PRIVATE-LABEL DOLLARS UP, UNIT VOLUME OFF

LISA SAXTON

NEW YORK -- While supermarket private-label dollar volume grew to an all-time high of $31 billion in 1994, private-label unit volume and unit market share dropped a hair.

In its annual Yearbook, the Private Label Manufacturers Association here reported that unit volume declined from 26 billion to 25.8 billion, and its 19.4% unit market share was down 0.3 points from the record high of 19.7% in 1993.

On the dollar side, the $31 billion represents a 3.1% increase over the $30 billion rung up in 1993.

The slight decline in unit volume by no means indicates private-label products have reached their plateau, according to Brian Sharoff, PLMA's president. It's merely a "blip on the screen," he said, using the last 10 years as a history lesson.

"For example, during 1988-89 dollar share was flat at 11.6% for both years. And in 1991, compared with 1990, dollar share actually dipped from 13.7% to 13.6%.

"So whether units or dollars, it's not unusual for [the numbers] to fluctuate slightly over the course of an upward trend," said Sharoff. "We don't attach any great long-term significance to [the drop in unit volume]."

While mass merchandisers and drug chains posted stronger private-label growth in 1994, supermarkets have had to contend with national brand manufacturers who took measures to stem the tide of private-label growth.

"The big brands became very price conscious and price competitive over the last 12 months in the hopes of stopping the growth of private label," Sharoff said. "I think they were able to take 0.04% in supermarket units, but that isn't going to mean much in the long run.

"There has been a good, solid

counterattack by the brands, which has held back some of the growth, but I don't think the flood waters are receding. In other words, [national branders] can put up another level of sandbags and the water isn't going to come over, but that isn't to say it's stopped raining. It's just that they've taken some defensive action with very severe price discounting in order to put the sandbags up."

Sharoff said the slight slip in unit volume is nothing more than the postponement of supermarket private-label growth for a year, noting that overall and across trade classes, private label continues to grow. "It's seen most visibly in drug chains and mass merchandisers. That trend will kick into effect in supermarkets by next year when health and beauty aids categories in supermarkets reflect what private-label products are now available at mass merchandisers and drug chains."

One grocery area that bears watching is the beer and ale category, where retailers are experimenting with new private-label products, said Sharoff.

"Beer is a very interesting one, because for years beer was considered immune to private label," he explained. "But there have been some big changes in the beer business. No. 1, the big name brands have had to fragment their business with the microbreweries.

"So not only have numerous new beers come up from the microbreweries, but the big breweries have had to compete with separate brands of their own.

"Therefore, you have a real fragmentation going on in the beer business. Obviously, consumer loyalty in beer is undergoing some changes and those are the conditions that are just prime for private label to enter the market and be very competitive. So I think that's a category that could take off just like cola did."