The white label is establishing itself on supermarket shelves and displacing the manufacturer’s label. It is a global trend that responds to the unstoppable increase in shopping basket prices since 2021, which is crushing the budgets of families for whom the only way out is to pay attention to every penny spent. A phenomenon that has made Spain the European paradise of this type of brands, overtaking the United Kingdom and Germany for the first time in history, as Javier Campo, president of the Manufacturers and Dealers Association (AECOC), highlighted this week. The congress that brought the sector together in Zaragoza: According to NIQ (formerly Nielsen), products manufactured for the main Spanish supermarket chains represent 44.4% of the total sales for mass consumption, having increased by three compared to the close of last year percentage points and an increase of six compared to the year before the pandemic, explains Patricia Daimiel, general director of this consulting company for southern Europe.
It is a common response to times of crisis. José Manuel Blanco, commercial director of Productos Frescos de Dia España, calculates that “private label consumption saves 25% of a Spanish household’s annual budget.” Eight out of ten consumers have changed their purchasing habits and 42% are looking for special offers. And manufacturers are worried because even when the inflationary moment is overcome, the share of major retail brands traditionally never returns to the starting point; from the spider market to industrial brands, says Paco Hevia, corporate director of Galletas Gullón. In fact, it is up 10 points compared to the previous recession. And according to Promarca president Ignacio Larracoechea, the presence of brands on shelves has fallen by 25% since 2007, destroying 1.8 billion euros of added value in the domestic market in the previous crisis.
Between January and September 2023, according to NIQ data, the increase in private label sales is almost 16%, compared to 7.2% for the manufacturer, in terms of value, as the latter lost 2.4% in volume, in contrast to the increase of 5.2% in the sales brands or own brands, as supermarket chains call the further developed own brands. In addition, prices for the latter are rising more than the others: by 14% compared to 12% so far this year, according to Kantar Worldpanel.
There are product categories such as toilet or household paper, canned vegetables and fish, juices, dairy desserts, nuts or bleach where the customer chooses packaging without a logo, which accounts for between 60 and 70% of total sales in large stores. The same goes for some fresh items, such as those made from poultry or refrigerated foods.
Leader by landslide
Mercadona, the leading group among supermarkets, also dominates private labels, although in this case it does so with a landslide, monopolizing 49% of the pie while controlling 27% in the distribution sector as a whole. Lidl follows a long way behind with 13.5%; then Carrefour at 9.2% and Dia at 6.3%, according to September Kantar data. The strategy is clear: you try to offer a price to the consumer through your own brand or through promotions and offers, describes Joan Riera, head of the mass consumption department of the aforementioned consultancy, a recipe that all competitors on the market have adopted , because Mercadona was the chain that grew even more by relying on it. 70% of the products on their shelves are own brands, just like Lidl and Aldi. In the rest of the supermarkets, this percentage is much lower, notes the director of NIQ, although in all of them it increases by two or three points.
For this reason, most brand chains rely on white label; some, like BM (265 supermarkets), have just launched their own brand with 1,200 references. They try to prevent the consumer from switching supermarkets. This is the customer’s final savings strategy and the one that makes hair stand on end for retailers who change the range to avoid this. They are the ones who decide which of the millions of references that exist on the Spanish food market will be the 40,000 displayed in a particular hypermarket or the 15,000 in a large supermarket. Those who have the upper hand, i.e. have the prerogative to put products on the shelves, says José Luis Nueno, professor at IESE Business School, and those who put private label items on the fast track before manufacturers innovate. “And that’s very ugly,” criticizes Nueno.
The White Label has evolved greatly since its birth. Sainsbury’s launched its own product in 1869, but it was not until the 1970s that it became widespread in French department stores and was introduced to Spain by Carrefour in 1982. At that time, they were simple white containers where the only thing that mattered was the low price (the industrialist was therefore exempt from advertising and marketing costs). The years passed and, according to Alcampo, “the commitment to these products, which offered margin and sales volume, required a further push for the recognition of society and the preservation of the reputation”, since then they did not enjoy such a good image as they do now. . In 1999, the French company incorporated the name and logo of its parent company Auchan into its items (today it has 3,860 private label references for food, drugstores and perfumeries, almost 4% more than in 2022).
Later, retailers went one step further and named their own brands: Hacendado, Deliplus, Compy and Bosque Verde (Mercadona), Aliada (El Corte Inglés), Bonté (Dia), Milbona (Lidl)… They went from copying to Calling on manufacturers to innovate, explains Paco Lorente, professor at the ESIC Business & Marketing School, as was the case with the pre-cooked fried eggs recently launched by Mercadona (produced by Angulas Aguinaga), which did not have the expected success and from market). Or like the range of senior products, Naturvita creams with an easy-to-chew texture, which Alcampo introduced this year.
