Own-label surges ahead and grabs further market share from branded rival products

Own-label products are powering ahead at the expense of brands in supermarkets, according to the latest market research.

Multiple retailers such as Tesco and Sainsbury have led the way with the introduction of different ranges of own-label products covering everything from budget through to 'healthy eating' and top-end ranges, said Mintel. The top of the range products command higher premiums.

"This is definitely an area in which the UK leads the rest of Europe," said Mintel director Richard Perks.

"A range of brands used to signify choice in a supermarket, now it is increasingly the brand of the supermarket that signifies the range," he added.

Mintel valued the total annual UK food retail sales at euro 156bn (£108bn), making it the second largest in Europe behind France at euro 190bn (£131bn). It predicted that European retail sales would surpass euro 1,000bn (£690m) before the end of the decade.

Meanwhile, a separate report from market analyst Datamonitor said UK sales of own-label drinks had risen from 24.8% of the drinks market in 2000 to 27.6% in 2005, with particularly strong growth in the soft drinks category, which rose from 34% to 45.6%.

Spending on own-label food during the same period had also increased from 34% to 45% of total sales, with strong growth in: bakery and cereals, which rose from 35.1% to 52.9% of the category; chilled food, where sales rose from 47% to 83%; and dairy, which rose from 52.6% to 63.6%.

"Famous brands must focus on innovation or risk brand erosion from being caught in the middle of the market," warned Matthew Adams, Datamonitor consumer markets analyst.

Datamonitor also said that when items they sought on supermarket shelves were unavailable, shoppers were more likely to switch from a brand to own-label, rather than the reverse.