More private label drinks products can be found in supermarket aisles reserved for ‘premium’ name brands, a new report by Canadean finds.
According to the report, private label soft drinks are seeing notable success in the Western European premium market, with ready-to-drink (RTD) iced coffee drinks forecast to grow by 8% in 2014.
“RTD coffees were traditionally considered to be premium and therefore private labels used to struggle to achieve the same sales numbers as branded products,” says analyst Michael Wiggins.
“This is largely due to the image that private label products are of lower quality which made it difficult to attract consumers who would be willing to try the drinks.”
Shift to premium to do with pricing
The report reveals that this trend is caused by retailers realising that the soft drink market can be approached by up-scaled product ranges.
“The trend towards premium private label drink products has a lot to do with pricing,” says Wiggins.
“Consumers expect private label drinks ranges to be lower in quality because of the low price point.”
“However, once the price and packaging of private label ranges are up-scaled, consumers feel that the quality gap between branded and private label products decreases.”
“The appeal of entering the premium market to retailers is undeniable, given the higher profit opportunities these products offer.”
Evolving super-premium market
As Canadean reported recently, it will not be too long before first products will be personalised to consumers’ unique needs.
This means that there will be a brand new super-premium end to markets which will allow the price of all products to drift upward as the price frame of the market is changing.
“Over the longer term it will be interesting to see the effects of these trends on private labels,” says Wiggins.
“On the one hand this will allow private label producers to gain a larger price advantage, but, on the other hand, it may be harder to achieve that initial push in convincing consumers of the product’s quality.”