Euromonitor International

The rise of private label in savoury snacks

Presented by Lamine Lahouasnia – Head of Packaged Food Research

@SNACKEX #SNACKEX

@Euromonitor

@LLahouasnia

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Cape Town

Santiago

Tokyo

Sydney

Chicago

Bangalore

Definition of snacks

Extruded Snacks 42%

Nuts 24%

Chips/Crisps 23%

Pretzels 7% Tortilla/Corn Chips 4%

Europe: The Size of the Savoury Snack Market in 2012

EUR 17 billion

What’s Really Driving Private Label?

Image courtesy of Jeff Eaton

How far has private label come in packaged food?

16%

17%

18%

19%

20%

21%

22%

-

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pri

vate

Lab

el S

har

e

Ret

ail V

alu

e R

SP -

€ b

illio

n

Packaged Food: Branded vs. Private Label in Europe, 2003-2012

Private Label Branded Food Private Label Share

So what about snacks?

16%

17%

18%

19%

20%

21%

22%

-

3

6

9

12

15

18

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pri

vate

Lab

el S

har

e

Ret

ail V

alu

e R

SP -

€ b

illio

n

Snacks: Branded vs. Private Label in Europe, 2003-2012

Private Label Branded Food Private Label Share

How private label snacks fits in with the rest of packaged food

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Pri

vate

Lab

el V

alu

e S

har

e

Europe: Private Label Penetration in Packaged Food, 2012

Chilled processed food

Baby food Snacks

What has driven the rise of private label food in Europe?

Trust in private label

Looks the same, tastes the same Is it the same?

Economic Environment

Financial squeeze Can I get the same for less?

Retail consolidation

The success of modern retail Is there a choice?

Battle for industry consolidation: Germany

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008 2009 2010 2011 2012

Top

5 C

om

pan

ies’

- R

etai

l Val

ue

RSP

%

of

the

Mar

ket

Germany: Consolidation in Packaged Food and Grocery Retailing, 2004-2012

Packaged Food Grocery Retailers

Battle for industry consolidation: Poland

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008 2009 2010 2011 2012

Top

5 C

om

pan

ies’

- R

etai

l Val

ue

RSP

%

of

the

Mar

ket

Poland: Consolidation in Packaged Food and Grocery Retailing, 2004-2012

Packaged Food Grocery Retailers

Battle for industry consolidation: Russia

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008 2009 2010 2011 2012

Top

5 C

om

pan

ies’

- R

etai

l Val

ue

RSP

%

of

the

Mar

ket

Russia: Consolidation in Packaged Food and Grocery Retailing, 2004-2012

Packaged Food Grocery Retailers

So, who has the upper hand?

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008 2009 2010 2011 2012 Top

5 C

om

pan

ies’

- R

etai

l Val

ue

RSP

%

of

the

Mar

ket

Industry Consolidation: Packaged Food vs. Grocery Retailers, 2004-2012

34

%

25

%

0

10

20

30

40

50

0

20

40

60

80

100

SV

LT

ET

SK

CS

HU

LA

RO

PL

CR

BU

BS

RS

UK

BL

RU

MD

GG

AT

DE

FI

CH

SE

GB

DK

FR

NL

IE

BE

NO

PT

ES

IT

GR

TR

Eastern Europe Western Europe

Pri

vate

Lab

el P

en

etr

atio

n -

%

Shar

e o

f th

e T

op

5 C

om

pan

ies

- %

Europe: Consolidation in the Packaged Food and Grocery Retailing Industries, 2012

