Analysis , Report

A new generation of private label growth in South Africa

Analysis , Report

A new generation of private label growth in South Africa

South Africa’s private label (PL) sector has continued its upward trajectory amidst lockdowns and an altered consumer reality.  Analysis by NielsenIQ shows that the PL sector now commands 24.3% of total basket*value sales in South Africa, which equates to R71-Billion in annual sales (12 months ending May 2021). 

Lockdown stockpiling boosted growth

The origins of this uptick are rooted in the booster effect of South Africa’s initial lockdowns in 2020 and should not be underestimated.  In March 2020, just before South Africa’s first and highest Level 5 lockdown, stockpiling saw private label growth soaring to a peak of 27.2%** and this strong double-digit growth was maintained throughout the second quarter of 2020. Interestingly, during this same period, name brands saw a decline in sales. This served to cement the PL growth path from 2019, when its share of sales was 22.8%, rising to 23% by May 2020 and 24.6% by May 2021. 

Reasons for success

Why has PL succeeded against all the odds? A key realization is that these types of products are no longer the no-name brands of old, which were often perceived as ‘cheap’ and of inferior quality. We have seen a diversification of PL products that range from entry-level offerings presenting high value for the price point, to the mid-range solid offerings, to a new generation of premium products that represent both quality and value. This stems from more investment in the sector, creating the depth and the momentum that we see today.  

In terms of more functional reasons for PL’s growth, particularly during South Africa’s lockdowns, The State of Private Label in South Africa report found that supply continuity was a key factor during South Africa’s lockdown periods.  This was driven by consumers’ need for quick ‘in and out’ shopping experiences, primarily due to health and safety concerns. This concern also led to a sharp decline in the number of shopping trips, which meant if products were out of stock, a shopper would only return to a store in a week or a month. Purchase opportunities were therefore far more limited and product availability was vital. Big stock ups at each trip also saw an increase in the purchase of larger pack sizes, once again to reduce the number of store visits. Within this context, it was the manufacturers’ and retailers’ ability to meet this need, via an increase in the distribution and assortment of private label products, that ultimately led to the increase in value sales.   

Product highlights  

In terms of overarching product supergroups that have benefited from this growth, eight out of 10 continue to gain share in the short term. Among the many movers and shakers, Frozen Foods has seen the biggest incremental gain of R2-Billion in sales over the last 12 months. This was mainly driven by consumers purchasing bigger pack sizes and more products. Unsurprisingly, the fastest growing group was Healthcare, with sales up by 34.8% in the last 12 months.  

Specific product categories that benefited from the buoyancy in PL are clearly shown by NielsenIQ Trade Desk RMS (Retail Measurement Services), with personal care private label products seeing a consistent gain in value share over the past three years. This is understandable given the massive shift to hygiene and health via products, like hand sanitizer, and echoed by 69% of consumers who claim to have purchased more private label personal care products compared to a year ago.   

Looking to the future, private label will continue to be a very good space to play in for manufacturers and retailers alike. Despite the onerous retail environment, we have identified some sweet spots that are still up for grabs for those who have the data and insights to analyze the market and move faster than anyone else.  

These insights stem from NielsenIQ’s latest report: The State of Private Label in South Africa,  which provides a far-reaching view of the evolution of private label in the local market based on trending data and insights gathered over the last ten years.  

Contact us for more information about this report.  

State of private label in South Africa 

Get a multi-dimensional view of how private label products are performing from a sales, shopper and consumer perspective. 

* All categories PL participates in, thus excluding Liquor and Cig categories, etc. 

*Nielsen CIP – PRIVATE LABEL – TD – 12 Latest 4 weeks (4 weeks rolling) – Week Ending 29/03/20.   

**NielsenIQ trade desk retailer benchmark: Woolworths, Boxer, Spar Group, Pick n’ Pay Group, Shoprite Group, Ok Foods, Clicks, Dis-Chem, Food Lovers Market, Game, and PEP Stores