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Private Label Food and Drink - UK - November 2013

“Tesco’s October 2013 relaunch of its premium tier Finest range should provide a boost to premium own-label NPD. Such innovation should be well placed to chime with the ongoing rise in consumer confidence and to tap into the predicted increase in consumer spending.”

– Amy Price, Senior Food and Drink Analyst

Some questions answered in this report include:

  • Can investment in premium private label tap into growing consumer confidence?
  • How are brands with the strongest image staving off private label competition?
  • Where does private label dominate and what categories is it expanding in?
  • How can the private label market engage with ABs and higher earners?

The UK private label food and drink market is estimated to have reached £50 billion in 2013, a 19% increase since 2008. This growth was broadly in line with the wider market, which grew by 20% over the same period.

While brands remain the most widely used type of food and drink product, standard own-label is only slightly less popular. Almost seven in 10 consumers use both branded and own-label food and drink, highlighting the extensive crossover in usage and the integral role that private labels play in consumers’ repertoires.
Ongoing NPD (New Product Development) activity by private labels has been noticed by the vast majority of consumers who cite an improvement in both the quality and packaging of own-labels, helping to alleviate any residing negative perceptions. This should stand the sector in good stead in the improving economic climate; while consumers are still adopting some recessionary habits, encouraging consumers to trade up across tiers will be key to driving value growth in the private label market once consumer spending regains momentum.

Brands are fighting back, accounting for the majority of NPD in the first nine months of 2013 and investing in marketing to drive consumer engagement as seen with Walkers’ resurrected Do Us a Flavour campaign and Coca-Cola’s Share a Coke activity.

Manufacturer brands: products which are available in most grocery stores and can be brand leaders or secondary brands. Examples include Heinz, Kellogg’s and Mars.

Private label: brands which are controlled and managed by retailers, carrying either the retailer’s name or an exclusively created name. This group includes tertiary/venture brands which are exclusively made for a retailer such as Tesco’s Parioli and Llama’s brands.

Own-label: products which carry the retailer’s name, with sub-brands segmented according to considerations such as health and price. Examples include Waitrose’s LOVE life range and Asda Chosen by You.

Premium own-label: products positioned towards the higher end of the price spectrum and looking to compete with brands in terms of quality. Examples include The Co-operative’s Truly Irresistible, Sainsbury’s Taste the Difference and Morrisons M Signature ranges.

Standard own-label: products positioned as retailers’ core range with a mid-tier price (undercutting brands by round 20%), generally covering the majority of product markets. Examples include Sainsbury’s and Tesco.

Value/economy own-label: products positioned at the lower end of the price spectrum, serving as the opening price point in each category. Examples include Tesco Everyday Value and Waitrose essentials.

This report focuses on private label food and non-alcoholic drink although the market size includes sales of food, non-alcoholic drinks and alcoholic drinks.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Retail value sales and forecast of private label food and drink, UK, 2008-18
            • Market factors
              • Confidence improves but consumer spending remains under pressure
                • Brands still have a role to play
                  • Growth in ABs should add value to the market, while value for money will remain a consideration for lower socio-economic groups
                    • Companies, brands and innovation
                      • Private labels have looked to economy lines to attract consumer attention
                        • Figure 2: Trends in premium and economy claims as a proportion of total new product launches in the food and non-alcoholic drink market, own-label vs branded, 2009-13
                      • Food and drink retailers represent around a third of total food and drink adspend
                        • The consumer
                          • More than nine in 10 buy own-label
                            • Figure 3: Purchasing of own-label and branded food and non-alcoholic drink, September 2013
                          • Almost half buy more own-label produce
                            • Figure 4: Changes in purchase patterns of own-label and branded food and non-alcoholic drink over the past year, September 2013
                          • Majority see brands as being of high quality
                            • Figure 5: Correspondence analysis of qualities associated with branded and different types of own-brand products, September 2013
                          • Around eight in 10 believe own-label has improved
                            • Figure 6: Attitudes towards own-label and branded products, September 2013
                          • What we think
                          • Issues in the Market

                              • Can investment in premium private label tap into growing consumer confidence?
                                • How are brands with the strongest image staving off private label competition?
                                  • Where does private label dominate and what categories is it expanding in?
                                    • How can the private label market engage with ABs and higher earners?
                                    • Trend Application

                                        • Trend: Life Hacking
                                          • Trend: Hungry Planet
                                            • Mintel Futures: Access Anything, Anywhere
                                            • Market Drivers

                                              • Key points
                                                • Confidence improves but consumer spending remains under pressure
                                                  • Figure 7: GfK NOP Consumer Confidence Index, monthly, January 2008-September 2013
                                                • Food prices remain high
                                                  • Brands still have a role to play
                                                    • Figure 8: Changes in purchase patterns of branded food and non-alcoholic drink, September 2013
                                                    • Figure 9: Grocery shopping habits, August 2013
                                                  • Demographic changes will impact the market
                                                    • Slow growth in ABs should add value to the market, while value for money will remain a consideration for lower socio-economic groups
                                                      • Figure 10: Forecast adult population trends, by socio-economic group, 2008-18
                                                    • Households with children are expected to see a decline
                                                      • Figure 11: Forecast adult population trends, by lifestage, 2008-13 and 2013-18
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • Private label continues to dominate NPD
                                                        • Figure 12: New product launches in the food and non-alcoholic beverages markets, branded vs private label, 2009-13
                                                      • Own-label invests in NPD in economy and premium lines
                                                        • Figure 13: Trends in premium and economy claims as a proportion of total new product launches in the food and non-alcoholic drink market, own-label vs branded, 2009-13
                                                      • Economy range revamps aim to polish quality credentials
                                                        • Tesco relaunches Finest range in 2013
                                                          • Private label increases NPD in drinks
                                                            • Figure 14: Percentage point change in the share of private label in new product launches, by product category, 2012-13*
                                                          • Tesco reviews tertiary brands
                                                            • Private labels look to take the lead on health
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • Private label continues to lose ground
                                                                  • Figure 15: Index of UK retail value sales of private label and all food and drink, 2008-13 (Index = 2008)
                                                                  • Figure 16: UK retail value sales of private label food and drink, at current and constant prices, 2008-18
                                                                • Forecast
                                                                  • Figure 17: Retail value sales and forecast of private label food and drink, UK, 2008-18
                                                                • Methodology
                                                                • Segment Performance

                                                                  • Key points
                                                                    • Private label shares vary in food and non-alcoholic drink
                                                                      • Figure 18: Share of private label in sales, by category, food and non-alcoholic drink, 2012*
                                                                    • Own-brand retains dominance in high-spend items
                                                                      • Private label renews efforts in brand strongholds from chocolate…
                                                                        • …to baby food
                                                                          • Brands enter areas previously dominated by private label…
                                                                            • …including ready meals…
                                                                              • ...and cooking sauces
                                                                                • Brands dominate alcoholic drinks segment
                                                                                  • Figure 19: Summary of private label share in sales, by alcoholic drink category (take-home only), 2012
                                                                                • Brands demonstrate strength in various categories
                                                                                  • Figure 20: Brand index, by leading food and non-alcoholic drink brands, 2012-13
                                                                                • Engagement helps to foster strong brand personality
                                                                                  • Building emotional connections
                                                                                    • Functionality offers standout
                                                                                    • Companies and Products

