Header image for Try Swedish at PLMA Amsterdam 2023

Why private label?

While growing in Sweden and the Nordics, private label plays an enormous role in European food & beverage. In major economies like Germany, the Netherlands, France, Spain, and the UK, private label ranges from 30% up to nearly 50% of the market value - far higher than Sweden's 26% and the global average of 18%.

But with rising energy costs, record inflation, and anticipated economic downturns across Europe, why focus on private label?

In fact, private label has one key advantage over branded products - guaranteed demand from retailers.

While own label manufacturers face the same cost pressures as branded rivals, private label products have a much stronger relationship with retailers. In exchange for less control over content, packaging, and pricing, suppliers are guaranteed stability and can rely on stable demand from retailers to stock their shelves. 

Indeed, retailers are also more likely to swallow price increases on own label products, as they are often more profitable to retailers than other branded items.

"Private label is one of the tools that they will use to convince shoppers to continue to walk through those doors rather than walk through the door to their competitors."  
- Andrew Walker, Client knowledge director, Kantar 

By contrast, branded product manufacturers are facing increasingly difficult negotiations with retailers who are less willing to raise product prices. After failing to agree with manufacturers, in 2022 the UK's largest supermarket Tesco removed Kraft Heinz products from shelves, and Dutch retail giant Albert Heijn did likewise with Nestlé.

"I am not completely happy with how the big international vendors talk about inflation and what kind of price increases they bring to us. We cannot justify those price increases to support their own profitability." 
- Frans Muller, CEO, Ahold Delhaize

For more information and private label insights, please review the documents below by McKinsey & Company and Nielsen: