Private labels and their effect in the market.

Private labels and their effect in the market

2007

Private labels and their effect in the market

Introduction

The intense competition in retail markets has driven retailers to offer their own products that have somewhat similar quality at affordable price . The so-called private label ' becomes an attractive solution for customers that cannot afford to buy branded products

According to global survey on private labeling , performed by AC Nielsen in 2005 , they found that consumers in 38 markets continue accepting private labeling as good alternatives especially in markets where private

labeling has existed for a long time . On average , in the Europe like Pacific regions , private labeling is perceived to be choice by 78 of their consumers , followed by North America (77 , and Asia (51 .In terms of individual country , private labeling becomes the most choices in Netherlands (91 , followed by Portugal (89 and Germany (88 (Shelf Impact , 2005

The situation suggests that private labeling now becomes the savior for consumers and serious threat for branded producers . Since the private labeling has been adapted in many countries worldwide , this will discuss about private labeling of Welch Foods in United Arab Emirates (UAE

Company Background

Welch Foods is a well-known producer of juices , jams , and jellies made from Concord and Niagara grapes . Since the company only produces particular type of grapes that only grows in the United States and some parts of Canada , it becomes the Welch 's competitive advantages

However , as globalization and open market policies are adopted by several countries to ensure fair competition , Welch Foods face serious threats as giant retailers start aggressively their private labeling strategy on variety of products including juice products

Private Labels and Its Impacts on market

By definition , private labeling refers to products or services that produced or manufactured by one company to offer under another company 's brands . Usually , retailers ' name appears on the packaging of the products and offer customers much lower price than other branded products

In case of Welch Foods that face intense competition from other branded juice products and private label in the UAE , the company must deal with private labeling strategies that retailers or supermarkets performs Therefore , in to cope with pricing strategies that retailers perform to undermine branded products , Welch Foods have two options

First is to form an agreement with retailers to produce store brands for the retailers . This private labeling of Welch has following benefits

It prevents competitors (juice producers ) to take opportunity of private labeling with retailers /supermarkets

Reduce promotion costs since it is such a joint promotion program

Obtaining more shelf space in retailers ' outlets

The second option is to produce second layer products if the retailers have conducted private labeling with Welch 's competitors . By delivering second layer products , the company can match the retailers ' private label products

Case of Welch Foods in United Arab Emirate (UAE

The fast growing of private label industry also exist in the United Arab Emirates (UAE . During the Private Label Middle East...