Faith in private label personal care grows

Accordingly the UK is now the largest market in Europe for private label, with penetration in all market segments now exceeding 35 per cent, a new report from Datamonitor reveals.

Consumer spending on personal care, food and drink topped £39 billion (€57bn) in 2005 and is estimated to grow by a further 25 per cent by 2010 to reach £48.7 billion.

However, elsewhere in Europe, the report points out that with the exception of Switzerland, the market for private labels is much smaller, indicating that there is plenty of potential for further growth, particularly in the larger consumer markets such asFrance and Italy.

Average penetration for private labels currently runs at 23 per cent in Europe, with Italy having the lowest rate, at 13 per cent, France coming in at 20 per cent and Germany having 25 per cent.

With specific reference to the personal care market, the report points out that consumers are least concerned about paying a premium for famous brands, suggesting that marketers of private labels have got their work cut out to convince consumers over efficacy and quality.

The report's findings show that when changing to private labels from famous brands, female consumers, the biggest spending group, expect to pay less for such products.

This means that marketers much 'tailor communications to capture as much female spending power as possible, especially in personal care where famous brand penetration is high', the report says.

But with the increase in the size of the private label market there is a price to pay. Famous brands are suffering, particularly in the UK market where the competition is getting tougher.

The report highlights the perception amongst UK consumers that they are paying for advertising expenditure when purchasing famous brands, and a more open-minded approach as whether or not to purchase private label products or famous brands.

Datamonitor suggests that to fight back against the seeminly inevitable onslaught of private lable personal care products, famous brand manufacturers should fall back on their larger research and development resources and budgets in an effort to product more innovative products.

Either way it seems inevitable that increased competition between the two segments should see some interesting developments in the European personal care market over the coming years, perhaps pushing innovation to new limits.