Creating and managing

brand value
TM
Private brands
A global guide to the rise of
private label brands
Creating and managing
brand value
TM
My rst private label experience
HAND
SOAP
INDIAN
CURRY
SAUCE
COOKING
OIL
BATHROOM
CLEANER
Page 1 Private brands: a global guide to the rise of private label brands
Introduction
United States of America
Dyfed Fred Richards
Cincinnati
I distinctly remember 1981-82, for
a number of reasons: I was living in
Britain, and it was the year of the
Falklands War and the start of the
bitter miners strike that came to full
efect in 1984. It also was the year I rst
encountered private label packaging.
Maybe, subconsciously, even then I
knew bad design when I encountered it?
I was sent by my mother to the local
supermarket, Liptons, to purchase some
sliced bread and my favorite tin of baked
beans beans on toast being somewhat
of a delicacy in the UK! At the shelf I was
amazed to see what can only be described
as packaging that looked like army rations.
It was a plain white can with stencil-style
lettering that simply said baked beans.
Knowing that money was tight and I
was on marching orders from my mother
to not overspend, I still could not bring
myself to purchase the private label can
of baked beans: Heinz baked beans was
the winner then, and it remains so today.
Later that same month, I was horried
to discover Liptons private label packaging
in my home. Was my family also being
afected by the miners strike and the
nancial squeeze gripping the country?
Was the terrible poverty and hardship
we were watching on TV every night
invading our home in the form of this
shocking-looking packaging?
In the early days, many
consumers believed that
private label goods were the
same as branded goods in
less-fancy packaging.
This prompted brands to go on the
ofensive and publicly state that they
did not engage in producing private
label brands. The war for shelf space and
consumer loyalty had begun!
After an initial trend of looking cheap,
private label brands tried to copy the
designs of their branded competitors as
closely as possible in an efort to gain
some of the brands aesthetic cache.
The strategy behind this approach is still
unclear to me: was the idea to confuse the
consumer or, even worse, trick them into
buying private label instead of the brand
they had trusted for so long?
New and exciting times
Little did I know or understand way back
in 1981 that what appeared to be a terrible
design crime would turn into a global
phenomenon and an industry in which
I would be actively involved. (In fact,
when I worked as a package designer in
London with Safeway and Sainsburys,
their commitment to raising the design
standards for their respective private
brands was very clear.)
Thankfully, package design for private
label products has advanced by quantum
leaps since those early days of emulating
army rations and copying brands as closely
as possible (while avoiding legal action).
Today private label packaging frequently
sets the standard and tone for high-end
design and consumer expectations for
product delivery.
British and Swiss private label brands,
for example, have capitalized on the
opportunity to create white space
on shelf and distance themselves
from the perception that private label
goods are inferior to the brands they once
tried to emulate. Better yet, some private
label brands have become destination
brands in their own right. No longer need
consumers feel shame in the checkout line
when placing private label products on the
conveyor. Private label brands are creating
new and exciting design languages,
consistently winning design awards,
driving business and delighting consumers.
Private label is a growth industry, and
one that we can learn from as designers
and brand developers. It is becoming
abundantly clear that consumers are far
more open to new creative ideas than we
ever dared imagine. While once branded
products led the way, today private label
market share is growing year on year.
1981 seems so long ago that I hardly dare
wonder what my weekly grocery shopping
experience will be like 26 years from now.
Certainly, the future appears bright and
oh-so-very private.
Dyfed Fred Richards
Executive Creative Director
North America
fred.richards@interbrand.com
Private label brands now have the
power to become destination brands
in their own right. Tesco, Harvey Nichols,
and Waitrose are great examples of
this principle.
Creating and managing
brand value
TM
CORN
FLAKES
NET WT. 8OZ
FAMILY
SHAMPOO
Page 2
Contents
Private brands

What is the strategy behind copying the master
brand? Is it to confuse, cheat, or question the
consumers ability to choose?
Introduction
Dyfed Fred Richards
Executive Creative Director / North America
fred.richards@interbrand.com
No complex
Marina Papendieck
Executive Director / Buenos Aires
marina.papendieck@interbrand.com
A view from Japan
Yuji Ohba
Creative Director / Tokyo
y.ohba@interbrand.co.jp
One of these things
(is not like the others)
Rick Mariani
Senior Creative Director / Cincinnati
rick.mariani@interbrand.com
Private label to retailer brands
Borja Borrero
Executive Creative Director / Madrid
borja.borrero@interbrand.com
A very private New Zealand
Debbie Hyde Creative Director
James Bickford Director, Head of Strategy
New Zealand
debbie.hyde@interbrand.co.nz
james.bickford@interbrand.co.nz
Swiss Magic: From copycats
to natural born winner
Andreas Rotzler Chief Creative Ofcer
Dr. Thomas Deigendesch Senior Consultant
Zrich
andreas.rotzler@interbrand.ch
thomas.deigendesch@interbrand.ch
Distinction is next for Europe
Ronald Bartikowski
Creative Director / Hamburg
ronald.bartikowski@interbrand.de
Opportunity and leverage
Dyfed Fred Richards
Executive Creative Director / North America
fred.richards@interbrand.com
The importance of private label
in creating value
Daniela Nunzi-Mihranian
Creative Director / London
dnunzi-mihranian@interbrand.co.uk
The threat!
Leigh Bachman
Executive Director, Strategy & Research / Cincinnati
leigh.bachman@interbrand.com
Creating and managing
brand value
TM
Consumers believe that they are choosing
a cheap, low-quality product compared to
leader brands, instead of conrming their
good value for money.
Page 3 Private Brands: a global guide to the rise of private label brands
No complex
Argentina
Marina Papendieck
Buenos Aires
Argentina witnessed the emergence
of outlet brands some time before the notion
of private brands invaded the market. For
consumers, outlet brands meant choosing
a lower-quality or defective product.
Contrary to that view, the advantage of
private brands is that they have the same
quality as other renowned brands because,
although supermarkets and retail chains
distribute and promote them, products are
manufactured by the top companies
in each sector.
