Are White Brands an I+D and Employment Threat?

Escrito el 26 febrero 2009 por Jesus Guerro en General

In the centre of the dabate about the strategy to go on in the Distribution Chains (withdrawing brands, reducing references or supplier partnerships), Distributor brands keep on gaining market share in Spain although their prices are every day higher versus Suppliers´ Brands. According to a TNS Study, the Distribution Brands rised to 32,5% of total Food turnover facing the 29% figured in 2007. So, more than 10.000 millions of euros.
Each home spent 652€ in 2008 purchasing this kind of products, which represents a 12% increment related to the previous year. Nevertheless, this increment dis not supose more consumption, cause of the Distributor Brand increased its price a 9% facing 2007. On the other hand, Suppliers´ brands only increased a 3%, so three times less. It could be a third of the price gap between them as average.

In some products or categories the market share is overwhelming. In the case of Intense Olive Oil the distributor brands reach the 78% of total sales. The industry already has claimed that this policy is a real threat for I+D, product development and then, employment in the sector.
Olive Oil producers are frigthened facing this trend. Jose Pont (President of Olive Oil Industry&Trade Association) foresees a «black future» for the sector if added value is not differentiated. According to his own words «the Distributor Brand does not innovate, it is only a question of cost».
This Association claims that the weigth of Olive Oil Distributor Brand in other external markets is not so important. In England, it suposes 50%, 25% in France and It doesn´t exist in EEUU.
Is the Distributor Brand a Real Thread for I+D and employment? Is it a trend against progress?


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