New research predicts that by 2017 Australians will be spending $31.8 billion dollars per year on home-brand (also known as “private label” products or “supermarket brands”) products, which will account for more than 30% of supermarket sales. International business information research firm, IBISWorld, today released the results of its survey into private-label spending by Australians.

According to IBISWorld General Manager (Australia), Ms Karen Dobie, private-label products have been one of the Australian supermarket industry's fastest growing segments over the past decade. "In 2007–08, private labels accounted for just 13.5% of total supermarket sales – meaning the segment has grown by more than 85% over the past five years", Ms Dobie said.

Australians are expected to spend $85.9 billion on groceries in 2012–13. IBISWorld has predicted that $21.6 billion of this will be spent on private-label products, up from $19.7 billion in 2011–12 and $9.96 billion five years ago. Looking forward, Ms Dobie said this figure is expected hit $31.8 billion by 2017–18, representing growth of nearly 50% when compared to five years ago.

The strongest private-label products According to IBISWorld, dry grocery items and chilled packaged food categories have been the strongest private-label product performers, although private label alcohol has also been a strong winner for Woolworths and Coles.

Eggs, which in 2002–03 had the largest market private-label market share (of 61%), have dropped to number five in 2012–13 on a chart of private label product ratings, released by the Department of Agriculture, Fisheries and Forestry (DAFF). "The decline is mainly due to a switch towards free-range, a segment not adequately represented by private-label players," Ms Dobie commented. Staple products, with a high degree of homogeneity, such as bread, butter, sugar and milk, have shown the strongest private-label growth. In contrast, products such as chocolate, confectionery, soft drinks, cosmetics and sanitary products were weaker segments.

IBISWorld cited consumers' ongoing preference for a trusted, quality brand when purchasing these items. Who is buying the supermarket private labels? IBISWorld noted that private labels are most popular with Australia's low-income families (those earning less than $44,000 per annum), accounting for over 40% of their total grocery bill.

Consumers in middle and higher income groups represent the strongest growth opportunities for retailers looking to push private-label products. Ms Dobie said, "Major supermarkets are introducing premium, organic and fair trade products – such as Woolworths' ‘Select' range – to attract private-label buyers from all walks of life."

Australian Food News