In Argentina, private brands emerged with
the repeated economic crises that plagued
the economy since the 1980s, when
top food companies and supermarkets
launched hundreds of
good quality products at
a lower price. However,
with economic recovery,
consumers have gone back
to leader brands.
On the verge of a new
economic crisis in the
Argentine economy,
private brands have a new
chance to consolidate
themselves as a real option
when consumers choose a
product and increase their
participation in
the market.
A walk around the
shelves reveals that mass
consumers give close
consideration to product
design codes according to category, both
in general brands and private brands. It is
not just that the latter copy leader brands;
it is quite rare to nd really innovative,
distinctive proposals in the segment.
Only a few dare to do so.
Thus, private brands seek to look like or
copy other brands to succeed in making
it to the category and becoming a real
option for consumers.
Consumers purchasing private label
products benet from a reasonable
option in terms of quality (which many
times is even higher than the credit these
products are given, if we take into account
that suppliers are the same as the leader
brands) and a very good option in terms
of price.
Price is key: it is the fundamental reason
why consumers buy and
choose a private brand.
Otherwise, they would
probably go with their
usual, favorite brand.
Originally, private brands
packaging designs were
poor, which rather than
reecting lower prices
actually made consumers
suspicious about product
quality. Thus, they
associated them mostly
with outlet brands.
It is quite understandable
that in the midst of
economic crisis, ination
and a generalized increase
in prices, consumers
should restrict their
shopping options and
(many times) quit buying their favorite
brands in favor of private brands.
But this should not make consumers
feel like they are buying a bad product.
Actually, private brands succeed in ofering
a good quality/price ratio, which is the
reason why their package designs should
conrm this perception and not contribute
to consumers suspicions of private brands
being low-quality products.
Low investment in package design results
in having consumers believe that they are
choosing a cheap, low-quality product
compared to leader brands, instead of
conrming their good value for the money.
A consistent message for a private brands
packaging design should highlight that it
is a good staple, basic, albeit good-quality
product. Product design should strive to
make consumers feel they made a smart
choice rather than feel ashamed of the
products they are buying.
As stated above, the main reason why
todays Argentine consumers choose a
private brand is price; otherwise, they go
promptly back to their favorite brand. But
if private brands also ofered a good choice
in terms of packaging, they would increase
ten-fold their opportunities vis--vis
competitors and ensure consumer loyalty,
even in the event of economic crisis.
Today the Jumbo chain is a leader in
achieving this with its private brands.
Package design has improved considerably,
and Jumbos consumers see the chains
products as a valid alternative and a smart
buy. They would rather not pay more for
more traditional or renowned brands,
particularly for similar quality.
A good design could be a key contributor
to a more appealing, value-for-the-money
proposal. It also could result in happier
consumers who are proud of their smart
buys and not just resigned buyers.
Private brands should be a good choice
for consumers due to their many benets.
They also should entice consumers to try
them and demonstrate why choosing
leader brands is not the only way of
guaranteeing satisfaction.
Marina Papendieck
Executive Director
Buenos Aires
marina.papendieck@interbrand.com
Page 4
Creating and managing
brand value
TM
A view from
Japan
Japan
Yuji Ohba
Osaka
The continuous increase in raw material
costs has pushed up the prices of all
kinds of consumer products. This has
made consumers quick to switch to
Private Brand products (PB products).
PB products are dened as those that are
planned by a distributor (seller), produced
by a manufacturer, and sold solely by that
same distributor. In contrast, National
Brand products
(NB products)
are planned and
produced by a
manufacturer and
are basically open
to all markets (and
distributors) to
sell. For example, a
leading Japanese PB brand, Top Value, is
sold at only Aeon, Jusco, and Daiei, which
are major Japanese distributors.
The prot margin for PB products is
roughly estimated to be about 40 to 50
percent, while the margin for NB products
is about 20 percent. The direct deal
between manufacturer and distributor
enables PB products much larger margin.
However, unless the scale of merit for the
product is similar in consumers eyes, it is
unrealistic to expect to maintain this large
of a prot margin.
Top Value originated in 1974, the year
of oil shock, and the Top Value brand
name was established in 1994. Company
sales have increased dramatically over
the years they were up 120 percent
in 2007 and 130 -140 percent in 2008.
Similarly, the entire PB category has also
expanded its market share, generating
erce competition among various PB
products. Today, health and safety features
are important value-adds, and package
designs are more rened.
To address the issue of improving PB
product safety a source of controversy
in recent years former Wal-Mart CEO
Lee Scott recently announced that the
company will require all of its PB product
manufacturers, including the largest
manufacturer in China, to disclose their
products histories. However, acquiring
certicates for safety and environmental
issues from third parties in order to comply
with Wal-Marts
new requirement
will mean additional
costs to the
manufacturers,
and thus some
opposition to
the plan is to be
expected. Scott also
mentioned that the current worldwide
economic crisis has made PB products
indispensable to consumers and that Wal-
Mart is planning to expand its business
into Brazil, India, China, and Russia.
The main diference between the
Japanese PB product market and the
European and US markets is that in
Europe and the US, PB-only manufacturers
co-exist with top brand manufacturers.
In Japan, only top brand manufacturers
produce PB products; there are no
PB-only manufacturers. That situation will
probably remain unchanged. Meanwhile,
the sales of PB products are expected to
increase, and their packaging will become
even more rened and categorized.
Yuji Ohba
Creative Director
Tokyo
y.ohba@interbrand.co.jp
Resource: Nikkei News Oct. 23, 2008 / Spa Business Oct.08
Photo by Takahide Nakamura, Japan
Creating and managing
brand value
TM
Page 5 Private Brands: a global guide to the rise of private label brands
One of these
things (is not
like the others)
United States of America
Rick Mariani
Cincinnati
Do you remember the game One of
These Things (Is Not Like the Others)?
Perhaps youve played this with your
children or recall watching the singsong
version from Sesame Street when you
were younger. The games purpose
was to teach you how to observe and
analyze diferent objects.
