Colombia: Private Label brands are present in 94 out of 100 homes

Discount Retail Chains revitalized the Private Label brands, supermarket chains are betting on this type of product with its lower prices and higher margins.

Private Label brands began to grow with the arrival of hard discounters in Colombia. Currently, PL is used by all retailers and department stores and is increasingly taking center stage in Colombian purchases. According to Nielsen, as of May of this year, PL brands have had a growth of 17.3%, while commercial brands grow at a rate of 11.3%.

Furthermore, 94% of households are penetrated by PL brands. This indicate that of every $100 that a Colombian spends in retail, $17 goes to a PL brand. Total sales of PL amount to US $ 2.4 billion.

However, within the PL brands there are two categories, those for mass consumption (food and beverages) and those that are not for mass consumption (household appliances). The first weighs 87% of total sales and the second 13%, although during quarantine it grew at a rate of 3%. For example, small appliances are on the rise, as are air conditioners.

According to Gutiérrez, retailers are betting on 'pre-communizing' their PL brand, giving it an innovative concept through differential functional attributes such as packaging, natural and organic products and that they are competitive with traditional brands.

In this sense, the commercial PL brands, those that are not tied to a retail brand, represent 73% of the sales of PL brands.

Meanwhile, white (OE) label brands, which do use the mother brand such as Discount Retail Chain Ara, Olímpica or Éxito, make 17% of sales.

In terms of formats, 75% of discounters sales are from their own PL brands. It should be remembered that these were the first to bet on PL. In contrast, in supermarket chains only 20% of the Colombian spending is on PL brands.

Regarding the consumer profile of PL brands, the high socioeconomic level buy more frequently, at least once a week. The average basket is $ 34. Meanwhile, the frequency of purchases of the mid-level is every eight days with a basked is $ 33. The low level buys every 10 days and spends $ 31.

Gutiérrez explained that, thanks to its growth, the segment gains one percentage point of annually. Last year, PL brands weighed 16% and today they are at 17%. In addition, with this year's crisis, consumers will be careful with each peso spent on purchases.

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