AFGC says choice being eroded by private labels

Manufacturers’ representative the Australian Food and Grocery Council has expressed renewed concern about the spread of private label brands throughout supermarkets.

The Australian Financial Review reports that the AFGC, a long-time critic of the increasing penetration of privately labelled products in supermarkets, has claimed that these products are being pushed onto shoppers, rather than sought out.

“We know that choice is being restricted and therefore competition is also being restricted under the private label strategies,” the organisation’s CEO Gary Dawson told the AFR.

“Clearly consumers have to choose from what’s in front of them, and there’s no lack of complaints about what’s happened to their choice.”

Recent research from Deloitte Access Economics has found that Coles’s product range has reduced by 11 per cent from mid-2010 to mid-2012, and the AFR reported earlier in the week that Woolworths’ home brand sales are growing at double digit percentages.

Coles has disputed the AFGC’s claim that 7000 branded units have been removed from shelves in the last two years, saying that these have made way for new items, and what has been removed has included both in-house and branded products.

It has been estimated that roughly a quarter of goods in Australian supermarkets are privately-labelled, compared to over a half of products in German and UK stores.

Earlier this week, Peter Brooks of Tru-Blu Beverages said that manufacturers should recognise the changing supermarket environment and adapt accordingly.

“It's a fact of life and that's where the future is heading for some categories,” he offered, explaining that supermarkets had the right to stock what they wanted.

“As long as you have the right structure and the ability to manufacture products at a competitive price you should be able to be reasonably competitive in the private label business,” he said.

The ACCC is currently investigating suppliers’ complaints regarding the supermarket duopoly’s practices.