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PRIVATE LABELS
HOW PRIVATE LABEL GROCERIES DAMAGE AUSTRALIAN MADE BRANDS
HAVE YOU NOTICED THE DIMINISHING RANGE OF CHOICE IN THE MAJOR SUPERMARKETS?
Many Australian Owned and Australian Made products are being cut from the supermarket shelves to offer cheaper imported groceries or unbranded - or home branded, locally made products. The continued growth of private label brands discourages suppliers from creating new and innovative products, jeopardise the livelihoods of smaller, independent suppliers and ultimately result in less choice for consumers. WHY CREATE SOMETHING NEW HERE IF THE CHAINS WILL JUST IMPORT IT FROM A LOW COST COUNTRY? Coles, for example, has a stated aiming of having private label products make up 40% of its product by 2023. That means 40% less shelf space for branded Australian Owned and Made products and even less choice for consumers. While more home brands will mean lower prices for consumers and greater profits for the retailer it is at the cost of local jobs and taxes. It has been estimated very job in Australian manufacturing generates 5-6 additional jobs via the retail, transport and other associated industries from raw materials through to packaging. In Australia, private label products currently account for 18.1% of all retail dollar sales (2018) compared to 41% of supermarket sales in the UK, 42% in Spain, 36% in Germany and between 27 and 32% in most other European countries. As consumers we need to make sure this does not increase by supporting Australian brands and rejecting home brands. Greater profits is the main reason for offering private label products as they may cost retailers 30%-50% to manufacture and distribute. They also make it much harder for local products to compete as they need to pay expensive shelving and promotional fees just to be stocked in the supermarkets. The ultimate private label supermarket is Aldi
that stocks only private labels products and barely 1,400 items compared to 25,000-30,000 at Coles and Woolworths. More supermarket owned brands will mean lower prices for consumers and greater margins for the retailer but the move could significantly impact Australian suppliers as their branded products are delisted and supermarkets seek out cheaper manufacturers overseas. A private label product with features and quality parity with national brands may cost retailers 40 per cent to 50 per cent less to manufacture and distribute to customers. The presence of more private label goods will likely require domestic manufacturers to themselves produce more private label goods to minimise offshoring. But, in doing so, manufacturers will commoditise themselves, thereby giving retailers even more power. One way to support Australian manufacturing is to shop at independent supermarkets. Supa IGA stores, for example, stock around 40,000 lines and focus on providing more options that Coles or Woolworths and many of those options are from smaller Australian suppliers that are often only available in the immediate region. These smaller, local independent brand manufacturers and wholesalers may have been “delisted” from the major chains or never had the opportunity as they have been muscled out by the major brands that are commonly internationally owned – or a private label brand.
