By Mary Bartnik
In July, the phenomenon was accentuated. Distributors promote their own labels.
There price increase weighs more and more heavily on the sales of branded products in supermarkets. To try to cushion inflation, customers opt for the least expensive items, swapping national brand products for private label (MDD) products in their baskets. Never has the sales gap between these two categories been as wide as in July 2023, according to the Circana institute. Volume sales of private labels have increased by 4.2% over the past year, while those of national brand items have fallen by 7.3%.
“With a differential of more than 11 points, the situation is getting tougher for national brands, which suffered in July from both high prices and the weather.“, explains Circana. National brands are indeed particularly powerful in time-sensitive categories, such as drinks or ice cream. But the trend at work is not dated summer heat. Already last January, volume sales of national brand products fell by 8% over one year.
With a differential of more than 11 points, the situation is getting tougher for national brands, which suffered in July from both high prices and the weather.
The Circana Institute
The price difference between the two product categories (15% to 20% on average) is a determining factor in explaining this fall. Moreover, it is the first-price private label products (Eco+ at Leclerc, Simpl at Carrefour, etc.) that have been the most successful, with sales in volume up 23.3% over one year, compared to just 3.2% for “clic” MDDs. According to the specialist magazine LSA, only 19 of the 75 largest retailers saw their volume sales increase in July.
Collapse of organic
And the evolution of prices is not likely to stop this trend. Admittedly, inflation is decelerating. It reached 13.6% in July over one year, against 15.2% in June and 16% in May. But inflation is slowing less quickly among national brands than among private labels – a consequence of manufacturers’ refusal to renegotiate the prices of their products.
Many distributors were counting on the drop in sales to make their suppliers bend. But to the chagrin of supermarkets, the latter have so far most often opted for temporary discounts and promotions to stem the decline in their sales. Danone for example, agreed to lower the price of 6 Danette references by 18% from July, as did Lesieur for 20 oil references. But these measures are not intended to be long-term, temporary remissions being generally planned for three months.
Distributors have also helped to encourage this change in the behavior of their customers. They showcase their private label products like never before. THE anti-inflation baskets, created at the request of the government, are made up at Carrefour, Intermarché or Système U only of these house products. For several months, Carrefour has been applying a method in-store to relaunch the hypermarket, which gives pride of place to its private labels. Among its recipes: reduce the number of references by 10% and increase the exposure of private label products. As a result, these now represent more than 35% of sales at Carrefour. Finally, the price disputes, which opposed distributors and suppliers, did not help to boost the latter’s sales. System U, for example, has just delisted Procter & Gamble (Pampers, Ariel, Always, etc.), failing to reach an agreement with it on a price reduction.
The downscaling of consumption is also reflected in the collapse of sales of organic products, which suffer from their high prices. In July, they accounted for less than 4% of sales of consumer products in large surfaces, “a level that had not been reached since August 2018, when the label was in full swing“recalls Circana. Volume sales of organic products fell by 11.4% over one year, at the same rate as the delisting of organic products by distributors.