Recessionary dynamics boost private label soft drink sales

By Guy Montague-Jones

- Last updated on GMT

Related tags: Private label, Soft drink, Marketing, Canadean

Recessionary dynamics boost private label soft drink sales
Sales of private label soft drinks are accelerating as consumers go out less and therefore drink more at home, according to a new report.

In its latest market report, Canadean observed an upward shift in private label sales since the recession began that it said is not just caused by greater attention to value.

With less excess cash to spend people are going out to fewer bars and restaurants, where branded drinks dominate the menus. Instead, Canadean said they are drinking at home which means spending more on soft drinks at the supermarket where private label alternatives line the shelves.

According to the market research firm, private label products in the soft drinks sector now account for over 1 in every 10 litres traded globally. As the graph below illustrates sales of own brand soft drinks have been especially high since the start of the recession.

Canadean-Soft-Drinks-Private-label-Chart-Nov-09

In Europe, the recession has provided the perfect conditions for discount retailers to flourish. As their network widens and more shoppers enter their stores, private label soft drinks sales have risen because many discounters exclusively stock their own low costs brands.

Private label drinks are also breaking into new territories. Instead of just being the preserve of supermarkets, own brand drinks are also appearing in fast food chains, sandwich stores and garage forecourt chains.

Faced with the private label invasion, Canadean said branded players must develop defensive strategies. Differentiating their products and justifying the price gap is vitally important.

Ultimately, Canadean said brands can be reassured that, while private label products will continue to make headway, they will always struggle to compete with brand heritage.

But the ease with which brands can fend off the private label challenge does depend, not only on marketing, but also on the product itself. Private label has captured market share to a varying degree across the soft drinks spectrum.

Juice is one category where private label products have made great strides as brands have struggled to differentiate themselves in terms of taste. It is a lot more generic as a product type than carbonated drinks that are often tied to a specific recipe and brand history.

Related topics: Markets

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