Private Label Shopping Trends in Alcoholic Beverages
Introduction
When Datamonitor surveyed consumers across 15 countries about to what extent they agreed they had been "making an effort to save more money," there was an overwhelming degree of agreement across geographies. In times of economic uncertainly, consumers become even more interested in obtaining value-for-money in their everyday shopping and private label is an important way of achieving this.
Scope
*Insightful analysis into consumer's attitudes, beliefs and motivations behind private label versus famous brand purchases
*Consumer survey insight covering 15 countries. Examines attitudes to brand image, price/value and alcoholic beverage products more generally
*Detailed action points offering practical strategies for private label and famous brands based on the trends and insights analyzed in the report
*Covers alcoholic beverages. Geographic coverage includes Europe, the US, Asia Pacific and the BRIC markets
Highlights
The adoption of a 'recessionary mindset' is already changing consumer attitudes and behaviors with regards to overall spending and their actual product choices. Any worries that consumers have about the economy only serve to strengthen private label spend because store brands are seen as an important way of achieving value for money
Private label is accounting for an increasing amount of alcoholic beverage spending across most countries but is less developed than other FMCG sectors. This is because product/category characteristics significantly influence own label purchases, in addition to consumer characteristics such as demographics, value consciousness and risk aversion
Marketing fatigue potentially enhances the appeal and relevance of private label brands, especially as advertising is a key defense tactic for famous brands. Across the 15 countries surveyed by Datamonitor, 47% of respondents 'strongly agreed' with the statement, "there is too much advertising today"
Reasons to Purchase
*Improve your decision making: use this report to help understand what you should be doing to embrace private label growth or defend yourself from
*Market sizing: understand the scale and growth of the private label alcoholic beverage opportunity/threat by sector and country
*Access insightful market and consumer opinion data aggregating the most compelling research in this timely and important opportunity/threat
Overview 1
Catalyst 1
Summary 1
Table of Contents 2
Table of figures 3
Table of tables 4
THE FUTURE DECODED 5
INTRODUCTION: Private label is entering an important era as value conscious shoppers look to maximize their discretionary spending 5
Private label growth can be attributed to both 'consumer pull' and 'manufacturer push' 6
TREND: Growth in private label penetration and sales is apparent across the globe 15
The propensity to opt for private label is increasing across all FMCG categories and most geographies 15
Private label is accounting for an increasing amount of alcoholic beverage spend across most countries but is less developed than other FMCG sectors 18
Key takeouts and implications: the presence of private labels is increasing, and is thus becoming a growing threat to producers' brands and manufacturers' profitability 23
INSIGHT: Price-led value has a significant influence on consumers' alcoholic beverage choices even if consumers are reluctant to give up their favorite brands 23
The search for value is increasingly dictating where consumers purchase products 24
Price/value is a key influencer of alcoholic beverage choices, which potentially bodes well for further private label growth going forward 25
Consumers are also generally highly conscious of the amount of money spent on alcohol 27
Promotional offers have a high influence on alcoholic beverage choice for over a third of consumers 29
Brand image is a secondary consideration to most alcoholic beverage decisions 31
Key takeouts and implications: private label potentially appeals to the many alcoholic beverage consumers looking to stretch their budgets and will further challenge brand loyalties going forward 36
INSIGHT: Increasing economic uncertainty enhances the appeal of private label alcoholic beverages 37
Private label offers consumers discernible price savings which they typically recognize 37
Achieving cost savings is the key driver influencing a switch towards private label alternatives because consumers instinctively recognize the superior value such products offer 38
Historical downturns, especially in the 1970s, have been major catalysts for private label adoption and development 40
As consumers adopt a 'recessionary mindset', the search for price-led value in alcoholic beverage purchases will intensify 41
More consumers have made alcoholic beverage purchases on the basis of value in 2008 but 'sacrificial consumption' is more apparent in other sectors 42
A desire and tendency to gravitate towards higher quality alcoholic beverages is still a prominent theme 44
The current economic downturn has contributed to consumers switching to discount stores and private label alternatives more often in 2008 46
Key takeouts and implications: private label appeals to the growing number of global consumers who are finding ways to stretch their budgets 48
INSIGHT: Private label choice is expanding and is more sophisticated than ever 49
Private labels are increasingly 'tiered' to accommodate all levels of consumers' budgets and the core consumer trends driving shopper behavior 49
Premium and indulgence trends are signifying a new direction for private label adoption and innovation 52
Health and wellness trends have a huge influence on consumer lifestyles, and food and beverage choices 54
Organic and ethical private label ranges are likely to gain prominence in private label alcoholic beverage innovation even if such benefits are currently not deemed important by global consumers 56
Private label saturation could however lead to time poor consumers returning to famous brands 58
