FMCG Vs Private Labels

Indian retail industry is witnessing an unprecedented growth with retail names popping up in the market every now and then. Organised retail has grown very rapidly in India with the influence of private labels. However, FMCG players are not perturbed abou
FMCG Brands

Indian retailers have laid a lot of stress on the growth of their private label brands which have a great potential in getting retailers a better bargain when compared with FMCG companies. Retailers, which started launching their private labels as a value alternative to FMCG brands, are now competing with them in respect to product packaging and claim to offer these products at a lower price. However, are consumers ready to let go their brand loyalty? If we ask the FMCG players about this, then the answer to this question is not an affirmative. 

Why private labels cannot eat the FMCG profit pie
“In India, the concept of private labels from retailers is at a nascent stage. Globally, it is a well established concept and P&G (Procter & Gamble) has been, relatively one of the more successful manufacturers in managing this relationship. The underlying reason for that is P&G brings innovation into categories and that really is the key responsibility of the branded manufacturer. As we bring in consumer focused innovation and offer superior experience, the category grows, which in turn means that more consumers walk in to the store to buy that category. Therefore, retailers profit. Disposable diapers are a great example of this. When P&G entered the category with a clear, differentiated benefit and innovation – their baby’s healthy development – the category grew. Other manufacturers got into the category and it grew further. P&G continued to be the pioneer in the category – with “Stages of Development”, “Baby Wipes” and therefore the category continues to grow and the brand stays highly relevant to the consumer, as well as retailers,” opines a P&G spokesperson. 

“With the emergence of modern and organised retail, private labels have become a reality in India. While the private label strategy, the developed markets have matured into a key differentiator, in India. It is just the beginning or rather the realisation that has just started. The contribution of private labels even for major modern trade retailers is about 10-15 per cent in the FMCG category. In addition, private labels have been more popular in generic categories like rice, atta, etc. However, when it comes to food, personal and beauty care products, consumers have been loyal to branded items and will continue to remain so. That said, we are closely monitoring the emergence of private labels even in these categories and we treat them as competition, like any other rival product in the market,” says V S Sitaram, COO, Dabur India Ltd. 

The influence of private labels on FMCG companies in India exhibit the changing consumer attitudes and shopping behaviour in the country, but unlike western retail players like Walmart and Tesco, no Indian retailer can yet give a competition to leading FMCG players. 

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