Supermarket brands

Coles and Woolworths have launched new ‘private label’ ranges.
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  • Updated:4 Mar 2006

01 .Introduction

Coles and Woolworths have recently launched new ‘private label’ (aka house brand) ranges, and announced plans to increase the number of these lines in stores. Judging by the experience of retailers overseas, it’s a smart move. Private labels increase profits for the supermarkets. They also provide retailer identity — the consistent product labelling a constant reminder of where you buy your groceries.

But for shoppers, supermarkets as we know them may never be quite the same again. You’ll probably find that with these changes will come some savings, but commentators predict that some of your favourite, smaller brands may also be swept from the shelves to make way for private label products. If you shop at Coles or Woolworths, chances are you’ve already noticed some changes.

Please note: this information was current as of March 2006 but is still a useful guide to today's market.


Coles has announced that it hopes to increase its private label market share to 30–40% by 2007. Its goal is to replace its current SAVINGS, FARMLAND, COLES, RELIANCE and PERSONA brands with around 3000 lines under its new brands, which are in three tiers:

  • COLES SMART BUY (budget, pictured above right): “Never beaten on price; matches the best quality for the price; choice covers the basic weekly needs of a family.”
  • YOU’LL LOVE COLES (mid-range, pictured right): “Cheaper than the leading brand(s); equal to or better than the quality of the leading brand; choice across all major categories.”
  • GEORGE J COLES (the yet to be launched premium label): “Cheaper than the equivalent brand; best in class; ‘leading edge’ with innovation.”


Woolworths is retaining its budget HOME BRAND label (along with its WOOLWORTHS FRESH, ORGANICS and NAYTURA labels), but it plans to introduce an additional 200 lines under its new premium brand, WOOLWORTHS SELECT, pitched as being of highest quality, equivalent to if not better than the current market leader.

Woolworths' earlier private label brands, including ARK, BOWMAN’S and MARKETTA, launched as a direct response to the arrival of ALDI in Australia, are being phased out.

The types of products

Until now, product categories with the highest private label share were mostly low-price, high-volume staples, such as sugar, birdseed, butter, vegetable oil (excluding olive), fresh milk, flour, paper napkins, cotton wool and chilled cream. With these fairly basic types of products, trust in the brand isn’t a major consideration for shoppers (see What consumers think for more).

But as we become more and more accepting of private label brands, we’re likely to see more products in the health and beauty and specialist food and beverage categories, where branding is important to shoppers. YOU’LL LOVE COLES shampoos, conditioners and beauty soap are just some examples.


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02.Private label positives and negatives



Retail experts and the Private Label Manufacturers’ Association say private label lines benefit shoppers because they:

  • Are easy to identify. Consistent branding and clearly differentiated tiers allow you to readily identify the varying quality and value levels so you can make an informed decision about what to buy.
  • Save you money. Private label prices are generally set at a competitive level, so you can make savings compared to manufacturer brands without waiting for ‘specials’.
  • Are quality assured. Much like the big manufacturer brands, retailers say that because their name or symbol is on the package, you’re assured that the product meets their stringent quality standards and specifications. Retailers are also making guarantees that their private label items consist of the same or better ingredients than manufacturer brands.
  • Can have value added. In the premium tier, retailers aim to introduce strongly differentiated (unique) products, and give a better choice of better products –– ultimately providing an alternative to shopping in niche stores, such as delicatessens.


With the increase in private label products in supermarkets, two areas of concern for shoppers (as highlighted in some unsolicited comments received by CHOICE, see What consumers think) have been raised:

  • Less choice
    Supermarkets have limited shelf space, so in order to fit in their own products, they need to cut back slow-selling lines. The top one or two market-leading brands will remain on the shelves, but smaller brands may be squeezed off to make way for the private labels — indeed some already have been. You may not notice it in categories like biscuits, where brands are numerous, or cereals, where there’s such a large choice of products. But where you only have a few options already, like baked beans or tomato paste, the disappearance of a brand is more obvious — particularly if it was your favourite.
  • Fewer Australian-owned and made products
    Both Coles and Woolies say that where possible they will source private label products from local producers, as long as they meet their specifications — which include quality and quantity at the right price. Some industry members say it’s only at the budget end of private label that the retailers are more likely to turn to overseas producers for the volume or price differential they’re after, and that this is no different from how it is now — local producers don’t always compete against overseas suppliers on a level playing field. For example, retailers can source the ingredients for canned vegetables from Belgium at a much lower cost than from local suppliers, because they’re heavily subsidised by the EU. Similarly, a lot of the canned and frozen vegetables sold in Australia come from China, where labour and produce are far cheaper. And with the current high exchange rate of the Australian dollar, local producers are at a further disadvantage. See Does it matter where your food comes from? for more on this.
  • Options for Australian producers
    From Australian producers’ point of view, they have a couple of options in the fight to retain shelf space:
    • Rationalise the brands they produce — merging or disposing of non-core brands, and focusing on core brands — to reduce costs, and then strengthen these brands through advertising, quality, value-adding and innovation to help differentiate their products from private label.
    • Supply private labels. It can be a struggle for smaller companies to compete with the marketing budgets of big brands, so supplying private labels allows them to reduce their overheads and concentrate on manufacturing.