Key takeouts and implications: private label has grown because it is increasingly 'on-trend' and industry players have been adept at aligning it with relevant consumer segments 60
INSIGHT: Consumers' trust in private labels is growing, which boosts propensity to trial and longer term adoption 61
The majority of consumers, particularly in western markets, consider private labels to be of good quality, believing that the differences between own label and famous brands are minimal 64
Private label preference and adoption does not necessarily translate into increased store loyalty 68
The quality that national brands offer is highly recognized by consumers in some product categories 69
In-store environment also influences private label and national brand perceptions 71
Marketing fatigue also enhances the appeal and relevance of private label brands 72
Private label still typically attracts more lower income shoppers but the consumer base is broadening which increases the relevance of psychographic rather than demographic targeting 75
Key takeouts and implications: private label is not a new phenomenon but consumer acceptance is growing across socio-demographic groups 80
ACTION POINTS 82
ACTION: Determine whether you want to manufacture private label brands or not 82
ACTION: Ensure that private label offerings are 'on-trend', deliver added value benefits for more discerning shoppers and receive additional backing during the economic downturn 85
Use the recessionary climate as an opportunity to grow private label share by implementing various tactics to boost private label adoption 85
Create and maintain a competitive advantage by reassessing strategic aims for future growth 90
Keep private label brands fresh with new variants that utilize more subtle and distinctive branding techniques 93
Be wary of creating choice proliferation through over-extended private label initiatives without rationalizing other parts of the store mix 94
Be sensitive to the international differences in attitudes towards private label products 94
Focus on building effective relationships with private label partners 95
Retailers must ensure that the relative mix of value and premium private label lines is consistent with store positioning 96
ACTION: Manufacturer brands must maintain marketing investment to minimize deflection to private label alternatives 98
Highlight the risk of switching to a cheaper non-branded alternative 99
Re-assess the need to rationalize brands and convince retail partners that those brands are in line with their broader positioning 100
Focus on quality to maintain differentiation and prove to consumers that quality really matters 100
Develop more custom/personalized solutions for consumers to offer unique, targeted benefits 102
Develop communications which convince consumers that national branded products still represent good value for money 103
Consider developing a 'flanker' value sub-brand while ensuring there is an offering for all pricing tiers 104
APPENDIX 106
Definitions 106
Methodology 106
Further reading and references 107
Ask the analyst 110
Datamonitor consulting 110
Disclaimer 111
List of Tables
Table 1: Consumer survey: the propensity to choose food and beverages, cosmetics and toiletries, household and laundry care and alcoholic drinks on the basis of value/cost in the previous six months, in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 9
Table 2: Total private label penetration and spend ($ millions) in Europe, Asia Pacific and the US, by country, 2002-2012 17
Table 3: Total private label alcoholic beverage penetration and spend ($ millions) in Europe and the US, by country, 2002-2012 21
Table 4: Total private label alcoholic beverage penetration and spend ($ millions) in Asia Pacific, by country, 2002-2012 22
Table 5: Consumer survey: the influence of price on consumers' choice of alcoholic drink products in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 27
Table 6: Consumer survey: attention given towards the amount of money spent on alcohol in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 28
Table 7: Consumer survey: the influence of promotional offers on consumers' choice of alcoholic drink products in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 30
Table 8: Consumer survey: the importance attached to "being seen with the right brand" in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 32
Table 9: Consumer survey: the influence of brand image on alcoholic beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 33
Table 10: Consumer survey: the influence of habit on alcoholic beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 35
Table 11: Consumer survey: the influence of price, habit/preferred brand, and brand image on alcoholic beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 36
Table 12: Consumer survey: the propensity to make efforts to save more money in light of the economic downturn in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 41
Table 13: Consumer survey: the propensity to choose alcoholic drinks for at-home consumption on the basis of value or cost in the previous six months in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 43
Table 14: Consumer survey: the propensity to choose higher quality alcoholic drinks for at-home consumption in the previous six months, in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 45
Table 15: Consumer survey: the influence of health on consumers' choice of alcoholic drink products, in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 55
Table 16: Consumer survey: the influence of ethics/sustainability benefits on alcoholic beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 57
Table 17: Consumer survey: the influence of organic/natural ingredients on alcoholic beverage product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 58