                                                                                      • Overview
                                                                                        • Figure 21: Sales of in-home food (including soft drinks), by retailer, incl. VAT, 2008-13
                                                                                      • Asda
                                                                                        • Market positioning
                                                                                          • Private label positioning
                                                                                            • Recent activity
                                                                                              • Co-operative Group
                                                                                                • Market positioning
                                                                                                  • Private label positioning
                                                                                                    • Recent activity
                                                                                                      • Morrisons
                                                                                                        • Market positioning
                                                                                                          • Private label positioning
                                                                                                            • Recent activity
                                                                                                              • Sainsbury’s
                                                                                                                • Market positioning
                                                                                                                  • Private label positioning
                                                                                                                    • Recent activity
                                                                                                                      • Tesco
                                                                                                                        • Market positioning
                                                                                                                          • Private label positioning
                                                                                                                            • Recent activity
                                                                                                                              • Waitrose
                                                                                                                                • Market positioning
                                                                                                                                  • Private label positioning
                                                                                                                                    • Recent activity
                                                                                                                                      • Other
                                                                                                                                        • Marks & Spencer
                                                                                                                                          • Market positioning
                                                                                                                                            • Private label positioning
                                                                                                                                              • Recent activity
                                                                                                                                                • Discounters
                                                                                                                                                  • Aldi
                                                                                                                                                    • Lidl
                                                                                                                                                    • Brand Communication and Promotion

                                                                                                                                                      • Key points
                                                                                                                                                        • Food and drink retailers account for around a third of adspend
                                                                                                                                                          • Figure 22: Main monitored media advertising expenditure on food and non-alcoholic drink, 2010-13
                                                                                                                                                          • Figure 23: Main media advertising expenditure on food and non-alcoholic drinks, by selected retailers, 2010-13
                                                                                                                                                        • Manufacturers dominate spend
                                                                                                                                                          • Figure 24: Main media advertising expenditure on food and non-alcoholic drinks, by top 10 advertisers (manufacturers), 2010-13
                                                                                                                                                        • Brands reference family connections
                                                                                                                                                          • Coke puts calories centre stage
                                                                                                                                                          • Consumer – Usage

                                                                                                                                                            • Key points
                                                                                                                                                              • More than nine in 10 buy own-label
                                                                                                                                                                • Figure 25: Purchasing of own-label and branded food and non-alcoholic drink, September 2013
                                                                                                                                                                • Figure 26: Crossover in purchasing of own-label food and non-alcoholic drink, by tier, September 2013
                                                                                                                                                              • Premium own-label and branded products attract the most affluent
                                                                                                                                                                • Figure 27: Purchasing of branded and premium own-label food and non-alcoholic drink, by socio-economic status and annual household income, September 2013
                                                                                                                                                              • Growth in over-55s poses an opportunity for brands while 25-34s are more likely to buy standard own-label
                                                                                                                                                                • Families are core users of own-label
                                                                                                                                                                  • Figure 28: Purchasing of own-label and branded food and non-alcoholic drink, by presence of children in household, September 2013
                                                                                                                                                                • Almost seven in 10 buy both own-label and branded
                                                                                                                                                                  • Figure 29: Crossover in purchasing of any own-label and branded food and non-alcoholic drink, September 2013
                                                                                                                                                              • Consumer – Changes in Buying Habits

                                                                                                                                                                • Key points
                                                                                                                                                                  • Almost half buy more own-label produce
                                                                                                                                                                    • Figure 30: Changes in purchase patterns of own-label and branded food and non-alcoholic drink over the past year, September 2013
                                                                                                                                                                    • Figure 31: Increase in purchasing of own-label food and non-alcoholic drink, by age, September 2013
                                                                                                                                                                  • Purchasing of brands is stable among almost seven in 10
                                                                                                                                                                  • Consumer – Buying Habits by Category

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Consumers buy both brands and own-label for staple products
                                                                                                                                                                        • Figure 32: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected categories, September 2013
                                                                                                                                                                      • Brands retain the lead in a number of categories
                                                                                                                                                                        • Own-label proves popular for staples such as pasta
                                                                                                                                                                            • Figure 33: Pasta, rice and noodles brand personality – macro image, August and November 2012
                                                                                                                                                                        • Consumer – Qualities Associated with Own-Label and Branded Products

