October 25, 1995. Copyright, 1995, Graphic News. All rights reserved

BRAND LOYALTIES
By Nicholas Booth

LONDON, October 25, Graphic News- British shoppers are happy to search out cheaper own-name products, where their Dutch, Italian and Portuguese counterparts are fiercely brand loyal. That is the result of a recent survey of shopping habits across the continent, bolstered by a survey of the best-selling brands in Europe. BritainÕs shoppers seek out the greatest number of own-brand products: the market share of private labels has grown from 27.5 per cent in 1992 to 29 per cent last year. Elsewhere in Europe the current penetration is nearer to 20 per cent and as low as 10 per cent in Italy and Spain.

But the future trend may follow that of the UK. With hypermarkets concentrating sales and providing more efficient distribution, own-brand names may have a greater penetration across Europe. Industry observers point to Germany, where the massive Aldi chain dominates sales, and which has started its own clothing lines which are cheaper than branded names. Private label growth provides a dilemma for brand names because the levels of profit are much smaller than they have been used to.
The latest sales figures in the UK show that branding is strongest in coffee, soap, bras, detergent and mineral water. It was weakest in perishables like milk, bread and eggs. Supermarket chains are now selling selling their own products at cheaper prices than brands of comparable quality.

In the United States, the situation seems to be reversed. The U.S. Information Resources Inc., a  market research company, says that own labels share of the market remained static last year at 14.9 per cent Ð the same as in 1993. But 
the experience of one well-known brand is not lost on manufacturers in the United States. April 2, 1993 has gone down in history as ÔMarlboro FridayÕ when Philip Morris slashed the price of its top-selling brand by 20 per cent Ð some 40 cents a packet Ð to shore up collapsing sales. The result was that the companyÕs shares nosedived and have still not fully recovered, and disruptions to sales affected other competitors.

Top of the U.S. brands selling in Europe is Coca Cola. The company lost a great many sales when it introduced a new formula in the 1980s, but recovered. In Britain, however, a sales war with Pepsi and Ôown brandÕ colas, such as Virgin and Safeway, may affect sales over the next year.


Sources: Associated Press, Financial Times, Sunday Times