As a kid, I loved this game and was always
making comparisons. I can remember
trying to nd the diferences between
national brand packaging and the grocery
store knock-ofs. My mother would
insist that the only diference was in the
price. Its the same thing; it just costs a
little less, she would tell me. Since the
packaging looked almost the same, I
believed the food would taste almost the
same. And since I would eat anything
when it came to snacks, it didnt seem to
really matter.
Today, however, the shopping experience
has become a little more challenging.
There are more and more products
screaming for your attention, and the
copycat store brands complicate
things further.
Why copy?
Consumers play One of These Things
(Is Not Like the Others) every day in
the grocery store. They see private label
packaging that is similar to the name
brand in color and architecture. Why does
the private label brand copy? Does it really
want to fool the consumer? Or is there a
lack of condence that the private label
brand will not be able to compete with the
national brand? Retailers such as Kroger,
Safeway and CVS adopted the copycat
strategy a long time ago. Why? Because
its easy. By piggybacking on the success
of national brands, retailers can elevate
products that might have been viewed
by consumers as generic. For a small
investment, retailers can reverse-engineer
the national brands and leverage what is
already working. Little research
is necessary, and manufacturers are
often willing to create the product at a
lower price.
Following the look of the national brand
opens the door to parity. The concern is
that the retailer often instructs its agency
to simply create a package very similar
to the national brand, which limits any
design exploration. Sure, its a safe way to
get a product to shelf, but is it the best way
to win the consumers trust?
Missed opportunities
Private label is the biggest missed
opportunity in the US retail market today.
However, transformation of private
label brands into store brands is on the
horizon. Retailers such as Target and
Wal-Mart have begun to elevate their
store brands into something bigger and
better. (Targets Archer Farms brand is an
example of how copycat package design
is no longer the norm.) These retailers
have discovered new insights into what
consumers will buy, and these insights
have allowed them to build connections
with those consumers. The retailers also
have advance notice about the marketing
plans of national brands, and they control
the everyday shopping environment. By
capitalizing on these advantages, the
retailer can identify consumers product
needs and, importantly, which needs
currently are not being met to build
better shopper experiences.
Page 6
The retailer has an advantage over
national brands. They own the canvas
where consumers shop. If they listen,
they can lead the shoppers to a better
experience and lay the foundation to
build a true store brand!
Target recently introduced a new cereal
box under its store brand, Archer Farms,
that has brought a new innovation to
the category. Bag in box, a resealable
cereal box, was developed to help keep
the product fresh. Target fulfilled an
unmet need and delivered a better
consumer experience.
Innovation may be as simple as
challenging the consumer to think
differently about a packaging structure
or product use. Little surprises can
delight the consumer and build loyalty
for the masterbrand, which puts the
retailer in a leadership role.
Look beyond our borders
In the United Kingdom, retailers such as
Tesco, Marks & Spencer, and Waitrose have
elevated the shoppers experience through
their store brands. However, evolving
private label brands into store brands does
not happen overnight. The UK market was
the rst to invest in this strategy, which
has matured over time. Tesco launched its
rst private label brand in 1924. According
to the book Private Label: Turning the Retail
Brand Threat Into Your Biggest Opportunity,
ten years ago Tescos private label products
accounted for only a quarter of its revenue.
Today it accounts for more than half of its
revenue. Tesco expanded its private label
into a three-tier approach: Tescos value
brand, Tescos premium brand and Tescos
Finest. Tescos Finest is a great example
of a retailer elevating a store brand to a
higher standard. Consumers view it as
the best product and do not mind paying
a little more for it because they trust its
quality. Listening to consumers has helped
Tesco identify ways to expand its product
line, which, in turn, has created new
shopper experiences and keeps consumers
coming back for more.
Facing the challenge
The UK has shown the rest of the world
how powerful store brands have become.
In the US, consumers are savvier about
private label than many companies
believe. Target and Wal-Mart have
recognized this and have put solid store
brand strategies in place. Other retailers
also need to invest in their own brands and
begin to build a foundation of trust with
consumers. Are Kroger, Safeway, and CVS
ready and willing to adjust their strategies
to build their store brands? The consumer
is ready! If we are to copy anything, lets
copy the UKs success and breathe new
life into the shoppers experience. Stop
copying and start leading! Building store
brands that mean something to the
shopper will increase your share of total
consumer purchases.
Rick Mariani
Senior Creative Director
Cincinnati
rick.mariani@interbrand.com
Creating and managing
brand value
TM
Private label to
retailer brands
Spain
Borja Borrero
Madrid
When private label brands were born,
they first positioned themselves as being
the cheapest product alternative in the
market. They weren t very attractive and
offered almost no guarantee of quality.
It was hard to imagine back then that
they would reach the level of brands
delivered by manufacturers or evolve
into premium products.
Private label brands have developed
incredibly fast. In just a few decades they
have revolutionized the market and gained
important market share against brand
name brands. Such incredible development
has forced private label brands to change
their names accordingly. No longer are they
no ones brands. They are now endorsed
by retailers, contributing added value to a
retailers brand and boosting
customer loyalty.
A trend that reects the evolution and
consolidation of private label brands
is retailers increasing investment in
packaging, which they are recognizing as an
important customer touch point. Retailers
growing interest and pride in their store
brands demonstrate their concern about
developing a personality that diferentiates
them and their oferings. For years this
situation has afected the store; now it
afects the product and its design.
The development of store brands has
reached the point where retailers today
not only ofer basic products but also those
associated with emotional benets. We also
see that they provide additional services
such as Braille, customer service, nutritional
information, and even stories to enrich the
packaging and the brand.
Yet, aside from these developments,
important weaknesses continue to be
detected in the retailers brands. The most
important one is the lack of transparency
about the products manufacturers. Most
consumers are unaware of the origins of
these products, and it makes them
feel distrustful.
For many, retailer brands prices, which
typically are lower than the rest of the
category, are usually interpreted as signaling
an absence of quality. This fact can make
consumers feel guilty about not buying the
best products for their families. The look
and feel of the store also inuences the
way consumers perceive a retailers brands.
