Despite last year’s spike in inflation, private label (PL) products have been able to emerge, strengthening their position in both value and volume in the overall FMCG supermarket market.

Although the revaluation of specific products continued at a rapid pace, their penetration into Greek households was rapid, the gap was widened by brands, and they were further strengthened by the “home basket”. Their share in value terms, with an average growth rate of 16.4% last year, reached 16.3% of FMCG turnover in supermarkets, while their dynamic progress is maintained in the first months of this year.

Panagiotis Boretos, vice president and managing director of market research company Circana Hellas (IRI Hellas), explained to APE-MPE that in January private label products accounted for 17.7% of sales in this category. “mileage” in the amount of 21.3%.

“The volume growth of this particular category of products is much greater due to the fact that they are generally about 30% cheaper compared to branded products,” notes Mr. Boretos, adding that “PL also contributes to the increase in sales of “household basket”, since a significant part of the goods included in it belongs to a certain product category”.

“Since November, when the household basket initiative was launched, coupled with limited consumer disposable income due to price increases, there has been significant growth in the private label product category. Indirectly, in essence, this initiative has pushed consumers to choose cheaper private label products, which in many cases are considered by consumers to be of equal quality to branded products,” he emphasizes.

He also believes that category-specific momentum will continue throughout 2023 as “the consumer buying private label products makes informed choices over and over again.”

Branded vs Private Label Products

As Mr. Boretos explains, the study showed that between the beginning of 2023 and mid-February (02/19/2023), PL increased by 14.9%, while brands increased by 9.7% compared to last year. An oxymoron, according to him, is that the rise in price of TM is greater than that of brands, but at the same time their unit sales are growing (7.8%) compared to the same period last year, in relation to branded ones it is decreasing (-2.3 %).

In addition, last year the basket of branded goods in the 60 largest categories reached 188 euros, and this year (until 02/19/2023) 205 euros, mainly due to revaluation, and as a basket exclusively PL it reached 140 euros, out of 130, what happened last year, that is, this year the difference between branded and PL is 65 euros, while last year the difference was 58 euros.

“It is clear that a gap in price difference between brands and PL is opening up. So CT has room to value more while increasing its share if branded products don’t respond,” he notes.

Growth in 2023 in supermarkets due to inflation

But what will this year bring to supermarkets? According to Circana, the inflationary crisis led to 2023 starting off with lower boxed sales, as commodity prices rose 9.8% from January 2022. Supermarket sales fell 2.5%, with sales value increased by 7% mainly due to revaluations.

According to Mr. Boretos, the rise in prices, which began in May last year, will continue with the same intensity until the first half of this year. In the second half of the year, the rate of price growth is expected to be lower. “The growth cycle will close next May when we compare it to last year’s high,” he stresses.

Based on two scenarios related to the level of revaluation in the country, which were studied by Circana Hellas analysts, in 2023 it is assumed that the turnover of supermarkets will continue to move up, mainly due to revaluations. In particular, based on the first, prices are forecast to rise by 5.4% throughout the year (7.8% in the first half of the year and 3.1% in the second half of the year). “Food prices are expected to rise more in the first half of the year as inflationary pressures began last May, and so we will have a four-month period to compare high prices in 2023 with lower prices in 2022,” notes Mr. Boretos.

In fact, he adds, fixed barcode FMCG sales growth in value terms will increase by 4.5% in 2023, with little impact on consumption. In the first half of the year, the market turnover will increase by 7.8%, and in the second half of the year – by 1.5%.

Under the second scenario, a smaller increase of 4.4% is expected for the year as a whole (6.9% in the first half of 2023 and 2.1% in the second half). Sales in value terms will grow by 3.7% in general, in particular, in the first half by 7.1%, and in the second half by 0.6%.

A necessary condition for the implementation of the above scenarios, he said, is the absence of “serious shocks” in the market, as parliamentary elections are expected, which are likely to affect consumers.

However, tourism is expected to increase the sector’s turnover even more after Easter, which will take place at the beginning of this year. In this context, 2023 is expected to close for supermarkets, where boxed sales will decline slightly compared to last year, and their value growth will again be based on revaluation.

Source: RES-IPE