Private label products : Turning premium

Private label products, also called own brands or own label, are brands that retailers and wholesalers develop. Private-label goods and services are available in a wide range of industries from food to cosmetics to web hosting. Throughout its history, private label has been mislabeled or misrepresented as being cheap in quality. Most private labels suffer this stigma because they are priced lower than the competition.
Traditionally, the proposition from private labels has been "value for money," but in the last few years during the economic recovery, private labels have shown a more aggressive face, investing more heavily in product innovation, marketing and packaging.

In Europe, retailers such as Boots, Marks & Spenser, and Tesco have sold private label store brands for generations. During the recession in the early 1980s, generic ‘no name' brands were introduced in the U.S. as low-cost alternatives to national brands. During the late ‘80s and the ‘90s, private label growth was phenomenal, with grocery unit shares reaching over 15%. Private label share was projected to surpass 30% by the turn of the century. In recent years, private labels have gained significant market share, and have already established high penetration in traditional channels such as supermarkets as well as grocery and drug stores. In developed markets with a consolidated retail sector, such as the UK, Spain and Germany, private labels account for one-third of sales.

In the last few years there has been a shift towards what is called ''premium private label''. Private labels have been repositioned through premium marketing and development tactics. In a recent survey by The Nielsen Company, 63% of consumers considered private label brands to be of equal quality to national brands, and 72% of the respondents felt that private label products were good alternatives to name brands. To illustrate this with an example, let's talk about packaging. Traditionally, packaging has not been a core strength of private-label brands, which often presented their products with plain packaging or copycat packages intended to confuse consumers. However, in recent years, the market has seen private labels launching products with sleek attractive packaging, which has helped these products gain their own, distinct and premium positioning in the market. In the UK, Sainsbury’s premium line is called Taste the Difference, Tesco has Tesco Finest, and Asda has Extra Special. These labels tell the consumer that this is the best product, and the packaging is also targeted to this effect.

Tesco premium ground coffee, with appealing packaging, emphasizing the origin of the coffee and is targeted to consumers ready to spend more money in order to get better quality coffee, yet as private brand.

Tesco everyday value coffee is also a private label product, however its packaging is very simple, it's price much lower and it is clearly targeted to budget shoppers with no interest in the flavour or origin of the coffee.

By the year 2025, mainstream private labels are expected to become the largest market segment, accounting for about a third of the total market globally. Premium private labels are expected to grow the most rapidly, and will start putting pressure on national top brands as well. To protect market share, it will become imperative for national brands to further leverage their core strengths to compete against private labels effectively and keep consumers' loyalty.

References:

http://www.mediapost.com/publications/article/202502/private-label-brands-go-premium-gain-prestige.html?edition= 
http://www.retailcustomerexperience.com/articles/the-evolution-of-private-labels-at-retail/