Private-label opens doors for confectionery makers

In recent months, the entire food chain - from farmer to consumer - has felt the impact of soaring prices for essential inputs, such as fuel and ingredients, which has sent costs spiralling upwards.

Recent figures from the OECD revealed food prices, overall, rose by 6.5 per cent in the 12 months to June.

While light price relief for certain raw materials – wheat, for example – is on the horizon, observers foresee challenging economic circumstances to continue in the short term.

And in times of economic straits, history has shown that consumers are wont to ditch certain branded goods, switching instead to cheaper private-label products.

A case in point is Spanish firm Natra, a supplier of own-label cocoa and chocolate products, that claims to be present, through its PLB products, in 24 of the 30 largest retail groups in Europe.

The chocolate-spread maker cites recent data from market analysts AC Nielsen that reveal the consumer switch from branded to private label goods in the US market has enabled growth in the consumption of private label products in excess of 10 per cent, compared to 3.2 per cent growth for branded products.

The estimates suggest that within the confectionary category, private label products will record significant growth of 27 per cent in 2008.

Aiming to reap a slice of this growth, the Valencia-based company recently communicated that "at a time when sales of PLB products are soaring in the US due to the economic situation"​, it aims to strengthen the firm's position in the US market with a new local office in California.

Supporting this view, in a recent interview with the UK's Financial Times, Justin King, chief executive of the UK's third biggest supermarket group J Sainsbury, said that the price “gap between brand and own label is as wide as it’s ever been”,​ adding that inflation had "come through much more strongly on branded goods”.​

According to research sponsored by the supermarket, a considerable 62 per cent of shoppers said they were more likely to buy supermarket own-brand products than a year ago.

A figure that makes for significant private label pickings for food formulators.

Natra, which produces 115,000 tons of chocolate products annually, claims to be the largest private label producer of chocolate spread in the EU, following the recent acquisition of Nutkoa chocolate spread factory in Italy, and Belgium-based chocolate factory All Crump.

The company also asserts that it is the second largest chocolate spread manufacturer in the world in terms of market share, following behind confectionery maker Ferraro, which manufactures the universally popular spread Nutella.