    The full impact of the new private label ranges on Australian producers is hard to judge, but as the Australian Food and Grocery Council told us, “For some companies, depending on their position in the market, private label manufacturing may represent an opportunity, while for others it may represent a threat.”

    Ultimately, Coles and Woolworths dominate the supermarket business in Australia and where they lead, it’s hard not to follow. In the UK and USA no single supermarket chain has such a concentration of power — in Britain, for example, the top 12 supermarkets have less than 60% of the packaged goods market, compared to the 70–74% share held in Australia by Woolworths and Coles Myer alone. So any decisions made by Coles and Woolworths have a big impact on both consumers and manufacturers.

    What consumers think

    A recent global consumer survey by AC Nielsen found that Australian acceptance of private label brands was the highest in the Asia Pacific region, with nearly four in five Australian consumers saying private label products were a good alternative to other brands. And 81% of Australian consumers (compared with 60% across the Asia Pacific region) agreed that the private label products they bought usually offered extremely good value for money. This is obviously very positive news for retailers.

    As for the level of quality that private label products offer, generally Australian consumers are less concerned about staples like milk, sugar and flour. But we’re more reluctant to trust the quality of products like ready meals, face cream or baby food, and may prefer a known and trusted brand. It’s this trust and brand loyalty that supermarkets are hoping to gain as they continue to roll out their premium private labels.

    03.Does it matter where your food comes from?


    There’s a lot of argument about it, but buying ‘Australian’ to support local producers or for the good of the country’s economy is a simplistic way of looking at a complex situation. Australia functions and trades in a global market, and (without going into the lengthy arguments here) there’s not a lot of strong evidence for the argument that a groundswell of consumer demand for Australian products would stimulate manufacturing, create jobs and benefit the whole economy. Other local and international factors are likely to have a stronger influence on the economy than how we fill our supermarket trolleys.

    'Australian-owned' or 'Australian-made'?

    On top of this there’s the whole question of whether Australian-owned or Australian-made matters more. With the falling cost of manufacturing, where a company spends its revenues, pays its taxes, employs its staff, etc, can have a bigger impact than where its products are sourced or made.

    Add to that our confusing and imprecise country of origin labelling and you have a shopping minefield that makes it very hard to make a properly informed choice anyway.

    Origin v value

    From a consumer viewpoint, too, focusing on where a product comes from is a distraction from the main issues. To choose Australian regardless of the quality or price means you risk spending more than you need to, giving unearned profits to producers who find they can sell on their Australian-made (or owned) status, regardless of value.

    To keep the market honest, when you’re buying, first decide which products are of the type, quality and price you want. When you’ve narrowed your choice to those, then pick an (apparently) Australian product over an imported one if that’s your preference.

    The overseas supermarket scene

    Compared with 28% in Britain, well over 20% in most European markets and 16% in North America, Australia’s private label share of the market is so far relatively small. But with Coles modelling its private label strategy on supermarkets like Asda and Tesco in the UK, it’s likely to increase.

    Walking into Tesco you’re confronted with a sea of private label products — no wonder, when its private label products are up to 50% of the total. For practically every product that’s on the shelves, there’s a Tesco-branded variety in at least one of its tiers. Not only does it have a budget range (TESCO VALUE), mid-range (TESCO) and premium range (TESCO FINEST), it also offers ranges for the health-conscious (TESCO HEALTHY LIVING), the carb-conscious (TESCO CARB CONTROL), kids (TESCO KIDS), customers with allergies or intolerances (TESCO FREE FROM) and an organic range (TESCO ORGANIC).

    Could this be the kind of branding spree we’ll find in our supermarkets in the next few years?