The objective is to make the purchaser see
the retailer brand as an intelligent buy,
combining low price and high personal
satisfaction. This way, the retailers brands
become valued, safe options that, through
the condence they inspire, deliver
personal satisfaction.
Going back to packaging, there is an
important cultural issue we discovered in
our research for the supermarket chain
DIA. In Spain, the most efective packaging
designs show the product in a natural way,
with a healthy, understated appearance.
In the US, however, wild colors,
spectacular type styles and a lot of visual
efects sell better.
The fast growth of
retail chains and the
maximization of their
resources, combined with
a culturally connected
world, enable us to think
in universal graphic codes
that make it possible to communicate with
many diferent targets. We should not forget
that brands need to adapt to the specic
characteristics of each market, but there
are some packaging elements and concepts
that we can consider globally. Relating to
the signature system, the most common
options are:
Product focus: The product uses a discreet
signature system with low brand visibility
that works as a warranty for the product. It
somewhat camouages the brand, giving
more importance to the product.
Brand focus: The brand is very visible and
leads the product. It communicates power
and pride in belonging, betting on this
transparency. One caution: this option can
have twice the negative impact
if the product fails.
Product and brand focus: This very
common graphic approach places the brand
in a lower position. Graphically it is very
dynamic; it has a high visibility and doesnt
need to saturate the brand use. Its versatility
becomes clear when it makes the most
of some other elements that accompany
it. This system usually works with many
diferent product categories (perfume,
children, and pets).
Traditionally, the design objectives for
retailers brands followed the trends of
market leaders. Now, however, retailers
brands are starting to innovate and even
move faster than some brand name
manufacturers in bringing new products
to life. Sometimes a retailers relationship-
building and customer-satisfaction eforts
are so efective even after imitating
a market leaders strategy that when
a branded manufacturer has to remove
a product reference because of bad
performance, the retailer is still rewarded
for it and keeps it.
Another important component of retailers
brands is communication. Supporting the
packaging with consistent information,
both in and outside the purchase space,
is important to gain client condence
and satisfaction. It is also a great
opportunity to establish an ownable style of
communication.
Increasing consumer concerns about
healthy living, product safety, and quality
make it mandatory to provide
organized and tidy product information on
a package, such as the main and secondary
propositions, simple and efective usage
guidelines, convenience information,
nutritional facts, and other important facts.
Another issue we should take into account
is the brands verbal identity. It should
always reect the brand DNA and can help
make retailer products more attractive
to the target markets. The development
of this identity can be conventional or
more poetic. The second option is more
creative and can better diferentiate the
brand, but sometimes it can be difcult to
adapt a product name to other cultures
and languages. (The word chocolate, for
example, is one word that works in diferent
languages.)
The use of an ownable type style/font across
a large quantity of references can help
retailers to create a consistent identity and
can facilitate the management and control
of the design. Use of a versatile and widely
available font also can solve many of the
problems of a multi-language strategy. The
counterpoint to the type simplicity would
be the logotipacion of all the product
references imitating the market trends.
Another area in which retailer brands
should invest a big part of their eforts is in
choosing photography that not only helps
to identify the product but also suggests,
evokes and enriches its content.
Retailer brands have grown in Spain 30
percent in the last year. To maintain this
rate of growth they will need to emphasize
authenticity, think always about the
consumer and invest consistently in R&D.
Issues such as universal design, Braille,
products for diabetics, avors adapted to
diferent cultures and eco-sustainability
will be more important each day in an
environment where the emotional aspects
of product selection eclipse material ones.
Borja Borrero
Executive Creative Director
Madrid
borja.borrero@interbrand.com
Retailer brands compete directly
with manufacturer brands in creating
value for their own brands and, as
the retailers do, they also ofer a wide
array of products and varieties.
We are seeing a lot of creating
and managing of new sub-brands and
categories, from personal care
articles to bio products, across a wide
economic range.
Page 7 Private Brands: a global guide to the rise of private label brands
Creating and managing
brand value
TM
A very private
New Zealand
New Zealand
Debbie Hyde
James Bickford
New Zealand
Page 8
Private label junkies
New Zealand consumers are private label
junkies when walking the aisles of the
supermarket. For the supermarkets, the
hard yards creating private label loyalty
is being further rewarded as consumers
tighten their belts. In a recession own
label brands are placed to reap the
rewards as acceptance, quality of product
and trust has been earned.
The New Zealand private label market is
an intensely managed and competitive
environment. Retailers recognize the
fact that the private label brand is a big
puller and, once hooked, the consumer is
extremely difcult to prize away.
Private label in New Zealand has become
more sophisticated and, in some quarters,
has become a stand-alone brand on the
shelf. Private label was once seen as a
contributor; now it is a brand weapon.
In fact the whole notion of private label
is something of a misnomer and risks
trivializing the scale of the business.
New Zealand supermarket operators
have tremendous inuence in a very
monopolistic market. Currently New
Zealand has two main players. Foodstufs
is New Zealand owned and operates
PAKnSAVE and New World supermarkets.
Australian-owned Progressive Enterprises
operates Countdown, Foodtown and
Woolworths. These two entities dominate
the landscape. New Zealanders purchase
approximately 75 percent of their food from
supermarkets, so the private label space is
extremely powerful to both operators.
Currently, both supermarket operators
are engaging healthier eating as a brand
value for their respective private label
oferings. Foodstufs is undertaking work
on a healthy options range that will appear
on retail shelves under its private label
brand Pams, and is working with suppliers
to reduce the fat, sugar and salt in other
The future is bright for private label in
New Zealand. Consumers trust the private
label ofering and, in some cases, private label
has become a stand-alone brand.
private label products where practical. A
reduction in the use of trans-fats has also
been set as an objective.
Pams, owned by Foodstufs, is the real
winner in New Zealand. As a brand, Pams is a
genuine competitor to branded products on
shelf. It is a private label that has grown up
to become a brand in its own right.
