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EC study: Do retailers’ own brands reduce consumer choice and industry innovation?

By Caroline Scott-Thomas , 12-Dec-2012

Are own brands curbing innovation?
Are own brands curbing innovation?

The European Commission (EC) has said it intends to conduct a study on whether expanded use of private label food and beverage products has restricted consumer choice and industry innovation.

The Commission said the study has been prompted by calls from stakeholders, who have highlighted a lack of comprehensive up-to-date data on choice and innovation in the food sector, and the possibility that increased concentration of the retail sector may have led to unfair trading practices.

Commission Vice President in charge of competition policy Joaquín Almunia said in a statement: "Many stakeholders argue that European food markets do not work well, but we need more comprehensive data to assess these claims. Therefore, we have decided to carry out a detailed study to find out whether European consumers enjoy sufficient choice and innovative products adapted to their needs when buying food. This will help us determine how to best solve these problems."

From a consumer choice perspective, the study is intended to assess whether concentration of the retail sector in some areas has reduced choice, by measuring the variety of products available. In addition, the study will examine innovation, measuring the number of entirely new products and products with new ingredients or characteristics that have appeared in recent years.

Successful ranges of own-brand products have given retailers “growing bargaining power vis-à-vis suppliers and may result in unfair trading practices, where individual suppliers are forced to accept unfavourable conditions for fear of losing a big – or sometimes even only – client,” the EC said.

The Commission has called for tenders from relevant experts by February 14, 2013. A final report from the study is expected by the end of next year, after which time the EC will assess the results and may propose changes to improve the functioning of EU food markets.

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