Magazine article Marketing

News Analysis: Too Much of a Good Thing?

Magazine article Marketing

News Analysis: Too Much of a Good Thing?

Article excerpt

Supermarkets revelling in premium own-label success must be mindful of retaining brand equity.

If, 10 years ago, a guest had turned up to a dinner party with a box of supermarket own-brand chocolates, the chances are that they would never have been invited back. However, those bearing gifts such as Tesco Finest Milk Chocolate Truffleballs or Sainsbury's Taste the Difference Slow-Baked, All-Butter Chocolate Cookies today would probably receive a more positive reaction.

Supermarket own-labels, which account for 49% of grocery sales, according to TNS, have emerged as brands in their own right over the past decade. Tesco revealed this month that its premium label, Tesco Finest, which it launched in 1998, has overtaken Kellogg as the UK's biggest grocery brand, posting sales of pounds 1.2bn (Marketing, 23 April.)

It is not just the quality of the food products that has improved - Tesco Finest's growth has been fuelled by its extension into non-food, and shows no signs of slowing, with sales soaring 37% since April 2007.

Helen Dickinson, head of retail at KPMG, believes broadening the offering beyond food is a sensible strategy. 'There are huge opportunities to increase the dimensions of premium lines as long as the ranges meet the needs of the supermarkets' customers,' she says.

However, Kate Waddell, director of consumer brands at Dragon, which handled the 2006 rebrand of Sainsbury's Taste the Difference range, says that extending a premium proposition into non-food is not without risks 'I would hesitate to take the proposition out to areas such as finance brands as these are not pleasure categories,' she adds.

Nonetheless, Waddell admits that Sainsbury's decision to spin off its Taste the Difference brand into homewares, using the Different By Design name, has proved effective. 'It is trying to associate Taste the Difference with specific values,' she says. 'Using a separate name for its homewares range makes a clear distinction between the brands.'

Some retail experts believe other supermarkets will fail to emulate the success of Tesco and Sainsbury's own-brand strategy. 'Morrisons has extended its premium label, The Best, into homewares and alcohol, but it has not had the same impact as Tesco Finest,' says one.

Waitrose, meanwhile, claims it has no need to introduce its own premium line. Dragon's Waddell agrees. …

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