Pams has a warm, friendly and fun
personality on shelf, and, as a brand, has
become a friend the consumer can trust. It
has evolved visually from stark beginnings
to where it sits now full color, food shots
and dynamic branding, while retaining the
equity of its heritage. Pams has set the
benchmark for other private labels to follow.
The future is bright for private label in New
Zealand. Consumers trust the private label
ofering and, in some cases, private label has
become a stand-alone brand. Consumers are
becoming wise to the fact that these private
label brands are often being produced by the
brand manufacturers they compete with
and are asking the question: Why should I
pay more for what is essentially the same
product? Historically, private label in New
Zealand was only focused on value, while
quality and brand value was the domain of
branded suppliers. This rule was broken by
Pams, who understands the value of brands
and is leading private label into the future.
Although, in the main, private label in New
Zealand is struggling for individuality, it is
refreshing to see a private label such as Pams
breaking away.
Debbie Hyde Creative Director
James Bickford Director, Head of Strategy
New Zealand
debbie.hyde@interbrand.co.nz
james.bickford@interbrand.co.nz
The art of private label
There is support for private label above-
the-line in New Zealand; however, these
brands have to work extra hard on shelf
compared to mainstream brands.
Signature Range was launched as a
revolutionary concept but has evolved as a
hybrid visually. While it uses black as a key
identier, each categorys individual visual
and verbal language is taken from the
brand leaders. Signature Range was the
rst private label brand to gain consumer
trust with a me too strategy. However,
one questions why Signature Range has
not now evolved away from a me too.
The newly introduced
Select range is
endorsed by the
Signature Range
brand. It is unclear
why Signature Range
has developed this
strategy. This could be
for one of two reasons.
One, the Signature
Range endorsement
acts as a brand
extension or two, this
could be the phasing
out of Signature
Range to make way
for Select. The Select
private label is safe
and delivers to a very
simple and predictable
formula. It has
positioned its products
as premium, and within
its SKU formats there
is evidence of being
more adventurous in
approach.
Creating and managing
brand value
TM
Swiss magic
From copycats to
natural born winner
Andreas Rotzler
Dr. Thomas Deigendesch
Zrich
Swarm Tactic
Migros Budget advertisement:
You won't nd these products
cheaper anywhere else.
Me-too principle
The old Migros Copycat world
The new Migros Natural Born Winner Universe
Gottlieb Duttweiler, a pioneer of the Swiss retail business, had a
clear vision when he introduced private labels in 1928 to benet
customers and revolutionize the retail business. Today, private
labels are more successful than ever. A recent AC Nielsen study
indicates that the worldwide market share of private labels
in the FMCG business is 17 percent, 20 percent in Europe and
considerably higher at 45 percent in Switzerland.
The original success of store brands was rooted in their attractive
price-value ofer. To compete against the superiority of name-
brand producers, retailers started to produce no-name products
by copying name brands and positioning them in the low-price
segment. Key to this strategy were lower pro duction costs and
savings in development and communication costs, resulting in
lower prices. Additionally, these no-name products provide an
automatic diferentiation in the competitive marketplace and
allow retailers to close the gap in their assortment. The recent
success of store brands is based on the fact that they have
become strong stand-alone brands. As the Nielsen study reveals,
the attractive alternatives are per ceived to be as good as name
brands. Nearly three-fourths (72 percent) of US households
surveyed viewed private label brands as equivalent to name
brands, while 62 percent said store brands were just as good as
name brands.
Today, store brands are represented in low price as well as in
premium segments and deliver the same benets as name brands.
They provide orientation about the product ofer, they convey
trust in the high quality of the product and, most importantly,
they deliver the critical function of a real brand: prestige and
emotional identication. The development from a no-name to a
real brand is also a result of a sophisticated positioning strategy
and a diferentiated package design that all successful store
brands have today.
Globalization has spread the same patent for success around the
world and Switzerland is no exception. Everyone uses the same
recipe for success. This me-too principle has resulted in everything
looking quite the same.
Customers around the world reach for crunchy breakfast
cereals which display a bowl in the lower right hand corner of
the package. Cleaning products for a sparkling home feature
high-color contrast packaging with diagonally placed, three-
dimensional typeface.
Every square millimeter of the packaging and every neutron in
the customer s brain has been programmed so the customer
will move his arm to grab the product behind the well-designed
message.
It does not matter if its an original or a private brand: the pattern
used is featured the world over. And this well-known strategy has
been copied by private brands for years.
Page 9 Private Brands: a global guide to the rise of private label brands
Cherry Picking Tactic
Migros Selection
advertisements for French
cheese and the Spanish
speciality Pata Negra ham
If we view things from this perspective, packaging that tries
to fulll consumers wishes ends up in nowhere land, a vast
emptiness which at best could be considered background noise.
No true leader emerges from this massive, undistinguishable
block of forms and colors which make up mainstream packaging
design. As a result, supermarket shelves the world over tend to
look the same.
Recently, something has changed. Copycat brands have become
unique at both ends of the product range for both cheap and
luxury products. And the design principles follow two simple
rules borrowed from Mother Nature:
As in cherry picking, the sweetest things in nature, the nectar of
owers and the sweetness of fruits, are translated into design
elements such as compact forms and colorful shapes in contrast
to a plain background. These stunning design elements can be
spotted quickly. They help relay a message to the world, I am the
essence. I am good and sweet. See me, grab me, eat me.
Another example borrowed from nature illustrates the way
weaker creatures seek protection. It is known that little sh
swim in swarms so that they look bigger and seem to be more
powerful as a group.
Migros, the biggest Swiss retailer has followed this direction.
Migros has launched both a cheap and an expensive product
range. Notably, Migros has broken away from established design
patterns to present something else, drawing on examples
from nature.
The inexpensive private brand, Migros Budget, has developed
one design pattern for the complete array of products in the
budget range, from cofee and pasta to cleaning products. The
design pattern seems to say, We didnt even spend a penny on
design. The message emphasizes quantity, and a never-ending swarm
of good, yet inexpensive products. Customers who choose these
products will certainly benet.