Large stores’ policies toward their manufacturers have also changed over time. In 2018, Mercadona abandoned its strategy of inter-suppliers (suppliers of the recommended products that previously worked exclusively) and looked for the best specialist supplier for each product. Over the last five years, the number of inter-suppliers in its 1,676 supermarkets has increased from 115 to 3,000 suppliers. according to company sources explain.
Dia supermarket in Madrid.Claudio Álvarez
Three years ago, Dia decided to renew its own brand, changing and improving its often own recipes, explains José Manuel Blanco, and checked all its suppliers: today it has 1,200, just over half of which they produce under their own brand items , which accounts for 54% of their revenue, having gained seven points since 2021. You don’t work exclusively with any of them. “Because we cannot guarantee any jobs in the future,” says the managing director. “We change suppliers all the time,” admits Blanco; Sometimes because they are outdated, sometimes because there are companies that are not prepared for growth, or because market demand simply changes. Or because another provider offers better prices.
The big secret
Supplier names are the best-kept secret in distribution chains. None of the six leaders in the Kantar classification wanted to name their first own brand suppliers for this article. And the majority of the twenty industrialists contacted also refused to take part. Lack of transparency. “Although more than half of consumers know that the big food manufacturers are behind the distribution brands, this is a very opaque business,” estimates Joan Riera. It is very difficult for the industrialist to justify a 30% or 40% higher price for the same product if it bears his brand, explain the sources consulted. A UGT study, cited by a supermarket manager who wished to remain anonymous, shows that of the country’s 100 largest food manufacturers, 70 produce white label products but would not disclose this due to price differences.
“The big truth that remains hidden from the public is that there is no difference in quality between the products we produce for the distribution brand and for our own brand,” admits a manager of a large food company. “We are interested in keeping the line running for a long time, and to achieve this we change the packaging, not the recipe or the format of the product, so that the lines produce without interruption,” he adds. With the rise of private label, this expert adds, manufacturers are ceasing production of staple items that have been colonized by private label. You cannot compete with them on price and penetrate into sophisticated product niches.
“Industrialists don’t dare to hide,” criticizes Fernando Olivares, head of the Department of Corporate Brands at the University of Alicante and co-author of “Black Brands in the Age of Transparency.” The publication revealed that only Mercadona and Dia proudly indicate on their packaging who supplies their white label items (logo, company name and/or brand name). “The rest of the chains negotiate this silence. The manufacturer’s name does not appear on the products so as not to tarnish their image,” he adds. Therefore, the dealer’s product “often has no traceability, so it cannot be compared with that of the manufacturer, since the manufacturer is not legally obliged to do so: he can provide the supplier’s or the dealer’s data,” emphasizes Lorente. And since they do not have this obligation, they practice a certain hypocrisy: “From a legal point of view, the manufacturers comply,” says the president of Promarca, which represents industrialists such as Pascual, Campofrío, Lactalis, Bonduelle, Calvo, Pescanova, which produce branded white , while they complain about her.
“Although it is not proven that the industrialist who produces private labels loses prestige or decreases his sales,” says Professor Olivares, which is also confirmed by Jesús Alfonso, general director of Conservas Cambados, which produces cans of gourmet fish and seafood: “We wanted to gain market share in big stores and it didn’t hurt our brand at all. We don’t sell any less as a result,” he assures us. His company supplies Alcampo White Label, El Corte Inglés Gourmet Club and Carrefour, a 20 percent addition to the business. “Only the presentation of the product is different from how I market my brand,” he claims.
Similar reaction to another Alcampo supplier: Campodulce, a Grupo Jorge company that markets ham by the piece and in slices and sells 15 million packs a year, three million of which bear the Auchan white label. For its general manager Mariano Sanz, supermarkets deliver volume and “the greater the volume, the lower the manufacturing costs”.
The professor from the University of Alicante describes Carrefour as the most opaque chain (95% of its items identify the manufacturer with a code), “which represents a general practice with little transparency towards the consumer and is one of the main characteristics of the white brands,” he points out points out in his book. Lidl is the second least transparent brand of the six brands examined (only 53% of the packaging contains the manufacturer’s company name). Eroski and Alcampo are in an intermediate position.
There are different types of white label manufacturers, explains José Luis Nueno, author of the book “All This is Terrible, But I’m Fine”: those who are dedicated to these brands to which they supply most of their production, as in the case of the Dutch multinational Refresco, which produces juices and drinks for Mercadona and Lidl in Spain. Industrialists who own certain companies dedicated to the distribution brand, as in the case of the Damm Group with Font Salem, which also supplies juices and soft drinks to almost all distribution companies. And finally, the manufacturers who allocate part of their product lines to the private label, and that is the majority. Some of these companies, such as Casa Tarradellas, simply produce a distribution brand for Mercadona, a type of branding in which their logo is placed on the pizzas, as is the case with the non-alcoholic beers Heineken and Falke, which are exclusive to the company’s supermarkets are manufactured. Valencian. Both companies declined to participate in this report.
