It all started in the 1990s. But, it was in the 2000s that Private Labels’ market share started to pick up considerably and fast. In Grocery for example, with some category-by-category variation, Private Labels could represent between 10-45% of a market (the peak being Frozen Foods, Note #1).
Some twenty years ago, I was at the beginning of my Marketing career, and so-called White Labels seemed almost unbeatable. All of a sudden, Trade was using legit suppliers (often, the same corporations owning Big Brands) and delivering proper products, at an affordable price. Trade was even communicating ‘above the line’. I was in France in 2006, when Hypermarkets and Supermarkets started airing TV ads on their price advantage. Branding was, for the first time in history, under attack. ‘No Logo’ was the manifesto of the decade. What’s the point of Brand romance, when you can get the same substance, unbranded and cheaper? It wasn’t only for families with high consumption frequency and on a budget. Smart shopping started to mean Private Labels and Discounters also for the well-off (for example, Chemical/Toiletries).
The historical point of Trademarks has been standardized quality, seasoned with extraordinary storytelling. Private Labels did stick thanks to quality and pragmatic storytelling, which became so compelling after the 2008 crisis. Craft Brands doubled down against established Brands, by starting to sell directly to consumers with similar quality and storytelling.
We are in the era of the end of Branding.
At least, Branding intended as the linear exercise of production – purchase – waste. The reliance on the linear model made products accessible, affordable for all and profitable for manufacturers. Kraft Heinz CEO recently said that consumption during the Covid 19 pandemic went back to trusted Brand names, thanks to the need to chase safety and known experiences (Note #2). Same was said by the CEO of Cocacola and Mondelez. They also added that they would cut back on innovation and Marketing. For most Brands and corporations, it’s time for efficiency, availability maximization for the core and an overall ‘back to basics’. I get it, if this is limited to the hype of the crisis. But, it will not be a limited homework, I believe. The temptation is to continue with aggressive portfolio optimization, Marketing spend efficiencies and cult of performance advertising for the medium-long term, which would be not only a mistake, but also an enormous business miss. The great opportunity here is to re-stage the meaning of Branding, as an evolution or – better – a revolution vs. that linear model, which made Brands obsolete. Again, the opportunity here is to re-gain relevance, and therefore market share, after three decades of decline.
Brands are the only hope in the run towards circular sustainability, thanks to their powerful R&D and Marketing departments. Brands are the only players able to embrace step change technologies, like Block-chain and AI, and open sourcing experiments towards a more cooperative model of Brand narrative, together with their fans. The biggest efficiencies will be realized not by improving the current linear model, but by shifting model towards circular, thus injecting new meaning into Brand names.
Branding may be back, and that would be great. Private Labels may face their biggest challenge in thirty years, if Brands understand the potential of circular, new tech and cooperative storytelling. I predict at least half of Private Labels’ market shares gone in five to ten years, if this game is played well. This is ‘the’ game for Brands to be back in the spotlight.
Yes, Logo. Finally.