The food industry is becoming ever more powerful. Is it not us who decide what we eat, it are the large companies like Coca-Cola and Unilever. It is an often heard view, but the facts do not coincide. De Volkskrant research shows that the food industry is a laboriously slogging group of large corporations that have huge difficulty to keep their largest clients, the supermarkets, of their back.
The most powerful brands are faring pretty well. Some, like CocaCola, are doing really good even. But the smaller brands are having a hard time. They have to settle for less space in the supermarketshelves and that space is only to become smaller. The supermarkets are claiming more and more of the shelves for their own products.
Research by de Volkskrant shows that already one third of all the space in the shelves – not even taking the fruits, vegetables and meat-department into account – is filled with the supermarkts’ own products.
This makes the supermarkets housebrand (or: neutral brand) easily the largest brand in the supermarket. It is no longer the food industry that decides what you eat, it is the supermarket itself that decides. For the supermarkets these house brands are great. The supermarkets themselves decide what the requirements are for the products. Only the cheapest producer gets the order. Often this producer gets little more than the cost price.
The bigger the supermarket chain, the bigger the housebrand. That is why the Swiss buy a lot of housebrands, says housebrand expert Koen de Jong. “In Switserland there are basically only two supermarkets that matter, the Migros and the Coöp.” This means that they can produce their housebrands in large quantities. The same goes for the United Kingdom, which has strong, national concerns like Tesco and Sainsbury’s. If they order cookes to be made, the order is for a lot of cookies. The producers compete for these large orders.
The same effect is visible in the Netherlands. Not taking Aldi and Lidl into account, that only sell housebrands, the housebrand of Albert Heijn (AHOLD) is the strongest. About 34% of the products is housebrand. For competitor Jumbo the percentage is 32. The smaller supermarkets (ssuch as Dirk van de Broek en Dekamarkt) don’t make it to the 20 percent.
In the United States the situation is different. De Jong: “Americans are much more loyal to their brands.” Moreover, there are few national supermarket chains. This gives the brandproducers an advantage: they can still produce the larger volumes of a product.
Does this mean that brandproducers are in for a hard time? In the Netherlands, yes. In Europe, also. But for the big brands the world remains large enough. They mostly grow in emerging markets. These markets hardly have any large supermarketchains.