Melbourne Herald Sun, Friday January 21, 2011
There's an Australian species that is being constantly, relentlessly driven towards extinction, yet nobody seems to care or speak out. Even the victims themselves.
The species is the dwindling race called Australian grocery manufacturers. The people who, for two centuries, have made what we eat and what we drink and the goods we buy. And their greatest predators are our vast supermarket chains.
A recent report from IBISWorld has once again pointed to the advance of the giants Coles and Woolworths as they grind the smaller brands off their shelves.
They have now reached a point where 25 per cent of their sales are private brand. But they have a higher target. After all, in the US more than a third of the products are own label, while in Britain it has now risen to over 50 per cent.
The latest category to feel the encroachment of private brands is liquor. By now we've grown accustomed to the fact that most of our take-away booze comes from the Big Two.
What, you don't buy your beer at Woolworths or Coles? Well how about BWS or Dan Murphy's or ALH, they're all Woolies. While Liquorland, Vintage Cellars and 1st Choice are Coles. Against them is the scattering of high street wine shops and pubs. Not much of a contest, is it?
What's happening now is a private label assault inside the booze barns. Wines like Baily & Baily and Crittenden, beers like Dry Dock and Platinum Blonde; Mishka vodka and Napoleon 1875 brandy, are all Woolies.
Coles also have a string of beers and wines. IBISWorld predict that in two years the majors will own 10 per cent of the liquor they sell, in Britain it’s already 30 per cent. At a time when our winemakers are struggling to turn a profit, they will be an easy mark.
Michele Levine, Managing Director of Roy Morgan Research, believes the independent brands are running out of time: “Our data indicates the move towards stores’ own brands is a function of improved product.”
So as the plain wrap gets less plain, there is less reason to spend the extra on familiar labels. Look at the results of recent Choice taste tests. The top products in ice cream, pasta, sauce, baked beans, cheese and sliced peaches were own brands. Even Tim Tams had a fight to come out equal with Coles Surrenders.
An eleven year study by Morgans showed the shoppers who declared “I buy more store’s own products than well known brands” had risen from 25 to 38 per cent.
IBISWorld senior analyst Naren Savasailam points to just a few safe areas, so far. “Confectionery, hygiene and cosmetics - the public trust their brands more,” he said. After all who wants fake Mars Bars or Chanel?
This illustrates the importance of giving your brand a strong identity, so the others look like fakes and the customers will insist on yours.
What’s the point of keeping a diversity of brands? Well, do we need more than two species of kangaroo, or parrot? What’s the point of 100 breeds of duck?
In business, just like in nature, we should insist on variety, through a wide range of choice.