Packaged Food Grocery Retailers Private Label Penetration

The relationship between retail consolidation and private label

Private Label Priorities for Snacks

Image courtesy of Geoff Lane

0.00 0.50 1.00 1.50 2.00 2.50

Tesco

McCoys

Walkers Sensations

Walkers Extra Crunchy

Walkers Crinkles

Tesco Finest

Kettle Ridge Chips

Real Crisps

Nandos

Jack Pots

Burts

Kettle Chips

Kettle Select Vegetable

Red Sky

Tyrell's

Price per Unit - £

Chips/Crisps: Private Label Price Positioning, 2013

Private label positioning in snacks: Tesco

Creating the private label

space

Undercutting branded

competition

Private label positioning in snacks: Asda

- 0.50 1.00 1.50 2.00 2.50

Walkers Sensations

Walkers Extra Crunchy

Hunky Dory

Asda Chosen by You

Asda

Asda Extra Special

Lays

Mackies

Walkers Crinkles

Ruffles

Kettle Chips

McCoy's

Price per Unit - £

Chips/Crisps: Private Label Price Positioning, 2013

Crowding out the private

label space

Private label positioning in snacks: Sainsbury’s

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50

Walkers Sensations

Sainsbury's Taste the Difference

Kettle Chips

McCoy's

Red Sky

Tyrell's

Walkers Extra Crunchy

Tyrell's Vegetable Crisps

Price per Unit - £

Chips/Crisps: Private Label Price Positioning, 2013

Creating the private label

space

Private label positioning in snacks: Waitrose

0.00 0.50 1.00 1.50 2.00 2.50

Kettle Ridge Chips

Waitrose

Corkers

Walkers Sensations

Kettle Chips

Red Sky

Walkers Extra Crunchy

Walkers Crinkles

Burts

Tyrell's

Price per Unit - £

Chips/Crisps: Private Label Price Positioning, 2013

Creating the private label

space

Packaging imitation crucial for economy private label snacks

Packaging type Colour Imagery

Albert Heijn

Carrefour

Esselunga

Cross category ranges needed for standard and premium private label

What are the priorities for private label snacks in Europe?

Specialty ranges also becoming popular

Initial focus on health and wellness

Future likely to see establishment of ethical ranges

Premium ranges to be next challenge

Cross category range requirement

More of a priority than standard segment for retailers

Domination of the economy ranges

Price to be primary offering Imitation is key

What the Future Holds for Private Label Snacks

Image courtesy of Femto

So where now for private label snacks?

16%

17%

18%

19%

20%

21%

22%

-

3,000

6,000

9,000

12,000

15,000

18,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pri

vate

Lab

el S

har

e

Ret

ail V

alu

e R

SP -

€ b

illio

n

Snacks: Branded vs. Private Label in Europe, 2003-2012

Private Label Branded Food Private Label Share

A perfect storm is brewing for private label in Europe

Disposable incomes stagnating

Retail modernisation to continue

Grocery retailers to prioritise PL

Trading down likely to return

-1

0

1

2

3

4

5

6

7

GG UK RU LA LT RO BU BS ET BL PL MD RS CR CS SV HU SK TR NO SE DK IE CH FI AT DE GB FR ES GR PT BE NL IT

Eastern Europe Western Europe

CA

GR

%

Europe: Outlook for Disposable Incomes, 2012-2017

Modern retail is everywhere

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SV

ET

LA

LT

SK

CR

H

U

CS

P

L

RU

U

K

BU

R

O

BS

R

S M

D

BL

G

G

DK

FI

N

O

AT

G

B

IE

NL

D

E

SE

FR

CH

P

T

ES

IT

BE

G

R

TR

Eastern Europe Western Europe

Mo

de

rn G

roce

ry R

etai

l Sh

are

Europe: The Rise of Modern Grocery Retail, 2002/2012

2002

2012

Where to invest…

Sales Growth

Margin Growth

…when expansion is no longer an option?

-20

-10

0

10

20

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Selli

ng

Spac

e -

Ye

ar o

n Y

ear

Gro

wth

(%

)

Western Europe: The Slowdown in Grocery Expansion, 2004-2012

Aldi Group Carrefour SA

Schwarz Beteiligungs GmbH Tesco Plc

Average

Is it inevitable?

Shapes ‘Pester Power’

Flavours Non-

traditional

Innovation

Event association

Party food

Health and Wellness

Healthier alternative

Marketing

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