Private labels heading towards maturity

The success of the PLMA exhibition in Amsterdam comes as no surprise. Protagonists face off against one another to the tune of supermarket shelf space.

On one side, branded products defend their established position, on the other the private label antagonists are slowly biting away precious centimetres from them. In the just proportions, this is also true of the tissue field in particular. The market is lively, consumption is increasing, and the challenge for the years to come is wide open.

Paolo Chierici And Katia Salvadori

The international "World of Private Labels" exhibition, organized by PLMA (Private Labels Manufacturers Association) that was held on May 22 and 23, 2001 at the RAI Exhibition Centre in Amsterdam, was an absolute success. It could not have been otherwise, if we consider that for over 15 years, this annual appointment represents an important meeting point between the offer of producing companies and the demands of the main European wholesale and retail buyers. Buyers of supermarkets, discounts, malls, "do-it-yourself" centres, wholesale and internal buyers (and this is a novelty), flocked to the Exhibition Centre with the typical busy and professional frenetic frenzy. At the show's opening, in a triumph of gray suits, briefcases and tailleurs, an ordinate crowd formed outside the fairgrounds. And like floodwaters, at the doors' opening, the world of business men and women surged into the exhibition halls, accompanied by insolent trills and waving antennae of cell phones. Once inside, the increased amount of space made available for this edition, offered a panorama of incredible vastness. Veritably incredible because, if one does not have a clear idea of what to see and who to speak tot good shoes and a floor plan of the show, it is easy to fall victim of astonishing bewilderment. Free access to every object of interest imposes the sacrifice of organizing a logical and, if possible, kilometrically sustainable, route.

PRODUCERS COMING FROM OVER 50 COUNTRIES PRESENTED, IN ABOUT 3000 EXHIBITION BOOTHS, GOODS - AND NOT ONLY FOODSTUFFS - AVAILABLE FOR THE PRIVATE LABEL. Each edition has witnessed a substantial increase in the number of exhibitors and in product categories on show. For this edition, 25 national and regional halls were filled, including new exhibitions coming from Ireland and Greece. Some novelties to be mentioned for the increasing interest they are arousing: biological foods and ethnic food specialties, while, for non-foods, the new section dedicated to household products, products for the do-it-yourself, car accessories and gardening tools, introduced following the direct request of many retailers anxious to expand in the field of these categories which are exhibiting a positive development trend. Even supermarkets and hypermarkets are conferring increasingly greater importance to the private label for these categories. The show also presented a vast assortment of foodstuffs for the Western consumer such as drinks, snacks, fresh and frozen foods, concentrated in the perishable goods hall. This exhibition space, which celebrated its third anniversary, hosted more than 200 companies. Some offered a taste of their wares: drinks, meats, poultry, dairy products and bakery, for the pleasant surprise of those who just happened to be passing by at the right time. Cosmetics and personal care items were also amply promoted by the show. The fast increase of these private label products reflects the new retail marketing trends. Over 5000 buyers visited the constantly crowded booths. Among them, well-known names in the field of large distribution chains emerge: Wal-Mart, Metro, Casino, Carrefour, Sainsbury's, Delhaize, Ahold, Tesco and hard discounts such as Aldi and Lidl. In addition to European retailers and wholesalers, numerous non-European importers coming from Asia, the Middle East, North and South America and Africa also participated at this buying expo. This global participation is an important aspect that brings together, at least as far as economic interests are concerned, different countries and markets that are often very diverse in their individual characteristics.

THE WORLD OF TISSUE. The tissue field saw a large presence of operators, clear indicator of a growth trend. If in the past years, one could express controversial opinions on the importance of private labels, today we are in the presence of an established, fast-growing phenomenon. Consumer preference has slowly shifted towards the private label (see table three with PL sales and volume percentages taken from PLMA's 2001 International Private Label Yearbook, compiled exclusively for the association by ACNielsen statistical data agency). This trend is not only due to reasons dealing merely with cost, hut also with the perceived quality that the well-versed marketing organizations of large distribution have succeeded in transmitting.