At the opposite end of the private brands is Migros Selection,
where the product is the star. The packaging used for these high-
end products features a window so that the product is visible.
Thus, the carefully selected products are beautifully presented.
The customer is bound to be convinced from the rst moment
that what has been selected is exquisite quality. The packaging
relays a message which seems to say, This is perfection. This is
cherry picking.
These private brands in Switzerland adopt a simple but
extreme visual strategy which focuses on a basic, down-to-earth,
natural magic to change the world. In Swiss German, we say,
Weniger isch meh the design world knows it as "less is more."
Andreas Rotzler Chief Creative Ofcer
Dr. Thomas Deigendesch Senior Consultant
Zrich
andreas.rotzler@interbrand.ch
thomas.deigendesch@interbrand.ch
Page 10
Creating and managing
brand value
TM
BEST
Albert Hein,
Netherlands
BETTER
coop, Sweden
GOOD
REWE, Austria
Distinction is
next for Europe
Germany
Ronald Bartikowski
Hamburg
Page 11 Private Brands: a global guide to the rise of private label brands
Leading the pack
Europe continues to lead the pack in
private label development. Nine of the
top ten countries in the world with the
highest-value market share of private
label are European.
Because of their unique position to
leverage consumer trends, retailers
have been able to deliver value-added
propositions that resonate with the
consumer. This advantage has allowed for
retailers continued growth year after year.
Retailers have moved beyond simply
creating imitations of manufacturers
brands and started developing targeted
sub-brand tiers. By adding budget and
premium offerings on either side of
the existing private label range, most
retailers have created a classic good-
better-best strategy.
Continuing to use consumer insights
to customize the shopping experience,
retailers have identied social trends as
a way to brand their oferings. Lifestyle,
health, and ethnic ranges allow consumers
to associate the retailer brand with these
important issues in their lives.
Coke is available everywhere
Its a small world, and retailers in Europe
are quick to learn from the developments
around them.
When new ideas and trends are identied
in one market, this thinking is adapted and
transformed into another, leading to a lack
of distinction among major retailers.
Almost every retailer has a range of
products addressing the popular topics
of our time: obesity, health, organic, and
the environment.
This combined with
the same selection of
manufacturer brands
has created a very me
too approach to the
market, no matter which
retailer a consumer chooses.
How does a retailer
create a point of
diference?
Selection is distinction
Consumers want to
know where products
come from. Based on
this important
insight and by
looking for a
distinctive ofer
to drive consumer
retention,
retailers have
started to develop
their own unique
selection of regional
product ranges,
including one-of-a-kind
regional product labels
and partnerships with
other brands.
Culinary traditions of
certain regions and
assumed qualities
resonate with consumers, as Reets de
France and Kirks fresh cheese have shown.
Coop has started a region-for-region
concept quite recently. Unser Norden
(Our North in English), a Coop ofer, is
produced and available exclusively in the
north of Germany.
All of these concepts are ways to create
that point of diference that allows a
retailer to stand out from the crowd.
Ronald Bartikowski
Creative Director
Hamburg
ronald.bartikowski@interbrand.de
Selection is distinction.
Retailer-exclusive regional concepts
is the next level of consumer retention.
Reets de France,
exclusively at Carrefour (France)
Kirks cheese specialities from a small
Danish dairy manufacturer
available at EDEKA (Germany)
Creating and managing
brand value
TM
Opportunity
and leverage
United States of America
Dyfed Fred Richards
Cincinnati
Page 12
Its all gloom and doom. Run for the
hills! Hide your cash under the mattress
and start buying private label brands.
If you believed everything you read, then
all of the current advice would lead you
to think that private brands are about to
clean house at the grocery aisle the
theory being that in an efort to save cash
at home, consumers will automatically
turn to private label brands, and in droves.
In fact, these brands are there specically
to reassure consumers and understand
their needs especially the reduced size of
their wallets.
Is it really that simple? Even in uncertain
economic times such as these, should
private brands really be ofering up the
value proposition so soon in an efort to
gain new and loyal consumers, especially
after so many companies have spent so
many marketing dollars to elevate private
brands perception beyond the entry-level
mandate of value? Most economic trends,
including the current nancial downturn,
are cyclical. What happens when the good
times roll again? Where will private brands
value propositions be then? In the coming
months, private brands need to make a
concerted efort to not just play the value
card. Consumers expect private brands to
be cheaper. But in recent years, consumers
have also raised expectations about what a
private brand needs to do.
While private brands across Europe have
managed to successfully breach the value
proposition while elevating product
delivery, they have also managed to
accomplish something that US private
label brands have yet to do: establish
themselves in the hearts and minds of the
consumer as equals to other brands that
happen to save them money.
The best time to x the roof is when
the sun is shining
Are consumers really that ckle? Will
they turn away from branded products
simply to save a few pennies? I think not.
Granted, many grocery carts around the
country mine included will, for a
period of time, be lled with more than
an average amount of private brands
in an efort to conserve cash. However,
brands will continue to make their mark.
Consumers are creatures of habit and are
always in need of comfort and familiarity.
Tough times require comfort foods and
comfort brands. No matter what a private
brand ofers, it will never be able to match
the experience of sitting down with your
favorite branded product.
During an economic downturn like this
one, private brands in the US should
balance their short-term messages about
value with longer-term messages about
trust, dependability, quality and price. In
this way they can secure an indelible place
in the hearts and minds of consumers
and retain their share of cart even as the
economy improves.
Dyfed Fred Richards
Executive Creative Director
North America
fred.richards@interbrand.com
Creating and managing
brand value
TM
The importance
of private label
in creating value
Britain
Daniela Nunzi-Mihranian
London
In Interbrands recent Top 25 Performing European Retail
Brands report, 60 percent of the companies featured offer
private label products that contribute between 30 and 100
percent of their revenues. Three of the top five brands sell only
private label products.
Spending on retailers own-label goods is rising: growth has been
running at an annual 5.3 percent in the US and 7.4 percent in
Europe between 2000 and 2005, and sales have reached more
than US$ 350 billion across the two. Private labels share has
grown across almost all categories.
