Private-label products driving FMCG’s into the ground

Talk to a marketing manager of an FMCG brand and you’re likely to hear that times are tough. As I explored briefly in my previous post, the Australian supermarket giants Coles and Woolworths are continually driving down the profit margins of their suppliers due to their significant buying power in the duopolistic grocery market. But beyond the supermarkets’ significant buying power, FMCG brands need to cope with the added pressure of private labels. Private label brands are those that are self-owned, self-managed and self-stocked by retailers. In the Australian grocery market, two examples are the Coles-owned ‘You’ll love Coles’ brand and the Woolworths-owned ‘Woolworths Select’ brand.  As I’ll explain the increasing prevalence of these private label brands is putting the hurt on FMCG marketers, big-time.

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The Battle for Aussie Supermarket Supremacy

The Aussie supermarket landscape is the most hotly contested in the world. Nowhere else do two supermarket giants control the grocery market as tightly as Coles and Woolworths do. Their stranglehold on the market is so strong that it impacts their competitors, customers and the suppliers of the many products they sell. Both Woolies and Coles seem to be locked in a constant price war, each employing a range of tactics like price promotions and loyalty schemes to win customers and gain an edge. Critics claim the price-war tactics that Woolies and Coles throw at each other are anti-competitive, but the stark reality is that the strategies of the two supermarket giants are unlikely to change anytime soon.

What is changing, however, is the demographic of the Aussie grocery shopper and the tactics that the marketers of fast-moving consumer goods (FMCG’s) companies use to attract new customers. This article will explore some of the insights of the changing Aussie grocery shopper, along with some of the tactics the FMCG marketers out there are using to win the Battle of the Aisles.

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