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Majority see brands as being of high quality
                                                                                                                                                                              • Figure 34: Correspondence analysis of qualities associated with branded and different types of own-brand products, September 2013
                                                                                                                                                                              • Figure 35: Qualities associated with own-label and branded products, September 2013
                                                                                                                                                                            • Value own-label seen as unappealing but offering value for money
                                                                                                                                                                              • Minority see brands and own-label as ‘innovative’
                                                                                                                                                                              • Consumer Attitudes Towards Private Label

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Around eight in 10 believe own-label has improved
                                                                                                                                                                                    • Figure 36: Attitudes towards own-label and branded products, September 2013
                                                                                                                                                                                  • Half believe that own-label tastes as good as brands
                                                                                                                                                                                    • Brands deliver on heritage and quality
                                                                                                                                                                                    • Appendix – Market Drivers

                                                                                                                                                                                        • Figure 37: GDP, PDI, consumer expenditure and savings, at constant 2013 prices, 2008-18
                                                                                                                                                                                        • Figure 38: RPI – all items vs food, January 2007-August 2013
                                                                                                                                                                                        • Figure 39: Forecast adult population trends, by lifestage, 2008-18
                                                                                                                                                                                        • Figure 40: UK households, by size, 2008-18
                                                                                                                                                                                        • Figure 41: Trends in the age structure of the UK population, 2008-18
                                                                                                                                                                                    • Appendix – Market Size

                                                                                                                                                                                        • Figure 42: Best- and worst-case forecasts for private label, by value, 2013-18
                                                                                                                                                                                    • Appendix – General Shopping Habits

                                                                                                                                                                                        • Figure 43: Main shop and additional shop used for groceries, September 2013
                                                                                                                                                                                        • Figure 44: Most popular main weekly grocery shop used for groceries, by demographics, September 2013
                                                                                                                                                                                        • Figure 45: Next most popular main weekly grocery shop used for groceries, by demographics, September 2013
                                                                                                                                                                                        • Figure 46: Other main weekly grocery shop used for groceries, by demographics, September 2013
                                                                                                                                                                                        • Figure 47: Most popular top-up shopping used for groceries, by demographics, September 2013
                                                                                                                                                                                        • Figure 48: Next most popular top-up shopping used for groceries, by demographics, September 2013
                                                                                                                                                                                        • Figure 49: Other top-up shopping used for groceries, by demographics, September 2013
                                                                                                                                                                                    • Appendix – The Consumer – Usage

                                                                                                                                                                                        • Figure 50: Most popular purchasing of own-label and branded food and non-alcoholic drink, by demographics, September 2013
                                                                                                                                                                                        • Figure 51: Next most popular purchasing of own-label and branded food and non-alcoholic drink, by demographics, September 2013
                                                                                                                                                                                        • Figure 52: Crossover in purchasing of own-label food and non-alcoholic drink, by demographics, September 2013
                                                                                                                                                                                        • Figure 53: Crossover in purchasing of own-label and branded food and non-alcoholic drink, by demographics, September 2013
                                                                                                                                                                                    • Appendix – Consumer – Changes in Buying Habits

                                                                                                                                                                                        • Figure 54: Changes in purchase patterns of value own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 55: Changes in purchase patterns of standard own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 56: Changes in purchase patterns of premium own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 57: Changes in purchase patterns of branded products, by demographics, September 2013
                                                                                                                                                                                    • Appendix – Consumer – Buying Habits by Category

                                                                                                                                                                                        • Figure 58: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - chocolate, by demographics, September 2013
                                                                                                                                                                                        • Figure 59: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - carbonated soft drinks, by demographics, September 2013
                                                                                                                                                                                        • Figure 60: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - coffee granules, by demographics, September 2013
                                                                                                                                                                                        • Figure 61: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - breakfast cereals, by demographics, September 2013
                                                                                                                                                                                        • Figure 62: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - bread, by demographics, September 2013
                                                                                                                                                                                        • Figure 63: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - cheese, by demographics, September 2013
                                                                                                                                                                                        • Figure 64: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - baby food^, by demographics, September 2013
                                                                                                                                                                                        • Figure 65: Purchasing habits of own-label and branded food and non-alcoholic drink products, by selected category - dry pasta, by demographics, September 2013
                                                                                                                                                                                    • Appendix – Consumer – Qualities Associated with Branded and Own-Label Products

