It's a long way from yellow pack
The first own-brand products in Ireland fared badly but now food shoppers are bypassing the big names and saving serious money, writes CONOR POPE
HOW WOULD you like to save yourself as much as €220 over the next 12 months without making any effort at all? Of course you’d like that, who wouldn’t? It is so simple. A two-litre container of milk with a recognisable brand name costs around €2.19 while two-litres of own-brand milk in SuperValu costs €1.49. So if you go through two litres daily – hardly excessive for a family – by making that one simple switch you save yourself €219 each year. On milk alone.
Then take bread. The biggest selling branded bread in Ireland is Brennan’s. An 800g sliced pan costs €1.58. A similarly-sized pan from Tesco’s Value range costs 65 cent. If you went through two sliced pans a week and made the switch you would save €91 a year.
Then there is tea. A 250g box of Tesco’s Finest tea is €2.65 while the same amount of Barry’s Classic Blend is €3.75. Make the switch and go through two boxes a month and you save €27.
So, by switching just three staples you can save yourself €338 over the next 12 months. Replicate that across 10 or 20 or 50 products you use regularly and it does not take long for the savings to mount up.
Given the ease with which people can knock substantial sums off their weekly shopping bill, it is amazing more of us aren’t in thrall to own-brand products. Part of the reason is historical. In the early 1980s, Quinnsworth rolled out a “yellow pack” range of own-brand groceries. The quality was poor and it didn’t take long for “yellow pack” to become a pejorative and the phrase was soon attached in a snide fashion to jobs, products and even lifestyles.
Throughout the 1990s and the last decade, own-brand products from all the retailers struggled as Irish shoppers stayed loyal to their big-name brands despite the fact that even by conservative estimates, a shopping basket filled with branded products costs 25 per cent more than a basket of similar own-brand products.
Then the German discounters came to town and the recession hit and suddenly we weren’t in Kansas any more.
The amount of own brand products bought by Irish consumers has increased steadily over the past five years and is up from just 9 per cent in 2005 to 35 per cent this year. The number of own-brand labels on our supermarket shelves is set to increase as retailers use them to grow their volume of sales and as a bargaining chip to get bigger discounts from suppliers.
Earlier this year the retailing industry magazine Checkout held its annual conference. Delegates were told that while the recession had given a boost to own-brand products, their proliferation had not only been driven by consumer demand but because retailers believe they were effective in forcing suppliers to offer more favourable terms or risk losing shelf space. Rabobank’s Sebastian Schreijen said the amount of own-brand products would increase by almost 50 per cent in Ireland to more than 40 per cent by 2015 .
Ray Kelly is the marketing director with Supervalu and he believes Irish consumers have already reached the “tipping point” when it comes to own-brand products. “We do a lot of research into what our shoppers want and they are repeatedly telling us they have less to spend. A lot of them have copped on to the fact that they can make savings of 33 per cent by switching to own-brand”.
He says people are trialling products and working out what they like and what they don’t like. The store is facilitating this with a promise that if you buy a SuperValue own-brand product and don’t like it, it will give you your money back.
Kelly says the store’s own brand breakfast cereals have grown by 20 per cent this year alone, while rice products have seen an 18 per cent growth. It is, however, in what he calls the “hot beverage” category where there has been the most surprising growth. Sales of own-brand teas and coffees have increased by a remarkable 40 per cent since the start of the year.
“People are very loyal to the tea they drink in particular but they have figured out that our tea tastes the same.” This may cause your eyebrows to arch but a few years ago Pricewatch reviewed four gold blend tea offerings and was dismayed to realise that they were pretty identical.
Kelly says some companies are “very precious about letting it be known they make own-label products, others less so. In reality we are not overly concerned about advertising our own-brand products. Our name is on them and we stand over the quality.”
Checkouteditor Stephen Wynne-Jones says there are certain brands which have become an integral part of Irish culture. Each year the magazine publishes its Checkout Top 100 Brands Report and each year the same companies – Coca-cola, Avonmore, Brennans, Lucozade and Tayto – finish in the top five.
“Many of these brands are part of our psyche and people buy them without thinking,” he says.
He points out that while savings can be made by buying private label products – the industry term for own-brand – the bigger names, recognising the threat to their once untouchable position are fighting back.
“A lot of the bigger brands are doing half-price deals and offering big discounts to try and maintain their volume,” he says. “I have sympathy for them. They have to develop elaborate marketing strategies, constantly innovate, manage their social media channels and compete on price with private labels.
“A lot of brands would like to keep the fact that they produce for private labels under wraps while some are very keen to boast about it,” Wynne-Jones says. “The companies who produce for private labels will also say that the products are not identical and the private label products are tailored to meet the specific requirements of individual companies.”
There are ways to work out who makes what when it comes to certain products, particularly milk and meat. You just need to look at the label’s origin code — it will be oval shaped and carry the letters IE followed by a number and the letters EC. If the numbers on two different products match then the production plant is the same.
There are some lines that people remain loyal to, particularly when it comes to their children and big-name brands dominate the baby formula, rusk and nappy markets. Similarly people seem loath to experiment when it comes to toothpaste and beans. However, increasingly the dairy sector is being hit with consumers switching to generic own-brand labels.
If the recession continues to bring us down, it seems inevitable this switching is only going to speed up.