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26 May 2005
Auckland
- More than half of Australian manufacturers producing private label products
- Aldi ranked highly by suppliers in majority of performance categories, and set to grow further
- Small business and non-private label manufacturers reliant on alternative channels to grow business
More than half (57 percent) of Australian manufacturers are already supplying private label products to retailers, a first of its kind private label survey conducted by leading market research company ACNielsen has found. The survey also found that of those manufacturers not producing private label products the likelihood of doing so in the future was very low – 67 percent said it was unlikely they would commence private label manufacturing in the next three years.
Findings of the survey, which was titled Retail Barometer and looked at emerging trends in private label manufacturing and the impact of Aldi’s recent entry into the Australian retail sector, were released by ACNielsen today as part of a first of its kind survey of over 100 senior leaders from top Australian fast moving consumer goods (FMCG) manufacturers.
Feedback from the manufacturers who reported dealing with Aldi was extremely positive, with Aldi ranked as the best performing retailer in four of seven key performance categories including fairness of trading terms and conditions; store compliance; supply chain efficiency; and strategies for success. Seventy-nine percent of respondents also expected Aldi to show further growth over the next few years.
The Retail Barometer survey asked business leaders to indicate their outlook on developing alternative channels such as convenience, liquor and route. Almost three in four respondents (74 percent) who were not manufacturing private label products saw the importance of alternative channels increasing, compared to just 57 percent of private label manufacturers. Non-private label manufacturers were also most likely to increase their advertising expenditure in the year ahead, indicating a renewed focus on branding, although there was some polarisation between responses from large and small companies and also between MD/CEOs and Sales/Marketing Directors. Notably, more large companies were likely to increase ad spend (45 percent) compared with small companies (24 percent) and similarly, more MD/CEO respondents (40 percent) reported a likelihood of increased ad spend compared to Sales and Marketing Directors (29 percent and 24 percent respectively).
"Prior to Aldi entering the Australian market-place, private label market share had been flat for 20 years," said Justin Sargent, Executive Director, Retail, ACNielsen Australia. "This is now changing rapidly and poses some key strategic challenges for manufacturers. The Retail Barometer survey highlights a divergence of views on how to best compete, and suggests we are on the verge of an unprecedented level of change in the sector over the next few years."
"From the survey results there appear to be three distinct streams of thought on how to respond to the changes taking place in the sector: there are those manufacturers embracing private label as an opportunity, and transforming their manufacturing and business operations accordingly; there are those concentrating on building well known consumer brands through increased advertising expenditure to re-enforce familiarity in consumers’ minds; and there are those smaller manufacturers who are increasingly looking to penetrate the alternative channels that are growing outside of grocery."
Other highlights from the survey covered manufacturer business sentiment (54 percent of manufacturers said they felt business conditions had declined over the previous 12 months) and premium private label take-up in Australia (71 percent of manufacturers believed Australians would purchase premium private label products).
Methodology
The Retail Barometer survey collected responses from 104 senior leaders including CEOs, MDs, General Managers, Marketing Directors and Sales Directors from 83 FMCG manufacturers via an online survey questionnaire. The survey was conducted in April 2005.
About ACNielsen
ACNielsen, a VNU business, is the world's leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen's market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns.
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