The main concern of the hundreds of food manufacturers gathered a few days ago at the Barcelona Food Fair is no longer inflation and the erosion of business margins. The headache now is how to slow down the rise of the white brand and regain sales volume. The progress of distribution brands is such that historical manufacturers such as Bimbo or Danone have been forced to close some of their plants in Spain to scale back production. A setback that has put the industry on high alert. “We need to stop this”, agreed sources from several companies in Alimentaria.
The unprecedented rise in the price of food in the last two years has boosted the presence of the white brand in the consumer basket to levels never seen before: from 38.3% in 2021 to 43.4% at the end of 2023, according to data from Kantar consultancy. Supermarkets have bet more than ever on their own brands to make the average ticket cheaper and retain customers and, as a result, there has been a decline in the manufacturer’s brand, which is more expensive on average. According to consultancy NIQ, white label value sales rose 9.8% in February, compared to a 3.4% rise in manufacturer brands. Volume sales, meanwhile, rose by 7.1% for the former and 0.5% for the latter.
But now that inflation in food and other consumer goods has moderated (5.4% in February, almost three points above the headline CPI), many manufacturers believe the time has come to do battle to recover quota.
“For a couple of months we have noticed a change in mentality, now all the operators are trying to gain volume and the challenge is the distribution brand, which has advanced five points since 2021”, highlights César Valencoso, Kantar Worldpanel analyst. The increase in distribution brands is widespread, despite the fact that some product categories are covered by them. If you look at the whole range of consumer goods, the presence of the white brand is the majority in the drugstore range, with a 52.4% share, while two years ago it was slightly lower (49.2%). The share grows by five points in packaged food, reaching 44.7% by the end of 2023. The balance definitely falls in favor of distributor products in certain items, such as dairy products. On the other hand, it only increases by one point in individual perfumery, up to 14.5%.
From Kantar, however, they see what seems to be a turning point, and they estimate that the white brand will grow this year at a “more moderate” pace, says Valencoso. One of the indicators that gives manufacturers a little more peace of mind is the change in the price trend that supermarkets put on the items in their brands. “For six months, the price of the distribution brand no longer increases above the manufacturer’s brand”, says Valencoso. It signals that the process of gaining share could begin to stabilize.
Some of the lines that many manufacturers presented at Alimentaria to increase their presence in the consumer basket involve new formats (products with smaller portions and different packaging), less processed, healthier foods. “It will be an interesting year for manufacturer brands, with more innovation to differentiate themselves from the white brand,” emphasized Kantar. Danone, for example, explained at the fair that it invests around twelve million euros in the development of new products.