Consumers no longer view brand solely as a mark of quality;
instead they search for brands that match and enhance their
individual lifestyles. They are also more likely than before to
deliberately trade-down in certain low-interest categories in
order to enjoy a higher standard of consumption in others. Enter
the role of private label.
In addition, as luxury and premium goods become more
accessible and value brands become increasingly high-quality,
the mass A brands are feeling the pinch as they are squeezed in
the middle ground. This poses a huge threat to traditional mass
market, household-name brands.
To combat this threat, retailers are moving away from mere price
competition to more value-added and segmented ofers. They
are also beginning to explore new markets and sales channels.
Consider Boots entering the US market and Marks & Spencers
presence through BP petrol forecourts, for example.
There still remain, however, certain advantages that strong
manufacturer brands enjoy. They continue to have the innovative
edge on private label goods. Also, some consumers continue
to perceive private label as inferior to its branded competitors,
especially within certain sectors. Manufacturers must capitalize
on these advantages if they are to compete against retailers
private label oferings.
Page 13 Private Brands: a global guide to the rise of private label brands
The UK is widely acknowledged as a pioneer in
private label, and the penetration of own-label
products is one of the highest in the world.
Within the private label sector in the UK,
there are four key categories:
Category 1 Budget alternative: Private
label is the stores value brand, e.g., Tescos
value range
Category 2 Cheap me-too: Private
label imitates the brand leaders in an
attempt to generate a rub-of efect by
association, e.g., many supermarkets
gin products imitate the market leader,
Gordons Gin
Category 3 Genuine competitor:
Private label becomes a valid branded
ofer in its own right, often inhabiting a
position of strength where manufacturer
brands have been weak or the market
fragmented. Manufacturers are essentially
pitted against private label brands at this
point, e.g., Sainsburys Organic range
Category 4 Category partner:
Together, the manufacturer and retailer
take a holistic category management
approach based on deep shopper insights,
with total category growth in mind.
Increasingly, manufacturers are taking
this better the devil you know approach,
going as far as manufacturing for these
private label ofers to ensure product
diferences are maintained.
Daniela Nunzi-Mihranian
Creative Director
London
dnunzi-mihranian@interbrand.co.uk
Page 14
Creating and managing
brand value
TM
The threat!
United States of America
Leigh Bachman
Cincinnati
The CPG industry
Doesnt it seem like weve been talking about the emerging
threat of private labels for years?
Originally, this threat was due simply to private labels ofering
a lower price that appealed to price-conscious consumers.
Then the threat shifted to private labels encroaching on a brands
visual equities so that the national brand no longer owned its
own color, logo or shape. And, more recently, the private label
threat has emanated from consumers no longer being ashamed
to buy the private label due to improved perceptions of quality
as well as the discount chic image that retailers like Target have
made fashionable.
In fact, private label products account for more than US$ 81
billion (16.2 dollar share) in the US, up 10.2 percent over the
past year. And with the country experiencing a major economic
downturn, private labels seemed to be poised better than their
branded counterparts to weather the storm. In September,
Walgreens, for example, announced its previous quarter private
sales were up 15 percent versus the previous year.
In addition to what can already be seen at the checkout counters,
new data revealing Americans perceptions of private labels
seem even more threatening to CPG brands. According to a new
survey by The Nielsen Company, 72 percent of consumers believe
that private labels are good alternatives to branded products.
The same survey said that nearly two-thirds (63 percent) of
consumers believe that the quality of the private label brand is as
good as name brands and one-third (33 percent) of consumers
believe some store private labels are higher in quality than the
name brands.
Lets face it, private labels are no longer an emerging threat; they
are a daily threat to CPG companies. And as the economy teeters
on the brink of Depression with a capital D, that threat is no
longer something CPGers can aford to look at over their shoulder,
or even down their nose it is front and center.
Lets face it, private labels are no
longer an emerging threat, they are
a daily threat to CPG companies.
Page 15 Private Brands: a global guide to the rise of private label brands
Yet despite all this, I think CPGers can count themselves lucky that
the damage being done to them at the hands of private labels isnt
far worse. For all that private labels have evolved over the years,
the private label retailers in the US are still a long way of from
having gured it out like their Western European cousins have.
US retailers seem to puzzle endlessly over what their strategy
should be every day, with little progress being made. Should we
use a masterbrand strategy across the store, or ofer a house of
brands? Or a hybrid of the two? Should we look like the national
brand equivalent in each category, or have a holistic design
strategy across all categories? What about when we ofer diferent
tiers premium, base and value?

Sure, a new and efective private label strategy pops up here and
there among the retailers, but for every Publix or Target, there
are a dozen retailers that wafe in indecisionthinking they have
next year or next quarter to gure it out. But if the train hadnt
already left the station before, its clearly long gone now that we
are in a full-blown economic recession.
Case in point: everyone has known Tesco was coming to the
States for some time, and yet, how many private label retailers
have changed their strategy and launched or relaunched their
store brands in a revolutionary, game-changing way? Instead,
retailers wafing and indecisiveness has led to inertia.
As sales for private labels increase, retailers are patting
themselves on the back for a job well done but this has not
been because of a well-thought-out private label strategy; rather,
in spite of one. Private labels have ridden the wave of natural
industry forces and most recently a tanking economy, but imagine
the tsunami they could be riding if more retailers get of the fence,
pick a strategy and implement it with excellence.
I think whether a retailer chooses to pick the masterbrand
strategy or the house-of-brands strategy or some other strategy
is immaterial, in some ways. Sure, one may work better than
another in diferent circumstances, depending on the overall
retailers strategy, and we each have our own professional opinion
on what that should be. But the more important choice to
make, regardless of the strategic approach, is one that leads to
compelling and consumer-relevant package design.
