The advance of private label in supermarkets and changes in consumption patterns are taking their toll on large manufacturers. The distributor's product share has reached records on the shelves of Spanish stores, with a share by the end of 2023 of 44% taking into account all categories, which is forcing groups with historical brands to close factories to concentrate production and to fight very hard not to lose presence in the stores.
This boom, driven by inflation in the last two years and the public debate around it, has reduced the sales volumes of some of the main consumer groups, such as Nestlé, which fell 0.6% in the first nine months. of the year although it grew in turnover due to the increase in prices, and has left unusual situations until now that the most veterans of the sector had not witnessed before: the widely publicized veto of some brands arguing that they are too expensive. It happened with Pepsico at the beginning of this year, when Carrefour reported that it was stopping marketing its products due to prices, and this week it was Bimbo that lost commercial presence in the country, specifically in Dia.
There has not been any public struggle here, but the historic sliced bread of the Mexican multinational will no longer be found, for the moment, in these supermarkets in Spain. Sector sources attribute the decision to a lack of a trade agreement. From Dia they explain it by the usual changes in the distribution assortment, which is "in constant evolution." “Our relationship with Bimbo, as with other suppliers, is good,” they point out from Dia. The company insists that the manufacturer's brand remains important in its case and accounts for more than 45% of its references. “We offer a wide assortment of our own products and manufacturer brands,” they continue, “giving the customer freedom to choose.”
It is not the only setback for Bimbo. The group is also preparing the closure of its El Verger (Alicante) plant, with almost one hundred employees, where it produces toasted bread and Takis snacks. The unions explain that the company justifies the measure by the need to reorganize its production capacity due to the drop in sales of these products.
Danone also points to a drop in sales volume in the decision to close the historic Parets del Vallès factory. Its volume in the first nine months of the last fiscal year decreased by 0.8%.
Sliced bread, yogurt, milk and preserves are some of the categories where the private label equals or surpasses the manufacturer's label, the sector confirms. Food inflation and an adjustment in the shopping basket, with a greater weight of the price factor and spending control, have driven this rise. But behind it there is also a supermarket strategy to gain customer loyalty, say distribution sources. The chains promote products with their brand, with a good quality/price mix, because consumers will not be able to find them in the competition –only in Dia there are products from their brand, for example, while Bimbo bread is in a large number of brands– . The great increase in private label, the same sources add, has occurred in chains where it barely had a presence just two or three years ago.
All in all, even if it is slight, the distributor's brand is growing in all the large chains despite having increased its average price more than the manufacturer's brand, concludes a recent report by Kantar. According to this, Lidl, Mercadona and Aldi lead the ranking of supermarkets with the highest white label share –see graph–. On the other side of the scale, El Corte Inglés, with just 15.3%.
"The consumer is sovereign in his or her purchasing decision-making and we believe that both the manufacturer's brand and the distributor's brand can and should coexist, ensuring fair competition in a free competitive market," the Spanish Federation of Food and Beverage Industries (Fiab), which demands an expansion of food with VAT eliminated to encourage consumption. Own brand and manufacturer can gain from it.
