03.Who is benefiting?
Why are these premium brands appearing? Here's a brief summary of what we all get out it.
What's in it for the supermarkets?
- Private-label own-brands increase profits. This means supermarkets can make more on these products than they do selling other companies’ brands.
- They provide retailer identity. Anyone who’s been in Woolworths and seen the sea of silver labels will agree — it’s difficult to forget which supermarket you’re in.
- For Aldi, private labels form the basis of the strategy for its existence and profitability. It buys all its products in bulk from manufacturers and packages the vast majority with its own brand names.
What's in it for you?
- Savings without compromising on quality. That’s what the supermarkets claim, and our results suggest that it’s true often enough to make it worthwhile buying premium own-brands — as long as they’ve got everything else you’re looking for.
- According to the supermarkets, other shopper benefits include the fact that the products are easy to identify (you can find the quality and value level you want with ease) and that, like the big brands, premium own-brand items are quality assured (the supermarkets are staking their reputation on them).
And what are the pitfalls?
Consumers have told CHOICE they’re concerned about the impact own-brands could have on the supermarket landscape.
Their first concern is that limited shelf space could mean fewer choices. CHOICE has monitored the number of brands in several grocery categories over recent times, and we haven’t seen a significant reduction in brands. Common sense, however, suggests something’s got to give (the aisles can only grow so much to accommodate the premium own labels) — what gives might be the variety on offer within brands. Shoppers may be seeing more own-brand items on supermarket shelves, but fewer combinations of flavours, sizes and packs for some brands.
Another concern is that we could end up with fewer Australian-owned and made products. Supermarkets say that, where possible, they source from local producers — as long as these producers meet their specifications for quality (and quantity) at a given price. The real impact on local producers is difficult to judge, but as more low-priced imports compete for limited shelf space, it’s possible that some Australian-made brands will be priced out of the supermarket.