Taste may be deal-breaker for private label cereal growth

By Jane Byrne

- Last updated on GMT

Related tags: Private label, Brand

More than 29 per cent of people in North America never buy private label cereal, citing taste as the main reason for not choosing such products, according to a study of 6,100 participants by research firm, Market Force Information.

The survey was conducted in March across the US and Canada, with about three-quarters of respondents being women and approximately 70 per cent reporting household incomes of more than $50,000 per year.

Of the 71 per cent who said they do purchase private label cereal, the top reasons for buying were price, value and promotions.

Private label snacks trends

Citing reasons such as taste, preference for name brand products, quality concerns and brand loyalty, about one-fifth of survey respondents said they never purchase private label snacks such as chips and crackers.

By comparison, only 4 per cent of survey participants said they never purchase private label milk.

Consumer discernment

Private-level brand recognition was also lower with cereal than it was with milk. When asked, consumers could only name nine specific private-label cereal brands and only three of those did not include the supermarket’s name.

This could point to an awareness issue, said the analysts, since only 6 per cent of those surveyed knew for certain that their supermarket sells private-label cereal, or “it could be that consumers cannot discern the difference between private-label and national brands​.”

We discovered that the distinction between private-label and named brands is fading for consumers and they may not even know that certain brands are private label,”​ said Janet Eden-Harris, chief marketing officer at Market Force. “This situation could pose some real challenges for the national brands who must maintain a distinct identity.”

Budget conscious buyers

In January this year, in reference to fiscal challenges being experienced by US firm, Tasty Baking, Datamonitor analyst, Michael Hughes told this publication that cost conscious US consumers, struggling with their day-to-day finances,​are “demonstrating a willingness to give up favoured brands”.

The analyst said that the customers will switch to alternative makes if they feel a better deal can be had.

“Indeed over the last 18 months, 35 per cent of American consumers have looked to reduce spend on bread and bakery products, showing no matter how iconic a brand is, it is not immune to changes in consumer spending patterns as people struggle to overcome the impact of the economic downturn,”​ said Hughes.

According to the analyst, the changes to customer spending patterns have been helped to some extent by improving perceptions of private label.

Hughes said that seven out of ten Americans believe that store own brands are just as good – if not better – than branded products in the food category which means they have a willingness to switch to private label, even in product categories associated with pure indulgence.

“This desire to get a better deal on non-essential groceries also increases the difficulty for Tasty Baking to pass on rising commodity costs down the supply chain to the consumer. Currently, 65 per cent of Americans say that food prices are having a significant impact on finances, and any price prices will further reduced levels of brand loyalty,”​ concluded the analyst.

Related topics: Markets

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