No one debates the statistics that at least 80 percent of purchase
decisions are made at shelf in the CPG industry. And estimates
have put the time spent making that purchase decision from as
much as three seconds to as little as one-fth of a second (the
latter being much more likely). So lets use a little common sense:
when you are reacting to something that quickly, are you thinking
about all the functional claims the national brand makes, how
that brand can really help your life, and how much this lower-
priced alternative looks like the national brand and might do just
as good a job?
Or, in that fraction of a second, is your brain thinking only, ooh,
pretty I want that, much like my ve-month-old daughter does
when she sees a shiny object just out of reach?
I dont mean to oversimplify what makes for a good, consumer-
relevant package design, but I think you get my point. Because
of the way the brain reacts on instinct, truly compelling design
is what can build a brand and motivate shoppers to actually
purchase. This phenomenon of human physiology is going to be
true for a national brand or an attractively-priced private label. So
why shouldnt the private label brands take a cue from nature and
take advantage of design?
Private label retailers need to play by the same rules as the
CPGers: Get in the game with package design. Design to delight
the consumer, not to try to fake the consumer into believing
that because it walks like a duck and talks like a duck, its a duck.
The consumer is smarter than that. Use design to allow the
product to win on its own merits, as a real brand that supports
the retailers consumer proposition, that actually is good quality
and that whoopee! has a fantastic price.
In these tough economic times, the bases are loaded for
private label brands. Retailers can choose to rely on price and
continue to walk in the run or they can swing for the fences
with package design.
Leigh Bachman
Executive Director, Strategy and Research
Cincinnati
leigh.bachman@interbrand.com
80 percent of purchase decisions are made
at shelf in the CPG industry.
Page 16
Best Global Brands has taught us time and
time again that brand remains a far less volatile
asset than other business assets tangible
or intangible.
Creating and managing
brand value
TM
www.brandchannel.com
Scott Lucas
Executive Director
4000 Smith Road
Cincinnati Ohio 45209
United States of America
scott.lucas@interbrand.com
Richard Veit
Managing Director Hamburg
Management Board Central and
Eastern Europe
Brandstwiete 4
20457 Hamburg Germany
richard.veit@interbrand.de
Bertrand Chovet
Managing Director
Branding and Packaging
28 rue Broca
75005 Paris France
bertrand.chovet@interbrand.fr
Hiroyuki Okada
Executive Consultant
Osaka Ofce
2-6-11 Kitahama Chuo-ku
Osaka 541-0041 Japan
h.okada@interbrand.co.jp
Jonathan Chajet
Asia-Pacic Strategy Director
Managing Director, China
101-102, C7, Red Town
No. 570 West Huaihai Rd.
Shanghai 200052 PR China
jonathan@interbrandcn.com
Roman Perez-Miranda
President Interbrand Latin America/Iberia
130 Fifth Avenue
New York New York 10011
United States of America
roman.perez@interbrand.com
For more information on Interbrand please contact www.interbrand.com
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Printed back copies from the past year are
available on request.
Interbrand started in 1974 when the world still
thought of brands as just another word for logo.
We have changed the worlds view of branding
and brand management by creating and
managing brands as valuable business assets.
We now have nearly 40 ofces and are the worlds
largest brand consultancy. We bring together a
diverse range of insightful thinkers, making our
business both rigorously analytical and highly
creative. Interbrand has the broadest geographical
presence ofering more people, more disciplines
and more knowledge tailored to our clients.
Our work goes deeper and further. We create
and manage brand value by making the brand
central to the businesss strategic aims. Were not
interested in simply being the worlds biggest brand
consultancy. We want to be the most valued.
The past year has been one of the more dramatic
and turbulent that global economies have endured.
In some regions of the world, the anticipation
of a troubled economy ahead will undoubtedly
make it more challenging for marketers to make
efective plans. Patience wanes in a results-
oriented, nervous economy. Brand management
needs to constantly demonstrate value. And in
regions with markets opening to the global stage
for the very rst time, a new and unknown set
of challenges awaits.
As the world becomes one global economy,
it becomes an increasingly complex place.
Will the economic woes of developed markets
pollute emerging markets, or will developing
markets provide the medicine that the established
world needs? Charting the course for successful
brand management requires a multifaceted
perspective, even if its delivered through one
brand. A connected and holistic approach to brand
management is a prerequisite.
Packaging is often the rst and most regular
contact people have with your brand. More than
just a face to the brand, packaging is a powerful
selling tool. It inuences market position and
consumer behavior by triggering purchase and
creating loyalty.
We ensure packaging solutions work seamlessly
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from the way they look, feel and function to
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complements a wider portfolio.
Our design teams have a deep understanding of
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packaging design systems that deliver consistent,
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moment theyre seen on the shelf.
In troubled economies, we know that business
doesnt cease. Companies may struggle, but
the practice of buying and selling continues no
matter what. Leading brands know this and come
through difcult times stronger and ready to
compete rather than hibernating in the comforts
of business as usual.
In developing markets, we know there is a world
of possibilities opening to consumers. The idea of
buying and selling is not new to them greater
choice is the novel concept. Wealth is no longer
an exciting idea, but a reality. The marketers
challenge is showing people where and how
to spend. Many of the Best Global Brands have
seen the opportunities emerging and are bullish
in establishing themselves. Regardless of your
view of the world, in good times and bad, your
brand is your companys most valuable asset.
Understanding how your brand creates value
for you is key to maintaining market leadership
or establishing it in the rst place. We continue
to see an increasingly sophisticated outlook on
managing brands and a growing importance
on understanding the drivers of brand value.
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the list?
2008 retrospective of the collection of
Monthly Perspectives produced by
Dyfed Fred Richards
Every month Dyfed Fred Richards
(Executive Creative Director, North
America) shares his observations on the
graphic world around us.
These glimpses into the good, the bad and
the ugly ofer insights and observations
about categories that inspire and educate,
and are sent via email around the globe.
Brandchannel (brandchannel.com) is a website about
branding launched in 2001. Its goal is to provide a
global perspective on brands.
The website is produced by global branding agency
Interbrand but maintains editorial independence. It
is published weekly and features web reviews, brand
proles, reader polls, and an international directory
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