Private label contribution lagging, says report

Written by Neha Pal | Neha Pal | New Delhi | Updated: Nov 29 2011, 05:32am hrs
While private labels (retailers inhouse brand) is one of the biggest revenue earners for WalMart, the contribution of private labels for major modern trade retailers in India is about 10-15% in the FMCG segment broadly under two main categories home care and food products.

Experts are of the view that private label strategy in developed markets has matured into a key differentiator but in India it is not the case yet. In India, private labels share only 7% of the modern retail space. One of the highest contributors to private label growth are packaged rice and household cleaners.

Food products like packaged rice and packaged atta which till now were ruled by players like Kohinoor and Dawat have lost 37% and 22% of the modern retail share to private labels. In case of household items like floor and glass cleaners, private labels attract 27% and 23% of the market share of modern retail, according to market research firm Nielsen. The ghee and jam market dominated by brands like Sundrop, Kissan have lost a 13% share to private labels and private label breads are at 17%.

However, when it comes to personal and beauty care products, consumers have been loyal to branded items. According to Daburs CEO Sunil Duggal, The category within FMCG that has seen more action in terms of private labels is home care where a number of key retailers are introducing their own brands be it in air fresheners or floor cleaners.

Harsh C Mariwala, chairman and managing director, Marico told The Finanacial Express, The threat of private labels to commodities is more and to personal care products is lesser. But with the coming of FDI in multi brand retail, there will be more number of private label brands across all categories which will be a competition for the existing players.

Indias modern trade shoppers spend over $100 million on private label goods per year and this amount is expected to reach $500 million by 2015.