Private Label and Industrial Producer Brands

Figures and sector strategies evermore oriented towards sustainable and functional packaging, popular with consumers. by Riccardo Ceredi

Sales of industrial producer brand products are on the up, while private label distributor brand products are stable, that though at any rate have helped Italians save 1.8 billion euros. Both types of brand show common trends, first and foremost the ever greater consideration towards aspects such as sustainability and packaging ergonomics, characteristics that depend strongly on painstaking design work and evermore evolved production processes.

The market results and the differences
The synthesis of the Private Label Report 2016, presented during the fair Marca (BolognaFiere, 13-14 January 2016) confirms a trend towards stability in sales of private label products that today cover 17% of sales in mass retail channels. Industrial brands continue at any rate to make up the lion’s share, accounting for 83% of total volumes sold. In 2015 the sales of industrial brand products in fact registered an upswing in both value (+2.3%) and in volume (+2.8%), while considering private labels, if sales in value are on the up (+0.1%), those in volume still show a downturn (-1.5%). The percentage though rises if one only considers discount stores, where private label DB products cover 53% of sales. And if fruit and vegetables remain the segment of the most value in private labels, with 30.5% of sales, at the same time, along with pet care products, this is the segment that has shown the greatest losses, dropping 0.8 points.
During the days of the Bologna fair, particular emphasis was placed on the study carried out by IRI on consumer habits, with interviews at sales point of twenty main private label distributor brands (chains such as Coop, Conad, Auchan, Carrefour etc.), to understand what factors have been and continue to be decisive in triggering purchase.

Making a comparison between industrial brands and private label DBs, one is struck by the fact that, even if overall sales have not risen sharply, the faith of private label DB product purchasers has grown: among Italian consumers who buy these types of products in fact, 49% do so with high frequency and a remaining 40% with average frequency.

What are the reasons that bring people to buy private label DB products?
If value for money is the decisive aspect (fundamental for over 72% of consumers), other important elements are product quality (68%), safety and certification (64%), functionality (52%) and sustainability (49%).
These are figures that do not differ significantly among the various sectors: those who prefer industrial producer brands also show the same wishes and behaviour.
Particularly interesting are the aspects of product packaging and wrapping: a context showing different facets, but featuring well-defined trends.

The leading trends: demand for sustainability
Today more than ever, among the dominant topics one has environmental impact, that has risen sharply over the last three years: if the figures for 2011 spoke of an interest standing at 28%, today in Italy alone figures stand at 50%; if we examine the global market, the percentage rises to 66%.
This is a subject particularly dear to young people: the purchasing segment most interested in ecological matters are in fact those between 20 and 35 years, and the socalled “Z generation” or that is those born between 1996 and 2000.
This latter segment of young people, who are often still not directly involved in purchases, is though of particular importance, because it groups the consumers of the future and hence stands as an indicator of future trends.

More premium and bio, less bottom price. In a nutshell, throughout the mass retail trade, the subject of sustainability is strong to the point of justifying a greater expenditure on the part of the consumer.
Not by chance, the most significant growth in sales can be seen, both in private label DBs and in industrial brands, in the range of “premium” and “bio” products (in the private label DBs the increases are 13% and 11% respectively), or that is those showing the greatest investment in packaging design, both in terms product shelf life as well as in relation to the ergonomics and the “disposability” of the pack. There has been though a considerable drop in the demand for bottom price products in both categories, that have seen a drop in sales of 38.0% in value and 41.3% in volume. This is due partially to the lesser perceived quality of the product and partially to the characteristics (real or perceived) of the lesser practicality and sustainability of the pack.

In relation to this last aspect, one need make a distinction between cases in which the packaging (and the material comprising the same) is sent for recycling and where it is sent for energy recovery.
According to the latest figures divulged by Conai in Italy, the totality of recycled steel and glass is reused as such, while out of the total aluminium and paper recycled, 70% is reused as such, the remaining 30% being sent for energy recovery.
The case of recycled plastic is emblematic, it being almost totally sent for energy regeneration.
Difficulties arise with packaging made up of more than one element, that create problems to the user at the moment of disposal.
One might only need think of a food oil can, that might have the container body in aluminium and the cap and internal element in plastic. One of the challenges of the producers is hence that of creating evermore recyclable packaging, also due to the fact that, above and beyond the comparison between private label DM and industrial producer brand products, sales and consumption of packed products are on the rise again, inverting the trend for the period 2013-2014, putting in a +1.9% in volume and a +2.6 in value.

Packaging is good for largescale retail distribution
Widespread objective: devise solutions that have a positive impact on the final user who evermore appreciates the value of sustainability. Some virtuous cases.

The ADI Packaging Award, held during Marca, has further confirmed the attention towards practical, innovative and green packaging solutions.
The jury of the competition chose “Oneglass”, a single dose wine container produced by the eponymous Veronese company. It is a 100 ml format, light, unbreakable and fits into one’s pocket, designed to contain an optimum amount of product, to be used when opening a bottle would be a waste. Made in paper (75%), polyethylene (20%) and aluminium (5%), Oneglass preserves the organoleptic characteristic of products with different degrees of alcohol content (as well as wine it can also contain cocktails). The jury also choose “Biomade”, a completely compostable food packaging system the result of Perugia based Polycart and, in the non food area, “Frozy Bag”, a line of cool bags produced by the Lucca based company Friodis and “Flower Fly Trap” of the multinational Zobele group. The honorary mention in turn went to the European solidarity brand “NoLogo”.

• Significant the case of Tetra Pak, that each year markets over 4.5 billion packs, managing the lifecycle of the same with an environmental impact friendly approach. 90% of packaging provided by the Swedish group was in fact   FSC™ (Forest Stewardship Council) certified, acronym that highlights the packs made with cellulose made from responsibly managed forests. Last year Tetra Pak launched Tetra Rex® Bio-Based, a completely renewable container, made up exclusively of plastic made from vegetables and celluose (that won the 2015 Italian Environmental Packaging Oscar).

• Staying on the subject of paper packaging, other realities are investing convincedly in packaging design and in the sustainability of their own solutions. This is the case of IPI (Perugia) part of the Coesia group, committed to  devising aseptic packaging of liquid products in polylaminate board containers. The Umbria based company uses FSC  paper and makes recyclable packaging, investing in the same time in the study of ergonomic packaging with a strong visual impact. A good example of this is Caliz: a multilayer board aseptic pack for longlife liquids (milk, fruit juices, wine and tomato puree), available in numerous formats, from 200 ml to 1000 ml. Caliz was made to respond to a market seeking evermore distinctive and functional solutions. The absence of seals on the upper part of the container facilitates the optimum positioning of the caps, also in the monoportion 200ml formats, making the pack suitable both for domestic consumption as well as consumption on the go. Lastly, the multilayer structure used protects the product from external agents (light, humidity, oxygen and microrganisms) preserving the taste and the nutrient properties for a long period of time.