Private label growth in Spain is set to slow down as branded manufactures respond with aggressive pricing and promotional strategies, according to research by Canadean.
Although the economy in Spain is steadily recovering, 7 out to 10 Spanish consumers are not feeling confident with the current state of the economy, according to a new survey by Canadean. The trend of ‘better value for money’ has been dominating the market in recent years and has created a habit of thrifty spending.
According to Canadean, private label sales have grown over the past few years. However, this growth rates will begin to slow as branded manufacturers respond with increased promotional offers. Only one third of Spanish consumers are planning to buy more private label products in the coming year, as price-oriented consumers seek out branded products on promotional offer. The survey finds that 57% of Spaniards look for promotions and discounts, while 49% use vouchers and coupons and 38% use websites to compare different prices at supermarkets.
Brands are positioning their goods around affordability and are increasing the number of reductions and sales. Raquel Perez-Lopez, analyst at Canadean, says: “As a consequence, both private and branded manufacturers will suffer due to the aggressive discounting. This will not just erode premium credentials of brands, but also means that consumers focus too much on price and promotion and do not evaluate other product attributes such as health and convenience.”
Promotional branded products and store own brands are often offered at the same price in supermarkets. However, consumers will fall back on known products as they believe that branded products are of better quality. “Private label manufacturers should promote the quality of their goods via clear labelling that states the origin of the product along with the production method. This will encourage consumers to think twice about what product to buy,” adds Perez-Lopez. “Unbranded food and drink products need to stand out on the shelf in order to compete with branded products.”