Although many food companies working for Mercadona come from the inter-supplier era, most of them have expanded their tentacles to other supermarket chains by losing exclusivity to the market leader. Cookie manufacturer Cerealto Siro is a clear example. In 2021, the Palencian company attributed its poor financial situation, with years of losses, to the change in the commercial relationship with Juan Roig’s company, for which it acted as a supplier after 20 years of heavy investments. As a supplier, he would now have to reduce his offer and improve his price. That’s why Lidl also supplies cookies and muesli. According to Paco Hevia, who assures that the growth of the distribution brand in his company was more than three percentage points during the inflationary tensions, his competitor Gullón has always offered white label products to all or almost all supermarkets.
Palacios tortillas
And so we come to the fact that the vast majority of white label gazpachos that populate supermarket shelves, regardless of brand, are made by García Carrión; The pre-cooked potato tortillas are prepared by Grupo Palacios and the most popular beer is usually supplied by Font Salem. Vicky Foods also repeats its bakery and pastry products in most chains, as well as Helios jams, Luengo legumes or turkey and cold cuts from El Pozo (Grupo Fuertes). Another example is Sovena, which is no longer the sole olive oil supplier for Mercadona, but also works for El Corte Inglés, Dia, Carrefour and Condis, in addition to continuing to be the reference supplier of sunflower oil and seeds for the Valencian company, at least the last three supermarkets mentioned, according to one UGT study.
In addition to those mentioned, Mercadona’s suppliers include Incarlopsa, supplier of meat products and ham; the Profand fishing group; Jealsa, the first national fish cannery; Importaco, dried fruits; Huevos Guillén, which sells 67% of its production to the Valencian chain; Entrepinares, cheese maker from Valladolid; Iparlat supplies the company with milk, shakes and other dairy products, as has the Córdoba cooperative Covap for 20 years. Manuel Blanco, director of the dairy business, recognizes that despite the cost tensions of the last two years, the relationship with Mercadona has not changed and is an example of co-innovation.
It is very common for Carrefour suppliers to be both Dia suppliers and Alcampo suppliers. The French origin seems to make the difference. For example, they supply their fish canning lines with Frinsa del Noroeste and Ignacio González Montes; They buy much of their oils from Acesur, owner of the Coosur and Guillén brands; their milk to the also Gala Lactalis; Dia and Auchan buy their chicken from Uvesa, while Carrefour buys it from Coren. The Germans Lidl and Aldi also agree with many of their suppliers: they buy a good part of their cans from Conservas Garavilla, owner of the Isabel and Cuca brands, as well as from the Conservas Dani Group, which is more widespread in retail. And their oils are provided by Jaencoop Cooperative and Aceites Maeva.
According to the experts surveyed, own brand and fresh products are the attributes that make the difference in consumption. With food prices rising more than 10%, supermarkets are taking a risk when it comes to choosing the items that fill their shelves. And in the meantime, food companies use their distribution brand to tacitly mask the poor conditions under which stores put them on their shelves. Life goes on.
Gullón biscuit factory.
Black spots: the other side of the coin
The white spots are familiar to mere mortals. They are very popular with consumers, especially in times when prices, like now, put pressure on shopping carts. The same does not apply to the so-called black spots that arise unlike the previous ones. Fernando Olivares, professor of communications at the University of Alicante, describes a growing global trend in the book he co-authored, “Black Brands in the Era of Transparency”: leading manufacturers to scrape off every last penny of commercial margin or order to reduce their costs To reduce costs to a minimum, they outsource the production of their items to third parties without informing the consumer. Opacity is the clearest value that black and white brands have in common, he says. “The difficult thing is that they present themselves in society and on the shelves as if they manufactured them,” he writes, a behavior he considers unethical.
Some examples include the Belgian industrialist Incopack (of The Dairy Food Group), which produces the Vitalinea yogurt brands, and the Danette custard from Danone, a French multinational company that also sells its Font Vella-flavored waters to the Italian company San Benedetto ordered. That of the Sevillian group Persán, which produces and sells detergents and cleaning products for both white brands (from Mercadona to Lidl, including Aldi and Amazon) and black brands (Skip and Mimosin for Univeler and Somat for Henkel), similar to Igepak personally Hygiene and perfumery (produces fragrances for Adidas and Playboy). Quesería Menorquina produces Tranchettes from Mondelez and Briseis, Magno-Gel from La Toja and Fa-Deodorant from Schwarzkopf Henkel.
“This is also the case with Nestlé ice cream, which the consumer believes is made by Nestlé but is not,” says Paco Lorente, professor of marketing at ESIC. Both the Swiss multinational and Danone (neither of which declined to participate in this report) produce white label products and subcontract some of their own production to third parties. A very widespread and completely legal practice, according to the president of Promarca, Ignacio Larracoechea.
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