1. part of Private Label: The brands of the future Planet Retail Ltd | May 2010 By Natalie Berg, Research Director & Matthias Queck, Research Director

2. www.planetretail.net Private Label: The brands of the future 2 of 74 Private Label: The brands of the future  New frugal tendencies amongst shoppers have ignited demand for private label, in addition to a improvements in quality, marketing and SKU rationalisation efforts which have carved out more shelf space for these items.  Key private label trends in Europe such as the rise of super premium, supplier transparency and niche sub-brands will soon become evident in developing PL regions such as North America.  Brand manufacturers must learn to co-exist with private label by adopting new brand-building strategies, while also working collaboratively with retailers in the form of joint promotions and planning.  For an increasing number of retailers, the role of private label is transitioning from generic alternative to FMCG brand. The extension of private label into services and other key areas aims to strengthen brand equity of the retailer and drive shopper loyalty. Previous recessions have shown a clear correlation between private label market share and the economy. In the past, private label sales spiked during a recession but quickly returned to normal levels at the first sign of an upturn. This time, however, private label is sticking.

3. www.planetretail.net Private Label: The brands of the future 3 of 74 1.Global overview 2.10 key private label trends i.Value lines 2.0 ii.Rise of super premium iii.Still a case for standard? iv.SKU rationalisation v.Category brands vi.Niche segments vii.Licensing viii.Provenance ix.Technology and private label x.Brand building 3.How brand manufacturers can win 4.Implications Contents

4. www.planetretail.net Private Label: The brands of the future 4 of 74 1. Global overview

5. www.planetretail.net Private Label: The brands of the future 5 of 74  Shopper frugality and increased focus on prices has been playing into the hands of retailers to continuously extend their private label lines and, as a result, penetration in virtually all markets.  The general trend to discounting, focus on margins and cost control has prompted retailers to rationalise their ranges, freeing up room for PL to underpin their price aggressiveness. The global economic slump has accelerated the growth of private labels, in addition to the underlying long-term shift in power from manufacturers to retailers. 1. Global overview Private labels poised for continued growth Coles, Australia Trader Joe’s (Aldi Nord), USA  Higher margins at lower prices, as well as shopper loyalty are the key benefits of PL for retailers, even more so in an ailing economy.  Stagnating PL shares in a handful of markets – UK, Germany – are just exceptions to the rule. There, brand promotions and price concessions have preliminarily halted PL growth, but are unlikely to be sustainable.