Store-brand food seen eating up market share

CHICAGO Thu Mar 24, 2011 11:47am EDT

CHICAGO (Reuters) - Grocery retailers' store-brand products are expected to double their share of the global packaged food market over the next 15 years to make up half the market, according to a report issued on Thursday.

The report by Sebastiaan Schreijen, associate director of processed food and retail at Rabobank, said growth of private-label brands will be fueled by retail consolidation in developed markets, adoption of modern retail in developing markets, and increased consumer acceptance of private-label brands following the recession, among other factors.

"Overall, the impact of the recession has given private label an enormous boost ... Indirectly, the effects of the recession will fuel further private-label expansion across the globe for years to come," the report said, citing increased consumer awareness and competitive pressure.

In addition, private-label suppliers are getting more professional, the report said, which is improving the quality of the products.

Private-label brands, such as those from Wal-Mart Stores Inc (WMT.N) and Kroger Co (KR.N) in the United States, Tesco Plc (TSCO.L) in Britain, Aldi in Germany and Carrefour (CARR.PA) in France, currently make up about a quarter of the food sold in grocery stores, the report said.

The private labels often carry lower price tags than branded goods from manufactures such as Nestle (NESN.VX), Kraft Foods Inc KFT.N and Unilever (ULVR.L).

Even as private brands gain market share, leading national brands will keep their market position and gain in importance, Schreijen said, as they stand as reference points for price and quality for each product category.

That means pressure will mount on the secondary brands, the report said, likely leading to weak sales and heavy price competition between suppliers.

(Reporting by Martinne Geller; editing by John Wallace)