Saturday, October 16, 2021

2021 Private Label Trends

Traceone has published their ”2021 Private Label Trends” report which shows that Covid-19 has driven almost 20% of consumers to buy more private label products. Sustainability, transparency and quality remain top priority for retailers when it comes to their own brands. 

The impact of Covid-19 on consumer loyalty

Supply chain disruption during 2020 has prompted consumers to rapidly shift their loyalties. During the pandemic, consumers have adapted their shopping behaviour, especially as supply chain shortages meant their preferred brands and products were no longer available.

38% of consumers tried new products or brands during the Covid-19 outbreak. 58% of the shift in brand choices was driven by preferred brands being unavailable. 21% of consumers switched because the alternative options offered better value. 40% of the customers who switched brands will continue to purchase the new brand.

Covid-19 has driven almost 20% of consumers to buy more private label products. As more consumers turn to private labels to bridge the gap between quality and affordability, retailers continue to rapidly introduce new products and lines to elevate their own-brand ranges.

“There’s no doubt that the gains made by private labels during the lockdown will continue based on the increased consumer exposure to quality retailer owned brands,” said Gareth Paterson, Director Retail Vertical, Nielsen.

Amazon is bringing innovation with the debut of its new own-label food ranges. In March 2021, Amazon opened its first physical Amazon Fresh store in the UK and debuted two new own-label ranges.

Sustainability is gaining ground as retailers accelerate their response to meet consumer needs. Today’s consumer cares about values just as much as value, and is willing to change their shopping habits and pay a premium to reduce their environmental impact.

57% of consumers are willing to change their purchasing habits to help reduce negative environmental impact. 73% of consumers indicate that traceability is important to them. 71% of consumers that believe traceability is important are willing to pay a premium for it. 76% of consumers say it’s at least moderately important that brands support recycling.

Five private label themes for 2021

  1. Health, nutrition and natural products

Consumers are paying closer attention to product labelling to better understand ingredients and where their food has come from. Retailers are adapting private labels to offer improved nutritional value and sourcing to support the health agenda.

In January 2021, Intermarché announced that over 900 of its own-brand products had been reformulated to improve the nutritional quality. Using the Yuka phone app, Intermarché highlighted 140 additives to remove from its recipes. The next goal is to phase out nitrite and sodium carbonate by 2025.

In March 2021, Rewe Group announced its aim to switch the sourcing of its entire private label egg range to laying-hen breeds where male chicks are not killed. Rewe will highlight the changes to consumers by changing the traditional ‘ja!’ logo to a “No to chick culling!” label on the egg box for fresh barn eggs.

In March 2021, Tesco announced plans to increase sales classed as “healthy” to 65% by 2025. Tesco aims to support healthy, sustainable diets by reformulating products so they are healthier, changing promotions and pricing to remove barriers to buying healthy food, alongside expanding its plant-based ranges. The retailer has also worked with the British Heart Foundation and Diabetes UK to help shape its approach on healthy diets.

  1. Sustainability: transparency

In response to increasing regulatory requirements and growing consumer awareness, retailers are addressing sustainability and becoming more transparent about the origins and environmental impact of their products.

“We also do not hide the negative sustainability aspects of a product. This enables us, on the one hand, to enable our customers to shop independently, and on the other hand, this complete transparency is also an incentive for Migros,” said Matthias Wunderlin, Marketing Director, Migros.

In March 2021, Migros added a sustainability scale to its own-brand products. Under the motto ‘We are not 100% sustainable. But 100% transparent’, the packaging indicates the impact products have had on animal welfare and their climate footprint by scoring with one to five stars. 

In March 2021, Carrefour Brazil launched a new line of products with blockchain technology. QR codes on the packaging of citrus fruits, provide customers with access to information about the production and transportation of the product from its origin to arrival on the shelves.

In March 2021, Colruyt introduced Eco-Score, a system that echoes Nutri-Score and shows the sustainability of over 2,500 products from its inhouse brands. The Eco-Score is awarded for a number of environmental criteria, including carbon footprint. The packaging also carries a QR code that can be scanned for further product information.

  1.  Sustainability: plastic reduction

Shoppers are increasingly embracing ethical, natural and sustainable consumption, and are driven to buy from businesses that share their values. Sustainable packaging initiatives are emerging as an essential lever to win trust and foster loyalty.

In March 2021, Alcampo launched its range of redesigned own-brand garbage bags, which are composed of 50% recycled plastic. The new composition will introduce 700 tonnes of recycled plastic to the production chain annually.

In March 2021, Ocado refreshed its private label range, introducing new lines and a revised logo. The updated packaging reduces plastic in Ocado’s own label products by 27 tonnes as well as removing nonessential packaging components, such as adhesive labels.

In March 2021, Asda announced that it will be switching from plastic to reusable fruit and veg bags. The move follows a nine-store trial which received positive customer feedback, and will remove over 100 million pieces of single use plastic from its stores each year.

  1. Sustainability: food waste reduction 

Retailers are developing innovative ways to prolong the shelf life of fresh produce and address the growing concern for the amount of food waste produced in the grocery sector.

In March 2021, Albert Heijn equipped more than 700 of its stores with ‘Dry Misting’ technology. Dry Misting creates a fine layer of pure mist in the air to preserve the colour and nutrients of fresh produce. The partnership with Contronics boasts the ability to double the shelf life of fruit and vegetables, thus significantly reducing food waste.

In March 2021, HelloFresh introduced a smart shelf life indicator called ‘Keep-it’, which measures the temperature of the storage environment to calculate the actual shelf life of the product. This initiative is part of a larger goal of becoming the first carbon-neutral meal-kit delivery company and reducing carbon emissions by 60% before the end of the year.

In March 2021, Netto integrated local food waste offers into its Netto + app. Customers are able to get an overview of groceries approaching their best-before dates, and purchase them at a discounted rate to prevent them from being discarded. 

  1. Quality, indulgence and treating

Retailers continue to use their private label ranges to demonstrate innovation and differentiation; offering high quality products at competitive prices – especially as an affordable treat while at home.

In January 2021, Aldi UK expanded its range of private label beauty products. The range offers cruelty free premium beauty items priced from 89p.

In March 2021, Kaufland Romania launched ‘Carmangeria Gourmet’, a new premium meat range available exclusively in Barbu Văcărescu. Customers are able to receive preparation advice from butchery specialists. 

In March 2021, Target announced that it will be launching a new private label line, Favorite Day, focused on snacking and indulging. The brand will include more than 700 premium products like ice creams, bakery items and beverage mixers.

Four predictions for the future

  1. Mainstream sustainability

Consumers will come to expect sustainable products as standard, although this must extend beyond just product design or recycling to a genuine corporate approach and set of values. Retailers and brands will need to accelerate their initiatives to stay relevant and remain competitive.

  1. Sustainable collaboration

Packaging reduction and recycling initiatives require more collaboration and closer cooperation between retailers and manufacturers. Expect to see more partnerships and organisations created to facilitate this change.

  1. Amazon grocery expansion

Amazon will launch more private label ranges and will continue to disrupt the grocery sector, with further investment in quality and sustainability initiatives. It requires scale though, and an acquisition of a leading supermarket in Europe in the next 1-2 years remains extremely likely.

  1. Continued disruption

Ongoing supply chain disruption and uncertainty will lead to consumers continuing to experiment and try new products. This will create risk for retailers and brands who fail to innovate at pace, whilst providing further opportunities for new and emerging brands able to capitalise on trends and meet shopper needs.

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