The A-brands in Dutch supermarkets are going through a difficult period. Due to the higher prices of products, consumers are more likely to opt for the private label than for premium brands. At the request of radio station BNR, research agency GfK calculated how great the loss of turnover of A-brands can be and comes to an estimated loss of turnover of 1.5 billion euros (USD 1.6 Billion) this year.
According to the market researchers, the share of private labels has increased by 6 percent over the past few months at the expense of A-brands. This fits in with the strategy of consumers to try the cheaper private label variant and thus save money.
The price difference between A and private labels was 45 percent two years ago, but that has steadily increased. A-brands have increased their prices by an average of 10 percent in recent months, while private labels have become on average 7 percent more expensive.
On balance, supermarkets themselves notice relatively little of the shift in consumer preference when it comes to total revenues. According to GfK, the total annual turnover of Dutch supermarkets will remain unchanged at around 45 billion euros (USD 48 billion) in 2022.
But supermarkets do see the shift as an opportunity to promote their own brands. They take a larger margin on those products than on the A-brands, while they can temper the price increases for customers.
An additional problem for the manufacturers of A-brands is that it seems to be difficult to win back buyers. They are already having a hard time communicating the added value for their brands, and with the widening price difference that will only become more difficult. According to brand expert Paul Moers, this means that A-brands must focus more on advertising campaigns, he tells BNR.