NEWS From Canadean: Recession Boosts Private Label

BASINGSTOKE, England, November 12 - According to a new report from leading beverage research agency Canadean,
the global economic downturn is providing the perfect conditions for private
label products to flourish. Private label products in the total soft drinks
sector now account for over 1 in every 10 litres traded in the global
marketplace; if you discount the on-premise sector, where private label use
is marginal, then private label's share of the market rises yet further. The
rise of private label is proving to be a considerable threat to branded soft
drinks.

The dramatic financial turbulence of recent times has undoubtedly
provided a major opportunity for private label. Apart from the obvious factor
that consumers are more inclined to seek out the value that private label
products represent in a downturn, there has been another factor that has
boosted the private label segment; the shift from on- to off-premise sales.
In many markets the footfall in bars and restaurants has fallen back sharply
but consumers are compensating for this by drinking more at home and buying
soft drinks in the off-premise, where the bulk of private label products are
found.

    Global Index: Growth of All Soft Drinks vs Private Label

    Growth Index 2005 = 100    2005   2006   2007   2008  2009F
    All Soft Drinks             100  105.0  110.9  116.1  118.9
    Private Label               100  109.3  116.5  119.3  126.0

In Europe the recession has also provided the ideal environment for the
'discount retailers' to expand rapidly and they have invested heavily in
widening their net across Europe. Feedback from across the region points to
the success of these outlets and there is now even a 'hard discounter' in the
Canary Islands. Although some discounters do stock branded products, many
choose to exclusively stock their own low cost 'pseudo' brands and inevitably
as their sales prosper, so too does the private label segment.

As the modern retail channel develops, B brand operators in particular
are vulnerable to the expansion of private label ranges; both compete against
A brands on price. A brands are also losing out, as the quality of private
label offerings improves and private label products take up a wider range of
price positioning to now incorporate value, discount, mainstream and premium
price positions. There is also a trend for other on-premise or convenience
retailers to adopt their own private label. Fast Food chains, sandwich stores
and even garage forecourt chains are now increasingly doing so.

How vulnerable a soft drinks category is to private label alternatives
hinges on a number of factors, which have resulted in varying levels of
private label penetration across the soft drinks spectrum. Juice in
particular has proved more susceptible than other categories because it is a
relatively mature category; with ambient juices in particular difficult to
differentiate in terms of taste and there is also a retail bias to purchase.
Consequently private label products make up nearly a quarter of all juice
volumes.

The importance for branded players to develop defensive strategies cannot
be understated. Differentiating from private label rivals and justifying the
price gap based on their equity is the key to any successful defensive
strategy. Private label products will continue to make headway but brands can
be reassured that private label will always struggle to compete with brand
heritage and ultimately consumers want retailers to provide them with the
choice that brands provide.

Canadean's new report "Private Label Trends in the Global Soft Drinks
Market" is available now - for further details please contact Debra Richards
on tel: +44(0)1256-394227, email: soft@canadean.com,
marketing@canadean.co.uk or visit our website www.canadean.com.

Editor's Note:

Canadean is the beverage industry information specialist,
providing market research, reports, databases and consulting on the global
beverage and beverage packaging industries.

With headquarters in the UK and regional offices around the
world, Canadean has built a reputation as the benchmark for global beverage
market intelligence. Local operations are now based in Madrid, Buenos Aires,
Mexico City, Hong Kong, Beijing, Shanghai and Sydney.

Issued by the Corporate Marketing Department of Canadean Ltd, the leading
global beverage research company.

    Canadean Ltd
    12 Faraday Court
    Rankine Road
    Basingstoke
    RG24 8PF
    England
    Tel: +44(0)1256-394210
    Fax: +44(0)1256-394201
    Email: sales@canadean.com
    Website: www.canadean.com

Canadean Ltd, 12 Faraday Court, Rankine Road, Basingstoke, RG24 8PF, England, Tel: +44(0)1256-394210, Fax: +44(0)1256-394201, Email: sales at canadean.com, Website: www.canadean.com