Private labels on the rise in Poland

2010-02-03

In 2009, sales of private label foodstuffs increased by 19.4% in terms of value, and demand for private label household chemicals by 28%, according to Nielsen, quoted by Rzeczpospolita. The share of private label products as a proportion of the juices and nectars market increased by 3 percentage points to 29%, in 2009. The most extensive budget product offers are those of discount chains: private label foods and household chemicals account for 57.3% and 64.8% respectively of the total offer. However, at hypermarkets and supermarkets, private label goods account for around 5% and 7% respectively of the total offer.
As a result, manufacturers of private label products reported a significant increase in turnover in 2009. By way of example, production at the retail chains of Makarony Polskie, the well-known pasta producer, increased by 40% year on year in 2009. Private label goods are responsible for 70% of the company’s turnover. In addition, the revenues of Sokpol, a manufacturer of soft drinks, from the sales of private label products increased by well over 10% in 2009. The producer invested €10m in order to broaden its offer by adding ketchups, mayonnaises and mustards. Domain Menada, a Belvedere subsidiary, which sells wine, increased the amount of wine produced under a private label by 20% in 2009.

According to our estimates, the value of the Polish private label market in 2008 amounted to PLN 16.2bn (€3.7bn) – a 23% increase towards 2007. We estimate that in 2009 the market dynamic was higher, at the level of 27%, while its value reached PLN 20.5bn (€4bn).
The rapid growth of the Polish market of private labels is due to a wider selection offered by retailers, the improving quality of products within chain label ranges, and the better perception of them on the part of Polish consumers. It is also a consequence of a mounting number of discount stores and an increase in the share of private labels in the traditional trade, as wholesalers and chains of small traditional shops now introduce their own labels.
The slightly higher market dynamic in 2009 resulted also from the economic slowdown, forcing the consumers to choose cheaper merchandise, like private label lines.
We expect that over the next years the market will continue growing at a two-figure rate, but due to the high base the level of dynamic will be lower.

Patrycja Nalepa
PMR Retail Analyst