Nosy Tarsee is not alone in becoming hooked on discount indigenous grocery brands. The trend toward private labels among big retailers has caught the attention of other countries, where popular brands seek to capture a bigger share of the local market, recognizing that this segment is now a dominant rival.
Some of the leading private-label grocery brands from major supermarket chains in the Philippines are SM Bonus, a private label from SM Markets; Everyday, another private label under SM Markets focused on basic groceries and household essentials; Pure Basics of Puregold Price Club; and Robinsons Supermarket, which also develops its own store-brand products, often in fresh and packaged food categories, though specific brand names may vary by store and region.
Hard-discount formats like Dali Everyday Grocery stock a high proportion of proprietary brands that function similarly to private labels, offering low-priced grocery items under the store’s own branding.
The US Department of Agriculture estimated that private-label grocery sales reached $896 million last year. Maybank Securities Research found that listed food retailers all have exposure to producing their own brands.
The USDA estimates the private-label grocery market will grow by 5 percent per annum over the next five years, accounting for 7 to 10 percent of total grocery sales. Key categories in private labels include fresh produce, frozen meats, oils, condiments, and spices.
Private labels are luring Nosy Tarsee and other consumers with their value, quality, and convenience, helping stretch the household budget. Listed food retailers SM Retail, Robinsons, and Puregold all have private labels, accounting for about 5 to 25 percent of their top-line brands.
Private labels could be a driver of margin expansion in the long run, provided they execute well, according to Maybank Securities. Retailers prefer to sell their own brands because their margins are 30 to 40 percent, compared to 15 to 25 percent for other brands.
Private labels contribute about 10 to 15 percent of SM Retail’s total grocery sales, the highest among modern retailers, according to Maybank. SM Retail’s private labels span fresh meat and poultry, such as chicken and eggs; frozen items, such as mixed vegetables; canned and packaged foods, such as pasta, whole-kernel corn, rice, and coconut oil; and non-food items, such as tissue, dishwashing liquid and tube ice.
For consumers, SM Bonus brands cost up to 40 percent less than leading brands. Private labels also benefit small manufacturers, which can use the names of large institutions to enter the market.