                                                                                                                                                                                        • Figure 66: Most popular words associated with branded products, by demographics, September 2013
                                                                                                                                                                                        • Figure 67: Next most popular words associated with branded products, by demographics, September 2013
                                                                                                                                                                                        • Figure 68: Other words associated with branded products, by demographics, September 2013
                                                                                                                                                                                        • Figure 69: Most popular words associated with value own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 70: Next most popular words associated with value own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 71: Other words associated with value own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 72: Most popular words associated with standard own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 73: Next most popular words associated with standard own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 74: Other words associated with standard own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 75: Most popular words associated with premium own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 76: Next most popular words associated with premium own-label products, by demographics, September 2013
                                                                                                                                                                                        • Figure 77: Other words associated with premium own-label products, by demographics, September 2013
                                                                                                                                                                                    • Appendix – Consumer Attitudes Towards Private Label

                                                                                                                                                                                        • Figure 78: Agreement with the statement ‘The quality of own-label products has improved in recent years’, by demographics, September 2013
                                                                                                                                                                                        • Figure 79: Agreement with the statement ‘Brands are better established than own-label products’, by demographics, September 2013
                                                                                                                                                                                        • Figure 80: Agreement with the statement ‘The packaging of own-label products has become more attractive in recent years’, by demographics, September 2013
                                                                                                                                                                                        • Figure 81: Agreement with the statement ‘Brands always deliver on quality’, by demographics, September 2013
                                                                                                                                                                                        • Figure 82: Agreement with the statement ‘Own-label food and non-alcoholic drink tastes just as good as branded products’, by demographics, September 2013
                                                                                                                                                                                        • Figure 83: Agreement with the statement ‘Own-label and branded products are made by the same manufacturers’, by demographics, September 2013
                                                                                                                                                                                        • Figure 84: Agreement with the statement ‘Branded products have a distinctive taste which you can’t get in own-label products’, by demographics, September 2013
                                                                                                                                                                                        • Figure 85: Agreement with the statement ‘With own-label products, you trade quality for a better price’, by demographics, September 2013
                                                                                                                                                                                        • Figure 86: Agreement with the statement ‘The choice of own-label products affects where I decide to shop’, by demographics, September 2013
                                                                                                                                                                                        • Figure 87: Agreement with the statement ‘Buying a well-known food/drink brand is important to me’, by demographics, September 2013
                                                                                                                                                                                        • Figure 88: Agreement with the statement ‘Branded products are made in a safer environment than own-label products’, by demographics, September 2013

                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                    • Adam's Foods
                                                                                                                                                                                    • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                                    • Arla Foods amba
                                                                                                                                                                                    • Asda Group Ltd
                                                                                                                                                                                    • Coca-Cola GB
                                                                                                                                                                                    • Costcutter Supermarkets Group
                                                                                                                                                                                    • Duchy Originals
                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                    • Heston Blumenthal
                                                                                                                                                                                    • HJ Heinz Company UK
                                                                                                                                                                                    • HMV Media Group (UK)
                                                                                                                                                                                    • ITV plc
                                                                                                                                                                                    • J. Sainsbury
                                                                                                                                                                                    • John Lewis Partnership
                                                                                                                                                                                    • Leiths School of Food and Wine
                                                                                                                                                                                    • Marks & Spencer
                                                                                                                                                                                    • Morrisons M Local
                                                                                                                                                                                    • Ocado Ltd
                                                                                                                                                                                    • Somerfield
                                                                                                                                                                                    • Tesco (UK)
                                                                                                                                                                                    • Waitrose
                                                                                                                                                                                    • Walmart Stores (USA)

                                                                                                                                                                                    Private Label Food and Drink - UK - November 2013

                                                                                                                                                                                    £1,995.00 (Excl.Tax)