Food: Trends and Opportunities in the UK

During 2018, sales of packaged foods in the United Kingdom exceeded $84 billion, and 36% corresponded to private label products, which have quickly entered this market.

Wednesday, December 11, 2019

The study "Trends and requirements of private label buyers in the food sector in the United Kingdom", prepared by Procomer Costa Rica, indicates that the United Kingdom stands out as the second country in Europe with greater penetration of private label.

The greater concentration of the retail channel (the three main chains account for 45% of food sales) has been key in this dynamism, as increased competition made private brands become a tool to achieve differentiation and exclusivity, and in turn has generated the economies of scale required to support the investment needed for brand positioning, explains the report.

The document notes that "... private label could be an interesting option for food manufacturers since the customer assumes the costs associated with positioning and access is gained to a consumer base already created with guaranteed distribution, however, this analysis is incomplete if it is not taken into account that the model adds challenges in production.

The flexibility of the model (common in a custom solution), generates complexity in inventory management, packaging costs, production line adjustments and limits the margin of action in case of unforeseen changes in demand, all of which could translate into higher costs. In this model, product attributes are as relevant as productivity efficiencies and cost reductions, which require the supplier to have strict cost control, accompanied by a policy of continuous improvement to remain competitive.

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