Figure 79: Types of own-label products bought in the last 12 months, by demographics, NI, May 2010
                                                                                                                                                                                                                • Figure 80: Types of own-label products bought in the last 12 months, by demographics, NI, May 2010
                                                                                                                                                                                                              • RoI
                                                                                                                                                                                                                • Figure 81: Types of own-label products bought in the last 12 months, by demographics, RoI, May 2010
                                                                                                                                                                                                                • Figure 82: Types of own-label products bought in the last 12 months, by demographics, RoI, May 2010
                                                                                                                                                                                                                • Figure 83: Types of own-label products bought in the last 12 months, by demographics, RoI, May 2010
                                                                                                                                                                                                                • Figure 84: Types of own-label products bought in the last 12 months, by demographics, RoI, May 2010
                                                                                                                                                                                                              • Demographic tables – Agreement with statements relating to own-label food and drink
                                                                                                                                                                                                                • NI
                                                                                                                                                                                                                  • Figure 85: Statements most agreed with in relation to own-label products, NI, May 2010
                                                                                                                                                                                                                  • Figure 86: Statements most agreed with next in relation to own-label products, by demographics, NI, May 2010
                                                                                                                                                                                                                • RoI
                                                                                                                                                                                                                  • Figure 87: Statements most agreed with in relation to own-label products, by demographics, RoI, May 2010
                                                                                                                                                                                                                  • Figure 88: Statements most agreed with next in relation to own-label products, by demographics, RoI, May 2010
                                                                                                                                                                                                                  • Figure 89: Statements most agreed with next in relation to own-label products, by demographics, RoI, May 2010
                                                                                                                                                                                                                • Demographic tables – which of the following words/phrases do you associate with own-label food and drink?
                                                                                                                                                                                                                  • NI
                                                                                                                                                                                                                    • Figure 90: Words associated most with own-label goods, by demographics, NI, May 2010
                                                                                                                                                                                                                    • Figure 91: Words next most associated with own-label goods, by demographics, NI, May 2010
                                                                                                                                                                                                                  • RoI
                                                                                                                                                                                                                    • Figure 92: Words associated most with own-label goods, by demographics, RoI, May 2010
                                                                                                                                                                                                                    • Figure 93: Words next most associated with own-label goods, by demographics, RoI, May 2010
                                                                                                                                                                                                                  • NI typology tables
                                                                                                                                                                                                                    • Figure 94: Consumer typologies, by demographics, NI, May 2010
                                                                                                                                                                                                                    • Figure 95: Type of own-brand goods used, by consumer typologies, NI, May 2010
                                                                                                                                                                                                                    • Figure 96: Type of own-brand products used, by consumer typologies, NI, May 2010
                                                                                                                                                                                                                    • Figure 97: Agreement with statements relating to own-brand products, by consumer typologies, NI, May 2010
                                                                                                                                                                                                                    • Figure 98: Words associated with own-brand products, by consumer typologies, NI, May 2010
                                                                                                                                                                                                                  • RoI typology tables
                                                                                                                                                                                                                    • Figure 99: Consumer typologies, by demographics , RoI, May 2010
                                                                                                                                                                                                                    • Figure 100: Type of own-brand goods used, by consumer typologies, RoI, May 2010
                                                                                                                                                                                                                    • Figure 101: Type of own-brand products used, by consumer typologies, RoI, May 2010
                                                                                                                                                                                                                    • Figure 102: Agreement with statements relating to own-brand products, by consumer typologies, RoI, May 2010
                                                                                                                                                                                                                    • Figure 103: Words associated with own-brand products, by consumer typologies, RoI, May 2010

                                                                                                                                                                                                                Companies Covered

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                                                                                                                                                                                                                Brand Loyalty in Food and Drink and Irish Consumers' Growing Fondness for Own-label - Ireland - August 2010

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