Table 18: Consumer survey: agreement with the statement "there is too much choice when doing grocery shopping", in 15 countries across Europe, Asia Pacific, South America and the US, by country 59
Table 19: Consumer survey: agreement with the statement "there is too much choice when doing grocery shopping" in 15 countries across Europe, Asia Pacific, South America and the US, by country 74
Table 20: Consumer survey: the influence of price on alcoholic beverage choices in 15 countries across Europe, Asia Pacific, South America and the US, by country and gender, 2008 78
Table 21: Consumer survey: the influence of brand image on alcoholic beverage choices in 15 countries across Europe, Asia Pacific, South America and the US, by country and gender, 2008 79
List of Figures
Figure 1: The private label market is impacted by a broad range of drivers and inhibitors 7
Figure 2: Overall private label penetration across FMCG categories is higher in Europe and the US than in Asia Pacific 18
Figure 3: Alcoholic drinks are typically under-represented in various national private label markets 20
Figure 4: Good value for money has become the most important influence over grocery store choice globally 25
Figure 5: Price is second only to sensory benefits in influencing consumers' alcoholic beverage choices 26
Figure 6: Price consciousness is not necessarily fully reflected in concerns about the overall amount of money spent on alcohol 29
Figure 7: Swedish alcoholic beverage shoppers are the least influenced by promotional offers 31
Figure 8: Consumers are not overly pre-occupied with brand image 33
Figure 9: Emerging market consumers are more pre-occupied with brand image than those from developed western markets when making alcoholic beverage choices 34
Figure 10: Habit or a preferred brand plays an important role in directing alcoholic beverage choices 35
Figure 11: Perceived and experienced value benefits leads to private label trial and long term adoption 38
Figure 12: Shoppers have come to recognize the 'value for money' that own label brands offer 39
Figure 13: Consumers are making efforts to save in light of the current downturn 42
Figure 14: A skew towards value conscious alcoholic beverage shopping emerged in 2008 44
Figure 15: Few alcoholic beverage consumers have been cutting back on premium, higher quality purchases 45
Figure 16: The nature of the private label offering has changed considerably 51
Figure 17: Private label brands are experiencing growth, with four distinct benefits/attributes 52
Figure 18: Alcoholic beverage private labelers are targeting more discerning drinkers with upscale offerings 53
Figure 19: Enjoying small indulgences to escape everyday pressures has remained a theme in global consumer behavior in 2008 in spite of the economic downturn 54
Figure 20: In Australia, Woolworths' is seeking to capitalize on the growth of the low-carb beer segment 55
Figure 21: Organic and ethically aligned private label alcoholic drinks are likely to emerge in line with any concerted efforts the broader industry makes going forward 57
Figure 22: A large proportion of consumers already feels that there is too much choice when doing grocery shopping, which means the private label range expansion must be managed carefully 60
Figure 23: Globally, consumers are familiar with private label and this better enables them to make a brand versus private label decision 63
Figure 24: Perceptions of private label are changing across the majority of FMCG categories 64
Figure 25: Private label brands are no longer perceived as merely low cost alternatives to famous brands 67
Figure 26: Global consumer attitudes towards private label are typically favorable 68
Figure 27: For some categories, private label is not deemed as a credible alternative to famous brands 70
Figure 28: Enhance the full scope of the consumer experience by strengthening overall retailer positioning 71
Figure 29: Japanese consumers show the least amount of advertising fatigue but more than 40% of consumers overall believe there is "too much advertising today" 73
Figure 30: Consumers think that a significant chunk of the higher price associated with famous brands does not bring them tangible benefits 74
Figure 31: More US consumers currently report buying private label products 76
Figure 32: There is little variation in the influence that price has on alcoholic beverage choices by age 79
Figure 33: Young Adults and Mid-lifers place the most importance on brand image when choosing alcoholic beverage products 80
Figure 34: National brand players are faced with a dilemma over whether to produce private brands or not 84
Figure 35: Industry players must consider these advantages and disadvantages in making decisions about whether to embrace private label 84
Figure 36: 7-Eleven is looking to capitalize on the private label opportunity in c-stores 87
Figure 37: Investment in marketing is important in effectively capitalizing on the recessionary climate as an opportunity to grow private label share 90
Figure 38: Industry players must determine the strategic approach taken to manage private label development 91
Figure 39: Private label players adopt different approaches to branding depending on whether the strategy is geared towards differentiation or low pricing 92
Figure 40: Fostering effective supplier relationships is crucial to the longer term growth prospects of private labeling 96
Figure 41: Private label wine is being used by a number of US retailers to drive store loyalty and/or improve private label brand perceptions more generally 97
Figure 42: Manufacturers looking to capitalize of premiumization in alcoholic beverages must excel more than their competitors in the provision of factors associated with the PPI 101
Figure 43: Four key personal benefits as well as the additional ease of customizing have driven the trend toward more personalized CPG 102
Figure 44: Charmin Basic, an example of a famous brand adopting the tiered pricing strategy of many private labels, and the possible private label response 105
