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Private Label

The Rising Power Of Private Label

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The Rising Power Of Private Label

One can make a very persuasive argument for private labels being the strongest brands in Britain these days.

Stores’ own brands have come a long way from their budget origins and today occupy an important part of many consumers’ lives. In fact, there have been seven ages of private label, the latest of which is only just emerging.

The first age of private label was as a simple, budget purchase for hard-up consumers. In 1919 a young demobbed soldier called Jack Cohen used his serviceman’s gratuity to set up a market stall in London. It flourished, but Cohen was ambitious and wanted to sell his own products. In 1924 he signed a deal with tea producer TE Stockwell to sell its tea under his firm’s brand. Taking the first three letters of the tea company’s name and the first two of his surname, he gave the Tesco name to Britain’s first private-label product.

The second age of private label was a move upmarket. Marks & Spencer began to sell its own products under the St Michael brand in 1928. Named after the founder of the company Michael Marks, the brand came to stand for quality and value to three generations of British shoppers and demonstrated the potential of private labels to provide more than simply a budget offering.

The third age of private label began in 1992 with the launch of Sainsbury’s Novon washing detergent. Rather than representing a cheap, budget equivalent closely aligned to the store master brand, Novon was a standalone product. Thanks to in-store promotions, Novon quickly doubled Sainsbury’s share of the detergent category and proved that private labels could stand on their own merits.

The fourth age of private label marked a period when private labels became brazen in their attempts to replicate and replace manufacturer brands.

In 1996 Asda decided to rename one of its chocolate biscuit lines, Take a Break, as Puffins. It was a clear attempt to position against Penguin, United Biscuits’ category-leading brand; Asda went as far as advertising its bar with the strapline ‘Pick up a Puffin’. United Biscuits sued and, after a confusing judgment, both companies claimed victory. The era of copycat private labels had begun.

The fifth age of private label was a move beyond parity and replication toward superiority. Following the successful example of Canadian supermarket Loblaws, Tesco launched a line of super-premium private-label products under the Finest sub-brand. They often retailed for more than the manufacturer equivalents and were of higher quality.

The sixth age of private label has seen a shift away from basic store brands toward a brand architecture of private labels. The big supermarkets have moved from a simple house structure to use private-label sub-brands to offer distinct organic, budget, healthy and premium lines – a multifaceted offering that surrounds manufacturer brands on all sides.

In 2007 we saw early evidence of the next step for private labels: category leadership. Asda has launched tea bags made from nylon mesh under its premium Extra Special label. These tea bags cost about four times the price of traditional paper ones. What’s important here is that there was nothing like it being sold in Asda by a big-name brand. Until now, for all their advancement, private labels have been second movers: undercutting and improving on big-brand offerings, but always following. Now, however, supermarkets are using store data, category knowledge and strong supplier relationships to begin to lead the market.

The real golden era of private labels is only just beginning and manufacturers are glimpsing the true challenge that awaits them. Brand managers will have to compete against private labels that are cheaper, more premium, more profitable, better merchandised, more trusted and easier to market – and face the prospect of trying to enter categories created, and now led, by private labels.

30 SECONDS ON … NYLON TEA BAGS

– Asda’s Extra Special Tea Bags are made from a translucent nylon mesh. Such bags have previously been sold in specialist tea shops, but it is reportedly the first time they have been available in mainstream stores.

– The bags are priced £1.97 for 25. Variants include English Breakfast, Earl Grey, Assam and Darjeeling.

– Sainsbury’s is trialling four St James fruit tea variants which use silky, food-grade nylon bags big enough to hold large pieces of real fruit.

– Composting enthusiasts have come out against the non-biodegradable tea bags, as have some loose-leaf tea fans. One blogger, was singularly unimpressed: ‘I bought (the nylon) Asda tea bags … and they were crap! Nobody in their right mind is going to buy them twice.’

– UK consumers drink 165m cups of tea a day, 96% of which are made with tea bags, according to the UK Tea Council.

The Blake Project Can Help: Please email us for more about our private label strategy workshops.

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education

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