Battle of the brands

Today ‘Checkout’ publishes its top 100 brands survey and, while there is little change at the top of the table, leading brands are competing in a diminishing market

AT FIRST glance, it doesn’t appear that a whole lot has changed at the top of the annual “Checkout Top 100 Brands” list with the top still populated by the same big names as in years past. Coca-Cola is still sitting pretty on the top of the pile followed by Avonmore and Brennan’s. But that is not the full story.

The level of innovation and new product development taking place in the Fast Moving Consumer Goods industry is intense and consumers here could be said to be living in a golden age, with each week bringing with it a slew of new products, pioneering shopper concepts and cut-price deals on old reliables.

In challenging times, consumers return to the brands they know and trust; a reason why the top five in Checkout magazine’s list has remained unchanged for three years but relying on past glories is a dangerous game and will only get you so far. For brands, faced with rising own-brand penetration, continued consumer focus on price, and intense opposition from both new and established competitors, the message is often a simple one: “innovate or die”.

The survival-of-the-fittest mindset is best illustrated by the confectionery category. It is Ireland’s largest and is populated by powerhouses including Kraft Foods, Nestlé and Mars. Brand managers in this highly competitive sector understand the need to maintain a constant innovation stream and they are constantly developing subcategories within subcategories, promoting new product formulations, and seeking to create long-standing unique selling points (USPs).

The rise of “sharing bags” in confectionery is a prime example: a couple of years ago, the concept was the preserve of just a handful of operators. Today, most of the key confectionery brands offer some sort of sharing bag portfolio, and those that don’t are either on the verge of doing so, or looking elsewhere for the next big thing.

Nielsen’s recent ShopperTrends survey outlined the challenges brand owners have to face in what is now the fifth year of the economic downturn. According to the survey, 63 per cent say they now buy only essential items, while 58 per cent actively look for products that are discounted. A third are actively switching to cheaper brands, while 37 per cent claim that, although they “don’t know the prices” of supermarket items, they do notice when prices change. Not the best environment in which to engender brand loyalty, then.

But statistics like these only tell part of the story. The growth in private label penetration also means that brands are competing in a diminishing market. Sales of store brands are reaching levels which were never seen before in the Irish market, while advertising of own-brand ranges has also got more sophisticated; particularly around key spending periods such as Christmas and bank holidays.

Nielsen’s reports that 53 per cent of consumers have been buying more private label in the past year. When asked for the key reasons why, 68 per cent cited lower prices, and 46 per cent said that the quality was just as good as named brands; an indication of how consumer preferences are changing, and a far cry from the old yellow pack days.

Fellow market analysts Kantar Worldpanel recently estimated that own-brand currently accounts for 26.9 per cent of the total ambient grocery market (taking in anything from chocolate bars to tinned tomatoes), up from 25.2 per cent for the same period last year and 23 per cent in 2010. When it comes to frozen goods, penetration is even higher, hitting 36 per cent this summer, compared to 33.2 per cent in 2011 and 32.2 per cent in 2010. And, the experts say, it’s only scheduled to increase. Not that brands are prepared to sit back and let this happen, of course.