Consumer confidence campaigns are bearing their fruits. Percentages show that the game is still open: however, even if this challenge should alternate successes of the one and the other party, it is comforting that, according to statistics, the overall tissue market is experiencing strong growth. And this is true whether it is establishing itself and increasing its consumption in the higher quality products segment, or whether it is opening spaces for itself in young markets having strong vitality and large consumption potential.

ANALYZING THE NOTES TAKEN DURING INTERVIEWS WITH CONVERTERS PRESENT AT THE SHOW, WE IMMEDIATELY FIND IT A DIFFICULT - IF NOT IMPOSSIBLE - TASK TO COME TO COHERENT CONCLUSIONS. To questions such as "What product feature will more greatly attract consumers in the next few years?", some answer by talking about the intrinsic quality of the product and its preciosity, others speak about today's important themes of ecology and recycling, and still others supply precise indications that basically the consumer is till tied to the quality-price ratio. Answers which create an enigma if one is trying to reach a conclusion, as these opinions come from operators often in competition. And what is more amazing is that they are speaking about similar markets, when not indeed about the same market. Once the initial surprise at this fact has worn off and one has had time to digest these answers, it becomes clear that misleading differences or an apparent confusion hide a clear and extremely important reality in its plausible interpretation.

WHAT CONCLUSION UNCONSCIOUSLY BUT STRONGLY EMERGES FROM THIS MOTLEY COLLAGE OF OPINIONS AND ANSWERS? We venture our forecast by talking with other converters on the second day of the show. Tissue as we who work in this field see it, is divided into many products different from the point of view of quality, type, image. These are characteristics attributed to the product by production processes following precise choices, research, investments. For the consumer, who we will say is at an advantage with respect to promotion experts, tissue is "the product" in which he or she looks for, and finds, the feature that most interests him: quality, image and let's add, price. These are characteristics that are perceived more or less consciously. In the most well-off areas (Europe and North America) given the importance that tissue products have acquired in the daily lives of consumers, unable to imagine the lack thereof, the important problem producers face is the supply, in the shortest time possible, of the appropriate quantities in those places where the product is required. It is no more a question of a specific product for a specific market, but rather every product for every demanding, expert and informed category of consumers. The differentiations therefore, are no longer to be found in geographical or economical areas, but, transversally, in the different consumer customs and sensitivity. The battle for market penetration, up to now fought with every means possible, is changing into a quest for greater market stability. This is being carried out through higher-level promotional strategies, alliances with retailing and a less-aggressive approach to consumers, who are today becoming increasingly selective in their search for the characteristics they most desire.

IN SUBSTANCE, IT EMERGES THAT, IF THE PRODUCTS HAVE REACHED QUALITY STANDARDS THAT ANSWER THE NEEDS OF EVERY CONSUMER SEGMENT, THE DIFFICULTIES OF TIMELY DELIVERY STILL EXIST. For everyone, then, logistics will play the fundamental role in the years to come. Those who are not able to reach an efficiency level oriented towards perfection, will have a difficult time. Organization will allow to be present in the right place at the right time, saving money and human resources to be invested in new machinery, research and marketing. It is for this reason that many companies translate these clues into concrete objectives by creating commercial alliances or consortiums. Others by deciding to invest large capitals to establish facilities closer to developing areas. And still others by buying these already-established companies. This latter case is typical of multinationals with their marked sense of business and, above all, availability of enormous liquidities. This latter point is the most widely discussed subject in the paper field and one that reveals the main incognitos for the years to come: how will this field be able to react to the assault of the multinationals? How will small and medium-size producers be able to maintain their market shares? And, finally, will it be possible, as workers' unions sincerely hope, to maintain or increase the employment level, irreplaceable source of income?

In a climate of ill-disguised recession in other fields of investment, harbinger of faraway fears that we would in our own way like to exorcise, this is surely the most pressing question that thousands of workers and their families ask. Workers who are sometimes protagonists, but more often spectators in the disposable products scenario, but always live members of the virtuous cycle of the consumer chain.

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