AMSTERDAM, Netherlands -- Private label is becoming a bigger business in Europe aided by years of store-label development and growth in that part of the world.
Retailers and suppliers point to the expansion of European-based global retailers and the entry of new countries into the European Union as forces influencing the advance of store labels. They stress that retailers are insisting on exclusive merchandise for store-label programs.
"The United Kingdom continues to lead Europe in store-label growth, and I plan to continue growing private label in my business," said Matthew Cain, buyer, Sommerfield Stores, Bristol, England.
Cain was among executives interviewed in Amsterdam late last month during the World of Private Label trade show sponsored by the Private Label Manufacturers Association, New York.
"In Europe, each retailer wants its own unique private-label merchandise, not just a unique package, but totally unique merchandise as well," Cain added. "That's different than in the U.S., where some stores differentiate only in packaging, but otherwise have similar private-label merchandise."
Johan Rybrink, executive buyer for wholesaler AB Gunry, Kungsbacka, Sweden, noted that retail customers are insisting on exclusivity in brands. "In Europe, private label is growing for supermarket brands, not wholesaler brands," he said.
"That's because retailers want items and brands unique to them."
Europe is the global leader in private-label share of retail sales at 22% overall, according to a study released last September by ACNielsen, Chicago.
Retail consolidation in Europe continues to be a catalyst for private-label growth, according to observers. Major mergers such as the combination of French retailers Carrefour and Promodes and the recent merger of British retailers Safeway and Wm. Morrison tend to have a big impact on private-label growth.
"These larger retailers can develop their retail brands more than before with greater buying power," said one private-label supplier. "So the more consolidation in the retail market, the higher the private-label share."
Global retailers are bringing their private labels to expansion territories. "As international retailers take bigger shares in emerging European countries, they increase private-label share in those regions," said a beverage supplier. "For instance, Tesco is strong in the Czech Republic and Poland, so it has been increasing private label in those countries. This opens up new markets for private-label suppliers."
The entry of 10 new countries into the European Union last month is expected to further foster the private-label growth trend, observers said. Those countries are Cyprus (Greek portion), the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
Some observers said those countries will experience rapid private-label advances. The ACNielsen study last year found that emerging markets are posting far more rapid private-label growth than more mature markets. It noted that in the 12 months ended April 2003, the emerging markets of the Czech Republic, Hungary, Poland and South Africa experienced a collective private-label sales growth rate of 48%, vs. the year-ago period. That compared to an overall growth rate in Europe of 6%.
